Draft Telecommunications Universal Service Obligation (Standard Telephone Service Requirements and Circumstances) Determination (No.

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1 4 The Manager Universal Access Section Networks Regulation Branch Department of Broadband, Communications and the Digital Economy GPO Box 2154 Canberra ACT Dear Sir/Madam Draft Telecommunications Universal Service Obligation (Standard Telephone Service Requirements and Circumstances) Determination (No.1) 2011 I am writing to provide information relevant to the draft Telecommunications Universal Service Obligation (Standard Telephone Service Requirements and Circumstances) Determination (No.1) 2011 (the proposed Determination). We have reviewed the reforms in the proposed Determination in the limited time provided. Given the time constraints we have generally limited our comments to areas that are within our experience in handling complaints relating to the Universal Service Obligation. We have set out in the attached submission, complaint information, some specific comments and a number of possible solutions which we trust assists the Department s deliberations on the proposed Determination and in developing any further legislative instruments to support the Universal Service Obligation Policy framework. Please contact David Brockman, the TIO s Manager Planning & Stakeholder Engagement, on (03) if you have any queries regarding the TIO submission. Yours sincerely Simon Cohen Ombudsman

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3 Telecommunications Industry Ombudsman Submission on the draft Requirements and Circumstances (USO) Determination

4 Contents About the TIO 1 TIO Approach to the 2 Complaints to the TIO 2 Landline (voice) services 2 TIO Jurisdiction over USO complaints 4 Specific Concerns about the proposed Determination 4 Restating the obligation to fulfil the USO 4 Areas likely to be contentious 5 Other matters 9 Page i

5 About the TIO The Telecommunications Industry Ombudsman (TIO) is a free and independent alternative dispute resolution service for small business and residential consumers in Australia who have a complaint about their telecommunications services. We aim to resolve these complaints quickly in a fair, independent and informal way, having regard not only to the law and to good industry practice, but also to what is fair and reasonable in all the circumstances. Before the TIO becomes involved in a complaint, the service provider is given an opportunity to resolve the complaint with its customer. Most complaints to the TIO are resolved quickly and effectively through a process of referral to designated contact points within the service providers, or by the TIO conciliating a mutually acceptable outcome between the two parties. Complaints that cannot be resolved by conciliation are escalated for formal investigation by the TIO. If the complaint remains unresolved after formal investigation and the TIO is of the view that it would be fair and reasonable to do so, the TIO can make binding determinations up to a value of $30,000 and non-binding recommendations up to a value of $85,000 in respect of each complaint. We are independent of telecommunications companies, consumer groups and government. Further information about the TIO is available at We record complaints according to the types of issues that these complaints present. These include provisioning/connection delays, credit management disputes, contractual disputes, customer service/complaint handling and billing disputes. Every complaint involves at least one complaint issue. Some complaints can involve multiple complaint issues for example, a complaint about a delay in rectifying a faulty landline service may also involve a claim that the consumer s complaint about this fault was not acknowledged or escalated (a complaint handling issue). TIO complaints are broadly classified according to service types internet, mobile, landline and mobile premium services (MPS) and are investigated according to the types of issues they present. More information about TIO complaints and complaint issues is available at Page 1

6 TIO Approach to the In considering the draft Telecommunications Universal Service Obligation (Standard Telephone Service Requirements and Circumstances) Determination (No.1) 2011 (the proposed Determination), the TIO has focused primarily on the potential impact the proposed reform would have on consumers in Australia. We have drawn on our experience in handling complaints about the provisioning of a standard telephone service. In the TIO s view, the proposed Determination may significantly change how the Universal Service Obligation (USO) policy is implemented by the primary universal service provider. Whilst the objectives of the proposed reform to improve clarity and provide certainty around the supply of standard telephone services under the USO are key benefits, the TIO is concerned that the proposed Determination may result in unintended detriment to some consumers, particularly those who are vulnerable and disadvantaged. We set out in this submission: a brief overview of complaints that the TIO commonly receives about landline services specific concerns about the proposed Determination that may need to be addressed so that any consumer detriment is minimised other suggestions to strengthen the consumer protection framework around the USO policy. Complaints to the TIO Landline (voice) services The scope of the USO is currently limited to the reasonable provision of standard telephone services and payphones. The TIO understands that Australian consumers are increasingly taking up mobile and broadband services, with landline (fixed line) services declining over the past few years. We note that this pattern is not necessarily reflected in the number of cases handled by the TIO about landline services, which have continued to grow at a moderate rate with a small decline in Graph 1 shows the growth of landline services in Australia compared to the total number of cases 1 handled by the TIO about landline services over the past 4 years. 1 Total cases in each financial year include new complaints received by the TIO, cases that require further assistance by the TIO without escalation, cases that are escalated for conciliation and cases that require TIO investigation or Ombudsman determination. A complaint is defined as an expression of grievance or dissatisfaction about a matter within the TIO s jurisdiction that the TIO Member concerned has had an opportunity to consider. Page 2

