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acma | 1
Contents (Continued)
Executive summary
Research background
Objectives and methodology
Key findings
Personal telecommunication services
Bill shock
Difficulty paying bills
Contact with the service provider
Credit management
Contact with the TIO and independent financial advice
Use of credit and spend management tools
1. Introduction
Overview
The need for research
Research objectives
Outcomes
2. Research methodology
Overview and rationale of the quantitative methodology
Statistical reliability of the quantitative results
Statistical testing of results
Rounding
Comparison with relevant studies
Overview and rationale of the qualitative methodology
3. Personal telecommunication services
Chapter overview
Introduction
Telecommunications services
Telecommunications service providers
Billing and bundling
4. Bill shock
Chapter overview
Introduction
Incidence of bill shock
Frequency of bill shock
Amount of bill shock
5. Difficulty paying bills
Chapter overview
Introduction
Incidence of difficulty paying telecommunication bills
Frequency and time frame
Services and service providers
Reasons for difficulty paying bills
6. Contact with the service provider
Introduction
Customers contacting the service provider
Timing of the contact
Bill disputes
Satisfaction with outcomes of contact
7. Credit management
Introduction
Extension of bill due date
Payment plan
Credit reporting agencies
Solutions for the future
Credit management for respondents who did not contact the service provider
How to improve experience
8. Contact with TIO and independent financial advice
Introduction
Contact with the TIO
Reason for contacting TIO
Outcome of contacting the TIO
Independent financial advice
9. Use of credit/spend management tools
Introduction
Awareness of tools
Use of tools
Perceived usefulness of tools
Conclusion
Appendix A—Quantitative research
Appendix A1—Quantitative research methodology
A1.1 Sample structure
Sample breakdown of respondents, by demographics and characteristics
AppendixA2—Quantitative research instruments
A2.1 Questionnaire design
A2.2 Questionnaire
Appendix B—Qualitative research
Appendix B1—Qualitative research methodology
B1.1 Sample structure
Rationale for sample
Recruitment of sample
B1.2 Discussion guide
Appendix B2—Qualitative research instruments
B2.1 Guidelines for the interviewer
acma | 1Executive summary
Research background
In 2010, the Australian Communications and Media Authority (the ACMA) conducted the Reconnecting the Customer public inquiryinto customer service and complaints-handling in the telecommunications industry.The inquiry was prompted by the high number of complaints to the Telecommunications Industry Ombudsman (TIO) and the increasing complexity of the telecommunications industry.
The inquiry report, released in September 2011, examined the issues consumers encountered when dealing with their telecommunications provider, including problems and causes. It also looked at issues relating to ‘bill shock’ and ways for carriage service providers (CSPs) to give consumers improved information about plans. However, it did not deal in depth with issues of credit management.
In March 2012, the ACMA commissioned Roy Morgan Research to undertake this national study to further investigate the current incidence and nature of unexpectedly high bills, difficulty paying bills and use of spend management tools and payment arrangements among telecommunications bill-payers.
This study builds on earlier ACMA research that examined the dimensions of mobile phone ‘bill shock’ and takes a closer look at consumers’ experience with credit management and financial hardship arrangements in telecommunications.
The current research provides a point of reference for understanding the extent of unexpectedly high bills and credit management issues in telecommunications, before new provisions of the Telecommunications Consumer Protection (TCP) Code come into force in September 2012. This work will help to assess how effectively the new code provisions deal with telecommunications credit management practices.
Objectives and methodology
The main objective of the research was to provide the ACMA with an understanding of:
the nature of financial hardship and payment arrangements that may be in place between personal (that is, non-business) customers and their CSP
why such arrangements are required
whether other customers would benefit from these arrangements if they were aware of or offered them.
The findings from the study will inform the ACMA’s approach to compliance activities relating to the relevant provisions of the TCP Code.
There were two phases to the research:
a quantitative stage surveying a national representative sample of 2,400 Australian telecommunications bill-payers
a qualitative stage comprising 20 in-depth interviews (IDIs).
In line with the main objective of the research, the study covered customers of telecommunication products for personal use only, excluding business customers.
