This article is by Mark Gregory, a senior lecturer in Electrical and Computer Engineering at RMIT University. It was first published on The Conversation and is re-published here with permission.

analysis Does the recent announcement by the Australian Communications and Media Authority (ACMA) of a new code of practice to prevent bill shock for “long-suffering telco customers”, and improve product marketing practices, bring Australia up to par with its international cousins?

In a word: no.

Bill shock, as the name suggests, is the reaction customers have to unexpected charges on their mobile phone bills. A public enquiry held by ACMA, with the final report released in September 2011, found that telecommunication companies write off up to A$113m annually in bad debts related to bill shock. The latest ACMA announcement is a major step forward but the government and ACMA have to act urgently to fix the great Australian mobile rip-off. The problem of the international roaming charges rip-off is yet to be directly addressed by either.

Have you heard about “data share” and why it is being promoted as a major step forward by Verizon Wireless USA? No? Read on and learn how Australian telecommunication companies are ripping-off mobile users with excessive data charges and failure to implement more flexible multi-device accounts.

The ACMA announcement
After several years of record complaints to the Telecommunication Industry Ombudsman (TIO) ACMA finally decided to act. Its 102-page code of practice – Telecommunications Consumer Protection (TCP) – will be enforced from September 1 and phased in over the next two years. The top 10 “wins” for mobile consumers can be found here. Among its many proposed benefits, customers will:

• Be “empowered” to comparison shop
• Better understand what they’ve actually signed up for
• Receive notifications at 50%, 85% and 100% of call and data usage, meaning there will be “no excuse for unexpected bill shock when they return from overseas holidays”

The telecommunication industry body Communications Alliance prepared the code after ACMA indicated it was not going to “roll over” to industry resistance for change. The ACMA chair Chris Chapman was quoted yesterday as saying: “My own discussions with the chief executives of the major telcos have convinced me that they get it [the need for a code of practice]. I think they know that in this increasingly technology driven environment […] there is only one outcome for them — that is to change their business practices and to own their customer is a way that is materially rewarding.”

In another article, Teresa Corbin, CEO of the Australian Communications Consumer Action Network (ACCAN) was quoted as saying: “[We] are hopeful that its [the new code of practice] adoption will result in clearer advertising, easier comparison of products, better information about contracts and better tools to help consumers avoid bill shock.” ACCAN is concerned that ACMA needs to be given greater powers of enforcement. Corbin argues: “The ACCC, for example, has much stronger powers and its issuing of fines has sent a strong message to the telecommunications industry that its advertising cannot be misleading.”

Data Share
Verizon Wireless USA has introduced “data share” – an initiative under which customers share their plan’s data allowance across multiple mobile devices, including smartphones and tablets. The Verizon Wireless data-share plans have been described as expensive for US mobile customers, but a sign of the future, as American telecommunication companies try to wean customers off unlimited data plans in the move to 4G networks. Let’s compare Telstra’s current offering with the Verizon Wireless data share plans – bearing in mind Telstra Mobile leaves the Australian competition in its wake for cost, coverage and network quality.

The current Telstra unlimited talk/MMS, text, with 3GB data plan costs A$100 per month. For three devices on the Telstra network, the cost is threfore A$300 a month, with 9GB of data – 3GB per device, that cannot be shared. The Verizon Wireless unlimited talk, text and share data plan with 4GB data will cost US$40 (A$40) a month for a smartphone and US$70 (A$70) a month for 4GB of shared data. For a Verizon Wireless account with three devices (two smartphones and one basic phone) sharing a monthly allowance of unlimited talk, text and 4GB of data would cost US$180 (A$180) a month (excluding taxes and surcharges).

To get a comparison we need to add 5GB of data to the Verizon Wireless plan. Verizon Wireless charges for extra data at a rate of US$10 (A$10) a month for 2GB. For an additional 6GB of shared data a Verizon Wireless customer would pay US$30 (A$10) a month. So the total cost to the Telstra customer is A$300 per month for three devices and 9GB of data that cannot be shared across devices; the total cost for the Verizon Wireless customer is US$210 (A$210) for three devices and 10GB of data that can be shared across the devices.