7 Graph 1: Landline services compared to Total Cases about landline services We note that between 1 July and 31 December 2010, we received more than new complaints about landline services, an increase of about 5% on new complaints received from 1 January to 30 June We record complaint issues about landline services (including VoIP services that are offered as standard telephone services) under several broad categories. Complaint issues about billing and payments formed the highest category of landline complaint issues in , followed by complaint issues about customer service, complaint handling, credit management, faults, contracts and provisioning. Faults and provisioning complaint issues formed approximately 13.8% of total landline complaint issues in Graph 2 shows complaint issues recorded for landline services in relation to faults and provisioning over the past 4 years. Graph 2: Landline faults and provisioning complaint issues Page 3

8 We note that between 1 July and 31 December 2010, faults and provisioning complaint issues formed 13.5% of total landline complaint issues. The TIO has jurisdiction to investigate complaints about provisioning and fault repair delays for landline services and to assess, if appropriate, any compensation under the Telecommunications (Customer Service Guarantee) Standard 2000 (No. 2) (CSG Standard). The TIO statistics indicate that the CSG Standard may be relevant to approximately 86% to 92% of landline complaint issues under the categories of provisioning and faults. TIO Jurisdiction over USO complaints The TIO has jurisdiction to investigate complaints about the connection of standard telephone services under the USO framework, although we do not have jurisdiction around USO policy matters. We often receive complaints about the supply of a standard telephone service under the USO where the consumer and primary universal service provider have had protracted interactions before the consumer approaches the TIO. These complaints may sometimes involve consumers who are particularly vulnerable by reason of their remote or isolated places of residence or business, or who have no other access to a telecommunications service. The TIO does not capture separate statistics in relation to complaint issues that may relate to the USO. Specific Concerns about the proposed Determination Restating the obligation to fulfil the USO The Universal Service Obligation (USO) ensures reasonable access to a standard telephone service for all Australians regardless of where they live or carry on business. The USO also ensures access to a standard telephone service for people with a disability, by requiring appropriate customer equipment to enable equivalent access. Under the recently amended USO framework, the primary universal service provider must fulfil the USO and comply with its approved policy statement and approved standard marketing plan 2. The TIO is concerned that the positive and fundamental obligation on the primary universal service provider to fulfil the USO and provide a standard telephone service may be reduced by the detailed specificity in the proposed Determination as to when the USO does not apply. Having a detailed list of circumstances when the USO does not apply, leaves open the possibility that the primary 2 Section 12C of the Telecommunications (Consumer Protection and Service Standards) Act 1999 as amended by the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Act Page 4

9 universal service provider may focus on identifying when the USO is excluded, rather than placing its focus on the overarching obligation to fulfil the USO. From time to time the TIO receives complaints, including where a consumer in a remote or isolated location is seeking a telephone service, where the issue is less than straightforward for the primary universal service provider. In the absence of the USO, a commercial decision to refuse service would be likely. In conciliating and investigating these cases, the TIO encourages both parties to adopt a problem-solving focus to overcome the difficulties that might present, having full regard to the policy intent of the USO. The proposed Determination as drafted, may work to exclude the operation of the USO when difficulties arise. That is, what were previously potential obstacles that the parties needed to work together to overcome to meet the USO, now risk becoming technical grounds for the primary universal service provider to decline a USO request. The proposed Determination risks removing the case-by-case flexibility under the current arrangements. To address this issue at least in part, we suggest that the proposed Determination reinforce at the outset, the positive obligation of the primary universal service provider to fulfil the USO and require that the exclusions and requirements in the proposed Determination be read in a manner consistent with the USO. Reaffirming this obligation in the proposed Determination will serve to assist consumers and the primary universal service provider in dealing with the difficult cases that will inevitably arise. Areas likely to be contentious We outline below, a number of areas where consumers who may have previously been entitled to a USO service, may no longer be so entitled under the proposed Determination. We also highlight possible difficulties with the proposed Determination as presently framed. These matters are informed by our experience in dealing with complaints, and may require individual consideration. They are also relevant to the point made above, concerning the potential inflexibility of the proposed Determination as currently drafted. Access to Disability Equipment The primary universal service provider s obligation to provide disability equipment to enable consumers with a disability reasonable access to a standard telephone service, is tied to its obligation to provide a standard telephone service. The extensive list of circumstances in the proposed Determination under which the USO does not apply, may have the unintended consequence of preventing consumers who have a disability from access to disability equipment that currently only the primary universal service provider is obliged to provide. Page 5