Key findings
Personal telecommunication services
Three-quarters of Australian bill-payers pay for a fixed-line telephone (77 per cent).
Nine in 10 bill-payers (91 per cent) pay for a mobile service, with:
56 per cent paying for only a post-paid service
21 per cent paying for only a pre-paid service
14 per cent paying for both post-paid and pre-paid services
Over half of those with a mobile phone have a smartphone (58 per cent).
Two-thirds (68 per cent) of bill-payers have at least one telecommunications service provided by Telstra.
Two-thirds (68 per cent) of people have bundled telecommunications services.
Seven in 10 (71 per cent) people receive a single bill covering multiple telecommunications services.
The most common service on a single bill is a fixed-line telephone (92 per cent).
Bill shock
‘Bill shock’ is a colloquial term used to describe unexpectedly high bills.
The incidence of bill shock is similar for pre-paid and post-paid services—for those who received an unexpectedly high bill or ran out of credit sooner than expected at least once in the last 12 months.
Those aged 18–24 years are the most likely to experience bill shock on a post-paid service (43 per cent), while those aged 25–34 years are the most likely to experience bill shock on a pre-paid service (40 per cent).
Those over the age of 55 years are significantly less likely to experience bill shock (23 per cent pre-paid, 24 per cent post-paid).
Those with pre-paid services experience bill shock more frequently than those with post-paid services.
A quarter of those post-paid customers who experienced bill shock said they received a bill that was $200 or more over the usual amount.
The average amount of unexpectedly high bills is $169 over the usual amount.
Difficulty paying bills
Consumers may experience difficulty paying bills for a wide range of reasons, which may include bill shock but can often be attributed to other circumstances.
14 per cent of Australian bill-payers have experienced some difficulty paying their telecommunication bills in the last 12 months.
Those aged 18–24 years are significantly more likely to experience difficulty paying telecommunication bills (22 per cent), while those aged 55 years or more are significantly less likely (seven per cent).
Post-paid bill payers who experienced bill shock are more likely to have difficulty in paying telecommunication bills (30 per cent) compared to five per cent of those that had not experienced bill shock.
In the last year, 24 per cent of those who reported difficulty paying bills experienced this only once, 18 per cent twice, 16 per cent three times, 12 per cent four times and 18 per cent more than five times.
47 per cent of respondents indicated bill shock as a reason for difficulty paying a telecommunication bill.
For those who had difficulty paying bills, 57 per cent of bill-payers reported post-paid mobile phones as the relevant service, 49 per cent fixed landlines and 31 per cent ADSL/ADSL2/ADSL2+ broadband connection.
Contact with the service provider
Three in five (59 per cent) bill-payers who experienced bill shock or had difficulty paying bills contacted their service provider to discuss this issue.
The majority (85 per cent) of these respondents contacted their service provider at the time they received a bill they had difficulty paying.
Two-thirds (64 per cent) of bill-payers who experienced bill shock disputed the amount of the debt or bill with their service provider.
A quarter (25 per cent) of bill-payers who contacted their service provider were satisfied with the quick resolution of their issue.
A quarter (23 per cent) of bill-payers who contacted their service provider were not satisfied, with staff not understanding their problem or being empathetic.
Three in five (65 per cent) bill-payers who contacted their service provider due to bill shock or difficulty paying their bill were asked to pay a reduced amount.
Two-thirds (64 per cent) of bill-payers who contacted their service provider due to bill shock or difficulty paying their bill were satisfied with the outcome.
Credit management
One-third of the respondents (33 per cent) who contacted their service provider asked for an extension on the bill’s due date.
81 per cent of those asking for an extension said there was no negotiation on the extension date. Payment plans were generally similar, with:
two-thirds of those offered an extended payment planweregiven less than a month to make a payment (67 per cent)
nine in 10 involvinginstalment payment amounts below $200, with 29 per cent between $100 and $199.
Only 14 per cent reported service restrictions and eight per cent service suspensions while on the payment plan.
Only three per cent of those who experienced difficulty paying bills had their debts listed with a credit reporting agency.
Only one in three (29 per cent) people who contacted their service provider due to payment difficulty or bill shockwere offered advice about avoiding such situations in the future.