Use or lose
One of the most frustrating aspects of mobile devices is paying for data that’s not used one month and then paying an exorbitant amount for going over the plan allowance the next month. The Telstra website provides the following advice: “If you use more than this [your agreed] amount each month you pay for that extra browsing at a reduced Pay As You Go (PAYG) rate – so you get more for your money.”

Sounds great. Yet the Telstra additional usage charges are described as A$0.10 per MB used, which means A$100 per GB used. To put that in context, a standard ten-minute YouTube video is about 25MB in size, so would cost the customer A$2.50. What a rip-off!

The old arguments in defence of high data charges in Australia cannot be justified. Telecommunication companies in the US and Australia have mature 3G networks and have commenced rolling out 4G (LTE) networks targeting areas of high population density initially. Technology costs have continued to fall. Backhaul), core and international bandwidth costs have continued to fall and are now similar to costs in the US and Europe.

Verizon Wireless’s additional usage charges are described as US$15 (A$15) per 1GB of data whenever customers go over their plan allowance. A Telstra customer with three devices will pay A$85 (US$85) per month more than a Verizon Wireless customer for a similar plan – and for a 1GB data overage, a Telstra customer will be charged A$85 (US$85) more than a Verizon Wireless customer. Add to this injury the advantages of data share enjoyed by Verizon Wireless customers. The Verizon Wireless customer will be able to share data use across their multiple devices; by doing so they will be better able to manage data use and potentially reduce the plan cost by moving to a lower shared-data plan.

For Australian families shared data plans are a must. It’s time for the government to act and force telecommunication companies to introduce shared data plans immediately.

Further reading: Are Australian international roaming charges the greatest rip-off in history?

Mark Gregory does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations. This article was originally published at The Conversation. Read the original article. Image credit: Fernando Mengoni, royalty free, screenshots of Telstra and Verizon websites.

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1. Rhys
   Posted 16/07/2012 at 11:57 am | Permalink | Reply

   Telstra will introduce this when Optus makes a grab at there share if Optus’ 4G network is competative.

   Or Optus will introduce this and Telstra will have their hand forced.

   And this will all happen in the next five years and no earlier than two.

   The end of indevidual plans is nih!

2. Timothy Walters
   Posted 16/07/2012 at 12:24 pm | Permalink | Reply

   Telstra have shared data plans, though they can be difficult to understand and aren’t cheap:
   http://www.telstra.com.au/business-enterprise/business-products/internet-data/plans-pricing/mobile-broadband/#tab-shared-plans

   Basically whatever you currently have, pay a minimum of $44.95 per device, per month. This increases the shared pool by 4GB.

   If you are a VERY heavy data user, this might mean saving money, but for those of us that just want to allow our iPad and perhaps laptop with 3G/4G modem to share a pool, it’s a real kick in the guts.

3. Nich
   Posted 16/07/2012 at 12:27 pm | Permalink | Reply

   Knowing our luck, we’ll get shared data but still terrible data prices. What’d be truly nice is just having data that rolls over between months.

   • Annoying Old Fart
     Posted 18/07/2012 at 11:39 am | Permalink | Reply

     Virgin Prepaid for one has data rollover – if you recharge at the right time.

4. Master_T
   Posted 16/07/2012 at 12:51 pm | Permalink | Reply

   Optus have data sharing, albeit its a paid thing below the $129 Business Timeless. The $129 Business Timeless allows the customer to share his data with all the other numbers attached to that one account. You could effectively pool as much data as you like between the numbers on the account if one person uses more – Id say that this would be more reflective of what Verizon has done here.

   Telstra’s implementation as usual is half-assed, overpriced for something that could be a simple benefit for the customer base – specifically business.

