Australia: Cracking the revised TCP Code – is this the end of self-regulation?

The Telecommunications Act encourages self-regulation and up until now the industry has been permitted to self-regulate the way it deals with residential and small business consumers. This may be about to change.

The Australian telecommunications industry body, Communications Alliance, has submitted a revised Telecommunications Consumer Protections (TCP) Code to the Australian Communications and Media Authority (ACMA) for registration. If registered, the revised TCP Code will replace the current version of the Code which was registered by the ACMA in September 2007.

The submission of the revised TCP Code follows a review of the current Code by telecommunications industry stakeholders and the release of the ACMA's recommendations from its Reconnecting the Customer inquiry into the industry in June 2011. The ACMA highlighted concerns over unacceptably high levels of customer dissatisfaction and complaints, as well as regulatory deficiencies in a range of key areas including advertising practices, product disclosure, internal complaints handling procedures and reporting, customer service performance reporting and customer spend management.

The ACMA then issued a notice to Communications Alliance requesting that it address the identified regulatory deficiencies and strengthen the existing self-regulated consumer protections within five months. The revised TCP Code has been submitted by Communications Alliance in response to the ACMA's notice.

Key features of the revised TCP Code

The revised TCP Code, if registered, will clarify some of the obligations imposed by the existing Code, scrap the existing TCP Industry Guideline as well as the Code Administration and Compliance Scheme, and impose a number of new obligations on the industry.

The major changes under the revised Code include:

• a new requirement for retailers to be able to provide consumers with a summary of offer prior to sale
• prohibitions on certain content in advertising, eg use of the term "unlimited" to describe usage entitlements where ordinary usage within Australia is not genuinely unlimited and not subject to exclusions, and use of the terms "no exceptions", "no exclusions" or "no catches" to describe an offer where there are not genuinely no exceptions. These restrictions have been inserted along with other restrictions on advertising content which are similar to the restrictions imposed under the terms of the undertaking given to the Australian Competition and Consumer Commission (ACCC) by Telstra, Optus and Vodafone Hutchison Australia under section 87B of the former Trade Practices Act 1974 (Cth) in 2009
• a new requirement to provide unit pricing information in certain advertising mediums
• a prohibition on using the term "cap" to describe new offers unless they are "hard-capped" offers
• a shortening of the allowable delay for back-billing, requirements to provide additional content on bills and to provide historic billing information free of charge for up to 24 months after a bill was first issued
• compulsory provision of usage information to customers for calls, SMS and data to allow greater spend management and reduce "bill shock"
• new complaint handling requirements, including shorter complaint resolution timeframes, a requirement to advise customers of complaint outcomes and a requirement to issue each customer who complains with a unique reference number to enable them to track the progress of their complaint
• the introduction of a new independent body to be called "Communications Compliance" to monitor TCP Code compliance with the power to refer non-compliance to the ACMA.

Response to the revised Code

The public consultation draft of the revised TCP Code received heavy criticism from the ACCC and the industry consumer group, Australian Communications Consumer Action Network (ACCAN). Both bodies called for the scrapping of industry self-regulation in favour of the imposition of an Industry Standard or Service Provider Determination by the ACMA under the Telecommunications Act.

The draft of the revised TCP Code was substantially amended following the public consultation phase and the criticisms of the ACCC and ACCAN. Despite the amendments, ACCAN has publicly refused to support the draft Code's registration because it does not believe the revised TCP Code provides adequate consumer protection or that it would adequately address the issues identified by the ACMA in its Reconnecting the Customer report.

What will happen if the ACMA rejects the proposed Code?

The ACMA is now considering whether or not to register the revised TCP Code. The ACMA has indicated it will undertake this process as expeditiously as possible.

Some commentators have speculated that the ACMA will reject the revised TCP Code because it does not fully address the issues identified by the ACMA in the Reconnecting the Customer report, and because the ACMA has previously expressed a preference for reducing the degree of self-regulation of the telecommunications industry in favour of direct regulation - which is supported by the ACCC and ACCAN.

If the ACMA refuses to register the revised TCP Code it is likely to impose regulation on the industry by determining an Industry Standard under the Telecommunications Act. The consequences of non-compliance with an Industry Standard are potentially severe, with the Federal Court able to impose civil penalties of up to A$250,000 per contravention.

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