Telstra sees only 'marginal' benefit in a consumer data right for telco

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Telstra sees only 'marginal' benefit in a consumer data right for telco

Right should be first rolled out 'where it is needed more'.

Telstra says a “rigorous” cost-benefit analysis for the proposed expansion of the consumer data right (CDR) to telecommunications is needed, believing the right would deliver only “marginal” benefit for a substantial cost.

The CDR is designed to give consumers greater control over their own data, including the ability to securely share the data with third parties.

It was introduced to the banking sector this month. On a practical level, it should mean consumers can link third-party financial management apps with their own bank accounts, and take data with them when they switch banks or bank products.

The CDR is intended to be rolled out to other industries, with the energy and telecommunications sectors on the target list.

However, Telstra believes there are fewer barriers to consumers being able to switch providers in telecommunications - and therefore less competition benefits to be had by implementing a CDR.

Moreover, it believes that the costs of customising the current CDR to telecommunications would be substantial - and that there are other sectors with bigger competition issues than telco.

“It is unlikely the CDR, as it is designed for the banking and energy sectors, will lead to any material incremental benefit in terms of facilitating customers switching between providers or making information available to customers in the telecommunications sector,” Telstra said in an industry submission.

“The incremental benefits to competition in the sector from CDR are likely to be marginal.”

Telstra said it was apparent from the banking sector’s implementation of CDR that it involved “an enormous investment in time and cost by government, regulators and sector participants.” 

“While some part of that investment might be reusable for other sectors, the rollout of the CDR in its current form to more industries is likely to involve substantial new investments (e.g. government and regulators would need to tailor rules and develop new standards for other sectors, and the costs for banks to upgrade and develop systems would need to be incurred again by firms in other sectors),” it said.

“On our observation, the rules and standards that apply to the banking and energy sectors will need a high degree of customisation before being applied to the telecommunications sector at least.”

Telstra said it was therefore “critical that a rigorous cost benefit analysis be undertaken before any future sectors are designated” to implement the CDR.

Telstra suggested other industries had worse structural problems than telecommunications did.

“The CDR should be rolled out first to those sectors where it is needed more by customers – where providers in respective sectors have responded less to customers’ needs, where there are long term customer contracts, where plan and price structures are complex and difficult to compare between providers, where customer information is difficult to find, and where switching between providers is not supported by regulation and industry codes,” it said.

If the CDR is targeted at telecommunications, or indeed a large cross-section of the economy, Telstra suggested creating a “low-cost and largely sector-agnostic solution for the CDR” to make the right simpler to implement.

The solution should be “focussed on making public information about plans and products available to third parties, which will provide a benefit to customers while minimising the need for the complex and costly accreditation, consent, privacy and information security rules and standards,” Telstra said.

“Telstra considers that a much broader deployment of the CDR could be achieved across multiple sectors, including the telecommunications sector, if there was a more efficient and lower cost option for CDR implementation.”

Telecommunications Industry Ombudsman (TIO) Judi Jones backed Telstra’s view that “differences in regulation and market structure” in telecommunications meant that some of the problems the CDR addressed in banking weren’t necessarily cross-applicable.

However, Jones believed there were some industry-specific barriers that could be addressed with a telecommunication-specific CDR.

“Contracts for mobile services are often sold alongside, or linked to, contracts for mobile handsets,” Jones said.

“This can have the effect of incentivising consumers to remain with their mobile service provider until they have completely paid for their handset.”

Communications Alliance backed Telstra’s calls for a cost-benefit analysis of applying the CDR to telecommunications.

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