Are warnings enough? Probably not. Look at how much money has been spent warning against the dangers of smoking
We’ve had a few months to settle in with the latest reforms for the telco industry and mull them over.
Here at WhistleOut, we don’t believe that the latest ACMA code (beginning next month) will fully stop ‘bill shock’ for Australian consumers. This new telecommunications industry reform package goes only part of the way to preventing the problem. The new rules will enable prevention, but they are not the cure.
The code is a welcome change, yet bill shock will still continue to occur with all major carriers. The new ACMA code does not address the ‘confuseopoly’ of mobile call costs when inside and outside of the plan value, as included value amounts are still advertised in dollars.
Think of it like this….. A consumer with a mobile plan paying $40 per month for $400 with calls at 99c per minute has about 340 minutes worth of calls including 35c flag-fall charges. Under the new code, the unit price is ‘$2.33′ per 2 minute call and is published upfront.
The catch for consumers remains…
On this plan, using 100% of your allowance for 340 minutes of calls will mean a bill of $40 at the end of the month.
Under the new code, the consumer will have received three warnings, the final warning at 100%.
However, with a busy month where the customer keeps using their phone and ends up using their phone twice as much, the bill is not doubled to $80, it will be almost 10 times higher at $436.
We’ve looked at this problem before and how the grounds shift under consumer’s feet inside and outside the plan inclusions in a previous blog post called Understanding Bill Shock
The weakness in the new code is that even with an SMS alert to the customer that they are at 85% and 100% of included value, the customer can keep pulling the trigger and still not understand how high their bill will be as usage costs are not accumulated at the same rate as in inside the plan.
Continuing the marketing of plan values as dollar value amounts offers consumers too little new information to understand how they might be charged beyond plan inclusions.
We believe all telcos should provide consumers with the option to place a hard / fixed limit on their accounts which would de-activate service at their own pre-selected monthly spend. This is similar to a credit limit on a credit card which de-activates the card when a limit has been reached. The hard limit occurs already on pre-paid plans when you run out of credit. Consumers should be able to pick their threshold of tolerance for overspend.
We recommend that the only solution to consumer bill shock is to follow these three steps which were not implemented in the code.
1. Make a mandatory requirement that all telcos give customers an opt-in function for them to set a personal ‘hard stop’ billing amount per month so that huge bills never eventuate.
2. Have telcos action this ‘voluntary service restriction’ so that when the user goes over a pre-defined billing limit, there are warnings that an immediate cessation of the service has occurred.
3. Implement a priority service line and website functionality for customers to reactivate their service in that month, if they choose to do so.
These fixes would address the fundamental problem with bill shock where consumers don’t know the manner or the speed in which they are accumulating costs outside ‘plan inclusions’ and prevent customers being blindsided with large bills.
We try to help upfront with our mobile plan comparison technology and we allow users to look at their existing bill and current usage and compare this for existing plans too see how much you’d use / have spare each month. We also graph plans so that you can see how each plans offer different included values and minute amounts at each price point. During the contract though, consumers are often going blind and SMS alerts are only the beginning on giving customers visibility on exactly how much they are spending. 