10 Principal place of residence The proposed Determination specifies a minimum occupancy period of 183 days (6 months) per annum for a consumer to claim that a particular location is their principal place of residence. This may disadvantage consumers whose residence is somewhat fluid, such as seasonal workers, tertiary students (including international students), and consumers whose circumstances may require them to spend significant amounts of time away from their normal residence (for example, to care for a sick relative). In some complaints to the TIO, the primary universal service provider has declined a USO request on the basis that the property was not the consumer s principal place of residence, yet the consumer intends for it to be his or her principal place of residence once a standard telephone service is connected. The minimum occupancy period in the proposed Determination may place some consumers in a difficult situation where they cannot have a service at a location because they do not live there, and they cannot live there because they cannot have a service connected. Request The proposed Determination details what constitutes a request for a standard telephone service. The TIO notes that most of the details appear uncontroversial, for example, the location where the service is required, set out in subsection 4(b). However, the TIO has received and dealt with cases where location can be an issue. This may include where the primary universal service provider has been unable to locate the exact address in their database due to issues with their mapping records, and because incorrect address information in the Integrated Public Number Database (IPND) prevented it from connecting a service. While such issues can be and have been resolved, they demonstrate the potential impact if compulsory requirements are included in the proposed Determination, and not deemed as met by the primary universal service provider. A related matter is the requirement for all other information the primary universal service provider has requested that it reasonably requires. While on its face innocuous, the provision has the potential to place barriers for vulnerable consumers who may find the required information too onerous to provide or who may find it difficult to understand what they are required to provide. Also related to this issue is the requirement in subsection 5(2)(d) of the proposed Determination for the customer to provide identification. While understandable, the requirement risks disadvantaging consumers, including those living in remote locations, those with unconventional living arrangements and/or victims of natural disasters, if it is unduly prescriptive. Excluded Premises Subsection 3(2) of the proposed Determination details an extensive list of excluded premises. It risks leaving some consumers with unconventional residences or unusual living arrangements without the right to have a service connected at premises that, while perhaps out of the ordinary, are nevertheless the only home they have. Page 6

11 In addition, there are some practical matters that arise. For example, requirements such as compliance with planning laws may require judgements about the exact status of particular premises that may be beyond the immediate expertise of the primary universal service provider (and the TIO, if a complaint is made to us). The TIO has handled cases where the planning status of the building and the consumer s tenure on the land in question were disputed by the primary universal service provider, although the consumer was able to produce some evidence of both. Legal right to occupy the premises Subsection 5(1)(c) of the proposed Determination includes a requirement that the consumer making a request for the standard telephone service needs to have the legal right to occupy the premises. This may create similar issues to that outlined above, as it places the primary universal service provider in a position where they would need to make legal judgements regarding ownership and occupancy of premises. Credit worthiness Subsection 5(1)(d) of the proposed Determination exempts the primary universal service provider where it considers the consumer (based on prior credit history with it or based on information from an independent credit reporting agency) not to be creditworthy. While the reasons for a provision such as this are entirely clear, there is of course the potential to disadvantage consumers who are experiencing financial hardship or difficult circumstances. Another approach, which may achieve the policy objective without further disadvantaging such a consumer, may be to allow the primary universal service provider to provide products such as an InContact or a pre-paid telephone service, as being sufficient to meet the USO where credit worthiness is an issue. Minors In a similar vein as outlined above, the policy objective of subsection 5(1)(g) of the proposed Determination may be achieved without the need for a blanket exemption from the USO. Electricity supply, security and unimpeded entry/access to premises Subsections 5(2)(a), (e) and (f) contain requirements for the consumer to supply electricity sufficient for the technology used for the standard telephone service, and also exempts the USO provider where it deems premises not sufficiently secure or where there is not unimpeded entry or access to the premises. From our experience in dealing with complaints of this nature, the primary universal service provider has on appropriate occasions had a range of options for servicing remote locations, including providing independent power supply for the necessary equipment. The TIO sometimes receives complaints about the supply of a standard telephone service where access to the premises is challenging, or where the premises do not have electricity or have a very limited supply such as solar panels or intermittent generation. In these instances, where the primary Page 7