   Optus has the ability to add the ‘data sharing’ to any business plan, provided that you add the $10 ‘Bolt-on’.
   The service IS however, restricted to purely Business customers at this point – its been around for well over 12 months. Vodafone’s provided a similar service for the last 4 years, its not well known and not advertised.

   Much like what Nich has said , rollover data would be excellent. What would be beneficial, is the ability to pay for extra data if you need it before the end of the month, much like the data topup options with iiNet / Internode.

   http://www.vodafone.com.au/business/products-and-services/business-plans/shared.

   Whether you think much about the company I work for is irrelevant, Vodafone’s had access to these for quite some time. While its not widely advertised, these were available with 3 as well, almost since initial product launch in 2007. Initially, the 3 / Vodafone variants at that time however didnt share data, but calls and text – its only been since 2008 we’ve seen data sharing enabled.

   Given that Verizon has a majority shareholding from Vodafone, Im not surprised at all that ‘Big Red’ is becoming quite similar to Vodafone in many ways.

5. Dave I
   Posted 16/07/2012 at 1:08 pm | Permalink | Reply

   I can’t see how the author can claim that Telstra leaves others in its wake in terms of cost. Coverage and speed perhaps, but certainly not cost.

   The Telstra $50 & $60 plans pretty much bracket my TPG plan that gives me $550 of calls and 1.5GB data, but for $15 (or $18 if you don’t have TPG broadband). The nice thing with the TPG bundle is that it includes 13, 1300, 1800 and international calls in that cap — no more surprises after you’ve made a 13/18 call.

   Performance on the Optus network is pretty good here in Brisbane. 6.5Mb/s sustained on a laptop or HSPA phone. Sure, 4G might be faster, but the network is often not the limiting point for a download.

   • seven_tech
     Posted 16/07/2012 at 3:29 pm | Permalink | Reply

     Dave I

     True. But I was with Virgin (Optus) for 2 years before moving to Telstra. For me, there WAS no comparison.

     While it’s old fashioned these days (:P) I do still use my phone for calls. On Virgin, I’d be dropped every 3rd call where I live. On Telstra- maybe 1 in 20, if I’m unlucky.

     Data speeds down here are also MASSIVELY faster on Telstra- 3-4Mbps compared to 1.2Mbps on Optus.

     I guess it’s all down to region. But I think that’s what the Author was trying to say. Yes, in some areas, Optus may be as good and even better. But in MORE areas, Telstra is. That’s just fact unfortunately.

     • Dave I
       Posted 16/07/2012 at 4:50 pm | Permalink | Reply

       Maybe ‘way out west/east’ Telstra does have the edge, but the coastal areas are where most people are and where the money is. The worst coverage I’ve ever had was when I was with Telstra CDMA (6km from the centre of Brisbane). Rural was fine (they had CDMA towers out there), but city coverage was shocking. Even Vodafone was better (used them for a while too before moving to TPG).

       Out in Moogerah, Chinchilla, Dalby and St George the Optus coverage has been very good. Their 900MHz UMTS covers just as well as Telstra’s 850MHz UMTS. I think that over time the coverage advantage that Telstra had with CDMA and NextG will be eroded.

       Regardless though, the Telstra prices are at a premium, although it will be interesting to see how the resellers handle the 3G product. Optus is certainly not good value compared to TPG and others, so the reseller vs reseller comparison will be the one to do.

       • Early Grayce
         Posted 16/07/2012 at 8:37 pm | Permalink | Reply

         I live in Keith in SA and Vodafone is a little under powered but I have never had a dropped call although the signal is low and my phone occasionally goes out of service.
         I only get 900MB for each of my phones which I do use but only pay about $29 for the plan and another $4.00 for the final 700MB of that data on both phones.
         I am a pensioner so the $62 a month I pay for the 2 phones can’t be beaten by Telstra aspecially since that includes a smartphone too.

       • Goresh
         Posted 19/07/2012 at 5:30 pm | Permalink | Reply

         You get the service you pay for.
         Telstra aimed for the premium market and charges prmium prices.
         Voda aimed for the low cost/low service market.
         Optus are in the middle somewhere.

