Despite a much-publicised December launch, a promise to take on the big telcos and an initial influx of customer signups, new prepaid player Kogan Mobile is already facing a backlash.
It's been revealed that the company has begun unexpectedly disconnecting the services of customers on its Unlimited Access plans for the apparent crime of using their phones too much. Customers who have received ‘error’ messages when attempting to recharge their prepaid service have been informed that they have breached the acceptable use policy of their plan, and have 90 days to find a new provider and port their phone number.
Kogan Mobile's prepaid plans advertise unlimited standard calls, texts and MMS within Australia, and 6GB of included data per month, with an expiry period of 30, 90 or 365 days depending on the plan - an offer which prompted tens of thousands of customers to switch their service when the telco launched late last year. What wasn't displayed in its advertising, but could be found in the terms and conditions, was that fair use restrictions applied to the both 'unlimited' inclusions and data usage - a policy used by all Australian mobile providers.
For most providers, 'fair use' prohibits activities such as using your service for commercial, fraudulent or illegal activity, or doing anything that could adversely affect the network or other customers' access to it. However, the stories from disgruntled Kogan Mobile customers state levels of usage that most of us would consider relatively reasonable for paying customers - a few hour-long phone calls in the space of a day or two, or downloading a few gigabytes of data over a week. Kogan Mobile, however, is accusing these customers of using their personal service for business purposes and immediately terminating their ability to recharge - something that, to our knowledge, other providers with similar policies just aren't doing.
To compare, Optus' Fair Go policy considers more than 2000 minutes of talk per month to be excessive, which breaks down to be a little over an hour of chatting per day - an amount that plenty of customers no doubt exceed. However, we've heard nothing about Optus users being booted en masse for talking too much. Other telcos such as Telstra and Vodafone have similar policies to Kogan Mobile (although unlike Optus, don't specify how many minutes are too many) but again, aren't terminating service for high-use customers, on both prepaid and postpaid plans with or without contracts. This just doesn't seem to be a phenomenon that we've seen with any other provider but Kogan.
We've looked at length at the Australian Communications and Media Authority’s revised Telecommunications Protections Code (TCP) and how it’s going to affect your mobile and broadband bill. One of the key changes that the new Code is supposedly going to enforce is an end to all misleading or confusing advertising, and a ban on using terms such as ‘unlimited’ unless the offer is truly, actually, 100% without limits.
The TCP Code states that a company may not:
“…use the term ‘unlimited’ or an equivalent term in an unqualified manner when referring to usage, unless the ordinary use of the service in Australia is genuinely unlimited and not subject to exclusions, including exclusions for various types of calls or usage, or selected parts of the network.”
The Telecommunications Consumer Protections Code 2012
The question here is whether Kogan Mobile has breached the Code and should be penalised by the ACMA. The new Code states that all plan advertising must include any important conditions, limitations or restrictions about an offer, to prevent customers being misinformed or misled. Originally, there was nothing in Kogan’s advertising, or its questionable Critical Information Summary (more on this below) indicating that the ‘unlimited’ use was restricted; it's since updated its website to specify that customers can use no more than 400MB of their 6GB monthly allowance per day. Although plenty for most people, this limit may be off-putting for heavy users who tether their devices or just spend a lot of time downloading.
Of course, most other providers don’t include info on their acceptable use policies in their advertising either, but then none of them appear to have unexpectedly started removing users from their network for using their plan allowance in a manner that most customers would agree isn't really all that excessive. The fact that Kogan Mobile has, indicates that its idea of fair use probably could be considered an ‘important condition’ that should be mentioned to its customers before they sign on the dotted line.
There’s one area in which Kogan Mobile has inarguably missed the mark, and that’s in its Critical Information Summary, which should be a two-page document covering information about the service, its pricing, billing, how to monitor call and data use, international roaming, customer service contacts and dispute resolution information.
It’s meant to be a concise and easy-to-understand summary of the important parts of the plan, and it should be easily and clearly available for consumers on a company’s website when they’re browsing phone plans. Kogan Mobile’s Critical Information Summary consists of a few lines and several links to its Members Area, which is just not good enough considering the inclusion of these summaries became compulsory at the start of March.
Although the Telecommunications Industry Ombudsman has stated it has received a 'small number' of complaints, by the vitriol being expressed online we're guessing that number is going to increase. The problem with complaining to the TIO is that, as customers aren't on contract (and being asked to leave isn't costing them money or breaching an agreement), there's probably not much the Ombudsman can offer grieved consumers.
Realistically, no telco should be advertising its service as 'unlimited' if they're intending to show all heavy users the door - that would mean that there actually is a limit on use. Unlimited plans are targeted at people who are glued to their phones and love to chat, so the fact that Kogan Mobile is prepared to damage its brand through this move is unfortunate.
The ACMA is under pressure from the Australian Communications Consumer Action Network to investigate Kogan Mobile and penalise it accordingly if the company is found in breach of the new regulations. The TCP Code was revised in order to strengthen consumer protection in an industry that's rife with confusion and unhappy customers; we're not sure yet just how many Kogan Mobile customers have been affected by this debacle, but its a situation that we feel warrants a closer look and, hopefully, a crackdown for all telcos regarding the use of terms such as 'unlimited'.
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