The telco industry owes Internode a corporate beer

Peter Moon

It’s just 11 days since Australia’s retail telecommunications industry was subjected to a new customer protection regime intended to halt what regulators described as a race to the bottom in terms of sales and advertising ethics and customer care standards. Predictably in a game that has about a thousand players ranging from Telstra at the top to micro-telcos with a few hundred customers, the early response to the new Telecommunications Consumer Protections Code has been variable.

The heavyweights Telstra, Optus and Vodafone have all followed the development of the TCP Code closely and shouldn’t be found wanting when their compliance effort is independently audited in the first quarter of 2013. And the code can already claim some success with the larger telcos. It’s no coincidence that Vodafone is heavily promoting its spend management app for iOS, Android and Windows-based smartphones.

Some parts of the TCP Code aren’t immediately mandatory but iiNet’s Internode brand has eloquently made the point that there’s no law against early adoption. While many service providers are thanking their lucky stars that the new product disclosure requirement for a two page ‘Critical Information Summary’ isn’t in force until March 2013, Internode has jumped the gun with at least one CIS already on its website.

Frankly, we’re watching with keen interest to see how useful these disclosure statements turn out to be.

Internode has sensibly chosen a very simple mobile phone offer as its first attempt at a CIS, and it reads pretty well. Somebody had to go first and the industry owes Internode a corporate beer for standing up here.

Getting more complex information into, and out of, this standard form layout is going to challenge ­service providers and consumers, but we’re a step closer to making it work thanks to Internode’s early contribution.

Moves like Vodafone’s anti-bill-shock tool and Internode’s initial CIS are both ahead of the code’s implementation timetable, suggesting that some telcos see a marketing advantage in embracing the rules as soon as possible. Why not make a virtue of necessity? If you’re stuck with the law, you may as well comply with gusto and make sure the world knows about it.

It raises the slightly disconcerting prospect of telco deals that don’t have hidden traps, but consumers are an adaptable lot and no doubt they’ll come to terms with no-hidden-strings sales pitches.

Unfortunately not every telco is making friends with the new code. Anecdotally, a good number are unaware that the document exists. Others dismiss it as another doomed attempt by the Australian Communications and Media Authority to tame an industry that’s too wild and, in some players’ self-estimation, too smart for ACMA to rein in. A huge number know there’s a new law but won’t be resourcing a serious compliance effort until somebody makes them. ACMA says it’s ready to be that ­special somebody. According to authority chair Chris Chapman there’s a budget for at least a hundred audits of compliance with key code rules this financial year.

Given that the authority seems amenable to a three-month education period, that’s a century of audits in the remaining 150 or so business days. Either Chapman is dreaming or telcos will be under some serious compliance pressure.

For residential and small business consumers, the fruits of the combined labours of ACMA and industry body Communications Alliance will take a while to ripen.

At the extreme, we expect to see a significant number of smaller telcos shut their doors. Their cheap and sometimes cheerful business models just won’t withstand the costs of compliance or the sales and revenue hits they’ll suffer if they have to clean up their operations. Many who do make the cut will need to restructure their service offerings, since plans that flourished in the days of dodgy ­disclosure will sink like stones in a market that gets a whiff of how they really work.

But in the next few months, we’re looking forward to breakaway moves like Internode’s and Vodafone’s.

Who knows? Maybe somebody will offer a radical “what you see is what you get” plan.

The Australian Financial Review