         The point is that you sign up for the service quality/price that suits you personally best.

6. Bryn
   Posted 16/07/2012 at 1:24 pm | Permalink | Reply

   While I agree with the premise of this article, its not as bad as they make it sound. To start with, what access to the other devices need? You can get 4GB of data for a tablet for $40 from Telstra, not $100.

   That basic phone- does it need unlimited calls and 3GB of data…odds are it doesn’t, so you could put it on say the $50 plan (or even less). Now those three devices are costing $190 not $300.

7. Brett Haydon
   Posted 16/07/2012 at 1:45 pm | Permalink | Reply

   Much like Optus was created to provide competition with Telstra, Verison was born out of the AT&T breakup and is closer in spirit to Vodafone and Optus than Telstra.

   AT&T is more like Telstra and it doesn’t have a shared data plan either. More likely one of the two – probably Vodafone since they have nothing to lose, might go down this path – but I imagine all three are waiting for spectrum auctions before we see any innovation in plans.

   I’m all for government intervention on the NBN but it’s up to the market to offer you the wireless plans you want not the government.

8. Dave I
   Posted 16/07/2012 at 1:49 pm | Permalink | Reply

   Verizon is definitely more like Vodafone, since Vodafone owns 45% of Verizon.

   From what I’ve read, AT&T behave similarly to Telstra.

   • Master_T
     Posted 16/07/2012 at 3:39 pm | Permalink | Reply

     Incidentally, if you look at the Verizon Website and the Vodafone UK one – Verizon now uses our base framework, web structure and plan structure. They also use alot of our back-end systems now.

9. seven_tech
   Posted 16/07/2012 at 3:35 pm | Permalink | Reply

   I think data sharing will only slowly make its’ way here. Even Telstra are struggling to keep up with data demand on 3G, particularly in the cities- hence the rapid move to 4G. IT’s not just about more customers, faster access. Otherwise they’d be charging MORE for 4G, like they did when 3G first came out. It’s about off-loading data onto a different network to stop congestion and ultimate network failure a la Vodafail.

   Data sharing raises to AMOUNT of data people use on the network, while only putting up data prices (device access on data-sharing plans) by a less proportional amount. Hence, people can get MORE data, for LESS money, increasing the strain on the network. This is why Telstra’s data on plans IS more expensive- it’s partially an artificial barrier to people using more data on the network. Data-sharing nibbles at that barrier, rather than smacking it down, but it still erodes network performance more than simple single caps.

   After all, if we’re gonna compare Verizon to Telstra- Verizon get maximums of between 10 and 14Mbps on their LTE network….Telstra get 18-30Mbps…..And you get maximums of (I believe) 3-4Mbps on HSPA-DC on Verizon, compared to Telstra’s 7-8Mbps….I think I know why Telstra is more expensive….

   • GongGav
     Posted 17/07/2012 at 9:40 am | Permalink | Reply

     Hopefully you’re right. I like to think that things like data sharing will be how the providers separate themselves post-NBN, and be the area they can be competitive.

     Base $50 for NBN/VOIP, +40/month mobile +30/month data sharing, something like that. Give people the option to pick and choose what they use their service for. Sooner or later, someone will do it, but it may not be until after the NBN reaches its saturation point.

     Until then, why would they? Its a captive audience they can continue to milk.

10. lonrad
    Posted 17/07/2012 at 3:57 pm | Permalink | Reply

    I think what the has done is compared apples with oranges.

    As of 2011 the Australian population is 22,620,600 people compared the 311,591,917 people that live in the US. With that in mind it’s easy to see why US Telco’s like Verizon are able to offer plans like that at such low costs.

11. Goresh
    Posted 19/07/2012 at 5:24 pm | Permalink | Reply

    Telstra is not the only mobile data network in Australia.

    Any of the other carriers are at liberty to introduce a Verizon style plan.

    Why then is criticism sole reserved for Telstra?

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