Telecommunications providers should be forced to change their advertising procedures in order to provide consumers with more transparent information about text message pricing, the leader of a government-sponsored taskforce has warned.
The comments come as new research reveals Australian mobile customers are paying the most out of a number of nations, including European countries and Canada, for text messaging services.
Allen Asher, chief executive of the Australian Communications Consumer Action Network taskforce, says large telcos are not being transparent.
“I do believe that, because nobody really knows what they are paying. The proliferation of cap arrangements, expiring amounts and penalty rates means that nobody can make an informed choice.”
“I believe if markets are going to work, we need to demand full factual and relevant product information so people can choose and reward the good ones, and punish the bad providers. Currently the market doesn’t allow that.”
Asher says many of the larger telcos, such as Telstra, VHA and Optus, do not clearly define text message prices. Instead, they bury them underneath fine print among information regarding caps and plans.
“There is no simple solution. It has to start with companies realising that customers matter. So far they just treat customers as a convenient source of cash flow, and massive reform is needed.”
“Part of that reform relates to advertising, which is full of fine print, confusion and deception. The rate structure of these caps and so on, you just can’t do that when the operators have considerable market power. It’s extremely confusing.”
Part of Asher’s criticism lies in the fact text messages are extremely cheap for companies to send.
Telstra and Optus charge a text message at 25 cents, which is the equivalent of charging several hundred for a megabyte of data.
This is compared to several fixed-line internet plans, which charge less than one cent per megabyte for an average plan.
Text message pricing across the developed world ranges from 14c in New Zealand to just 2c in China, 6c in Japan and 3c in India.
Vodafone spokesman Greg Spears denies Asher’s charges, saying the company clearly posts its text message pricing on its official website.
“This whole thing is a bit of a red herring. This is trying to compare apples and oranges, because most Australians are on caps, and the actual hard cost is more like four cents…we are also very clear on pricing and what’s involved in our caps.”
An Optus spokesperson also defended the company’s plans, saying it has a “wide range of options for customers”, including unlimited text and MMS plans.
But Asher also says several other aspects of the telecommunications industry must undergo reform, including the current nature of customer service.
“Customer service for telecommunications in Australia is appalling. The number of complaints received per capita is higher than Britain, so it’s a seriously bad market. We’ve got sleepy regulators who don’t focus on good outcomes, and we have a policy built on self-regulation designed in 1997 which has failed.”
“The National Broadband Network gives us a good chance of starting again and putting customers at the heart of the industry. We want businesses to be profitable, but we want clearer marketing and advertising, and we want to dump self-regulation.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
