Telcos call for radical overhaul of TIO

Australia’s telecommunications providers have called on  the Federal Government to impose widespread changes to the operation of the industry-funded Telecommunications Industry Ombudsman (TIO).

The Department of Broadband, Communications and the Digital Economy published submissions received by the telcos in response to its discussion paper yesterday.

The Department sought views on whether the TIO’s dispute resolution mechanism was fair or efficient and whether it promoted the industry to provide better processes to customers.

The most pressing issues were:

• That the TIO is motivated to escalate complaints as a consequence of its funding structure – a potential conflict of interest.

• The TIO’s methodology for reporting the level of complaints, particularly the practice of a single complaint being recorded multiple times.

• Calls to collapse the TIO Board and the TIO Council into a single entity.

• A need to broaden the TIO’s jurisdiction to encompass Pay TV customer complaints.

• A recommended self-imposed timeframe on dealing with complaints in order to provide more timely resolutions to disputes.

The TIO was funded according to the amount of complaints it receives, which the telcos suggest encourages the ombudsman to inflate the amount of complaints it receives and count single complaints multiple times.

Telcos were also concerned that it had an economic incentive to escalate rather than resolve disputes at the first instance. For example, telcos are charged $31 for level 1 complaints, but the fees rises very sharply thereafter, with level 2 complaints incurring a $260 fee, level 3 incurring $475 and level 4 complaints attracting a whopping  $2250 fee.

This point was highlighted in Vodafone Hutchison Australia’s submission, which called for a fundamental overhaul of the TIO’s current funding model.

“There are two reasons why the funding model must change. First, the funding structure exacerbates perceptions of a conflict of interest in how the TIO scheme functions. Second, the TIO requires a stronger incentive to resolve, rather than simply handle, customer complaints,” the VHA submission said.

The mobile carrier’s submission added that while the TIO scheme is designed to cover its costs, it has no incentive to manage its costs efficiently. 

AAPT expressed concern that, unlike in Britain and New Zealand, there was no requirement in Australia for a consumer to show that they did in fact first try to address the complaint with their service provider.

“It is AAPT’s understanding that the TIO does ask consumers who contact them whether they have contacted their service provider about the complaint, however, there is no way to verify that contact had in fact been made.”

The complaint escalation schemes in operation in both the United Kingdom and New Zealand requires consumers to have received a “deadlock” letter stating that the service provider will not be doing anything about the particular complaint before contacting the equivalent of the TIO in each of those jurisdictions.

AAPT also called for the timeframe for resolution of a level 1 TIO complaint to be increased from its current duration of 14 days up to 30 days to bring it in line with the Telecommunications Customer Protection Code, which specifies a time frame of 30 days to offer a mutually satisfactory resolution to a customer.

AAPT reminded the department that the TIO has always based its publicly reported complaint numbers on member billing records. A complaint is registered when a service provider is invoiced by the TIO, even though it may be invoiced many times for a consumer complaint.

“Consequently, the single consumer complaints are often counted multiple times by the TIO.”

AAPT recommended that the TIO should implement changes to the way it reports complaint numbers so that:

• multiple counting of single complaints is eliminated; and
• in addition to reporting absolute numbers of complaints per service provider, the TIO should report complaints per service provider per service in operation.

Telstra said the TIO should hold itself accountable to published timeframes for resolving complaints.

Although they may require flexibility to allow for consideration of complex cases, it would promote the more prompt resolution of matters, and may ensure that some matters do not linger, Telstra said.

The market incumbent also called for the re-establishment of the TIO as an office of last resort, which it argued should be objectively reinforced by the TIO’s own processes.

Macquarie Telecom was among the critics of the current make-up of the TIO board, and joined in the call for restructuring of the organisation.

“The TIO is governed by two masters: the TIO Board which provides corporate governance advice, and the TIO Council which provides advice on policy and procedural matters. In any setting, serving two masters is inevitably impossible. This is exacerbated to the extent that while both consumers and the industry are represented on the TIO Council, consumers are not represented on the TIO Board. This has led to conflict between the TIO Board and TIO Council and to calls for the collapse of the TIO’s current structure.”

Macquarie Telecom said that the TIO Board and TIO Council should be collapsed into a single overseeing body which has equal industry and consumer representation and an independent chair.

Macquarie also echoed the thoughts expressed in most of the other submissions to the Department that the TIO’s jurisdiction should be expanded to encompass pay TV, given that many consumers are now supplied telephony, Internet access and a pay TV service in a bundle from a single supplier. Currently, the TIO’s reach only extends to the telephony and Internet components of the bundle, but not the pay TV element.