12 universal service provider has initially declined to provide a USO service or rectify any faults, both parties explore other possible solutions during the TIO conciliation and investigation process, resulting in mutually agreed outcomes. Lead-in, trenching and erecting of poles Subsection 5(2)(b)(i) of the proposed Determination exempts the primary universal service provider where the consumer does not agree to supply, or cover the cost of suitable trenching to house leadin cabling underground. The provision states that the trenching covers the point that the cable enters the property and the point that the cable enters the building. Whilst this reflects current arrangements, there is a lack of clarity, reflected in complaints received by the TIO, around who determines where the cable enters the property, the location of the trenching, and whether the costs involved are reasonable (if undertaken other than by the consumer). As currently drafted, the provision in the proposed Determination risks disadvantaging consumers by leaving them open to bear the costs of trenching that may not be reasonable. Part of the solution to this would be to amend the proposed Determination to ensure that the costs of trenching should be reasonable. Subsection 5(2)(b)(ii) of the proposed Determination also stipulates that the consumer is liable to erect, agree to pay the costs of erecting, or arrange for the payment of the costs of erecting poles at the premises if underground cabling is not reasonably feasible. This represents a significant departure from current requirements and may impose a more significant financial burden on consumers who would have to rely on the primary universal service provider or specialist contractor to erect these poles. Unlike trenching which may be undertaken by some consumers themselves to reduce costs (for example, a farmer with a tractor), the erection of poles would be outside the expertise or capability of most, if not all, consumers. Environmental impact issues, risk of injury, threatening behaviour and unsanitary conditions Other provisions in subsection 5(2) of the proposed Determination also exempts the primary universal service provider from the requirements of the USO in a range of broad situations such as the existence of significant environmental impact issues, if there is a risk of injury to the primary universal service provider s staff or contractors, or where there is threatening behaviour or unsanitary conditions. Again, the policy reasons for the inclusions are clear. We strongly support arrangements that protect workers from inappropriate risks. However, as presently drafted, these provisions create a risk of the primary universal service provider renouncing any further responsibility for difficult cases in reliance on these provisions. Their inclusion emphasises the importance of balancing any potential exemptions with an obligation on the primary universal service provider to provide a standard telephone service. These provisions serve to emphasise the need for consumers and service providers to work together to resolve issues before relying on the exemption provisions to refuse a standard telephone service. Page 8

13 Other matters The USO remains a critical consumer protection safeguard that will transition into the National Broadband Network environment. Reasonable access to standard telephone services across Australia on an equitable basis, including in unprofitable areas of rural and remote Australia, remain a cornerstone of the USO policy framework. The TIO notes the following additional steps which will further promote this objective: (a) existing Dispute Resolution processes be enhanced: The primary universal service provider and any alternative provider who may be selected to provide the USO service, are expressly required to have effective internal dispute resolution processes that may be subject to review by the Australian Communications and Media Authority. Where the USO requests are declined, the primary universal service provider and any alternative provider are required to clearly communicate their reasons for doing so to the consumer, offer to record a complaint if the consumer is dissatisfied, and inform the consumer of external avenues of redress including the TIO. Consumers with a complaint about a declined USO request and who have been unable to resolve it at first instance continue to have easy and accessible recourse to the TIO to assist in resolving their dispute. The primary universal service provider and any alternative provider are required to refer unresolved consumer complaints about the declined USO request, to the TIO. (b) Performance Standards and Benchmarks for USO requests be established 3 : The primary universal service provider and any alternative provider are required to record and report on the number of USO requests received, the number of USO requests declined and the grounds under which these were so declined. Where the primary universal service provider and any alternative provider refer unresolved consumer complaints about any declined USO requests, to the TIO, they are required to record and report on the number of complaints referred to the TIO, and the outcomes of these complaints. 3 Under section 12EB and section 12EC(6) of the Telecommunications (Consumer Protection and Service Standards) Act Page 9