A third (34 per cent) of bill-payers who negotiated a payment arrangement with their service provider were happy with the arrangement or felt that nothing more was needed to improve their experience of the payment arrangement.
Contact with the TIO and independent financial advice
A small group (four per cent) of bill-payers who experienced bill shock or difficulty paying bills contacted the TIO.
Eight bill payers who had trouble paying for their bills sought independent financial advice.
Use of credit and spend management tools
A quarter (26 per cent) of bill-payers who experienced bill shock or difficulty paying bills in the last year were aware of spend and credit management tools before receiving an unexpectedly high bill or a bill that they had difficulty paying.
A quarter (25 per cent) of respondents who had not experienced bill shock or difficulty paying bills were aware of spend management tools.
An online usage meter is the most popular tool (32 per cent of respondents reported using such a tool), followed by SMS alerts (22 per cent) and email alerts and service providers application (both 11 per cent).
88 per cent of bill-payers who use at least one credit/spend management tool consider the tools to be useful.
1. Introduction
Chapter 1 describes the motivation for the research and its objectives.
Overview
Difficulty paying telecommunications bills is a major issue for consumers. According to the TIO, nine per cent of telecommunications complaints are about credit management, and 17 per cent are about billing and payments more generally. In 2008–09, Telstra’s Bill Assistance Program helped over 30,000 people in financial difficulties, with that number increasing by 33 per cent in 2010. In research conducted by Colmar Brunton for the Low Income Measures Assessment Committee (LIMAC) in 2010, 18 per cent of the community agencies interviewed said telecommunication bills are a major reason why their clients seek emergency relief.
Difficulty paying bills is not always due to general financial difficulties or hardship, but can also be related to bill shock, where the bill for a particular month is unexpectedly high. This issue, while less severe than difficulties due to long-term financial hardship, is a far more common occurrence. ACMA research from June 2011 with 3G mobile bill-payers found that half of those on a post-paid account had received at least one unexpectedly large bill on their current or previous 3G plan. Similarly, 44 per cent of pre-paid users reported running out of credit faster than expected at least once in the last 12 months.
The need for research
The ACMA’s study into credit management and financial hardship among telecommunications customers was intended to provide information on the current incidence of unexpectedly high bills, difficulty paying telecommunication bills and payment arrangements.
The aim of this national study was to provide the ACMA with an understanding of the nature of financial hardship and payment arrangements that may be in place between personal (non-business) customers and their CSP, why such arrangements were required and whether other customers would have benefited from either of these arrangements had they been aware of or offered them.
Research objectives
The objectives of the research were to increase the ACMA’s understanding of:
the incidence of unexpectedly high bills
the number and proportion of consumers who have difficulty paying telecommunication bills
the kinds of consumers who have difficulty paying their telecommunication bill and the services most likely to be involved
the reasons consumers have difficulty paying their telecommunication bills
how consumers who had difficulty paying their bill dealt with the situation (including contact with the service provider and the TIO)
the proportion of consumers who had difficulty paying their bill who entered into a payment or other arrangement with their service provider
consumers’ use of spend management tools.
Outcomes
The major findings from the research are:
14 per cent of Australian bill-payers experienced some difficulty paying one or more telecommunication bills in the past 12 months.
Nearly half (47 per cent) named bill shock as one of the main triggers for difficulty paying a bill.
69 per cent of consumers who contacted their service provider about payment difficulty or bill shock were not offered advice about how to avoid such situations in the future.
These findings have confirmed the need to make financial hardship and its causes a focus of the ACMA’s compliance activity for the new TCP Code.
2. Research methodology
Chapter 2 describes the two phases of the research conducted, focusing on the methodology.
The study comprised a main quantitative stage surveying a national representative sample of Australian telecommunications bill–payers. This was followed by a qualitative stage comprising in-depth interviews with respondents selected through the quantitative study, based on their experience as telecommunication bill-payers. The in-depth interviews provide case studies to illustrate and expand on the survey results.
Overview and rationale of the quantitative methodology
The main objective of the quantitative phase was to obtain robust estimates of bill-payers’ experiences of bill shock, difficulty paying telecommunication bills and payment arrangements.
The population of interest was bill-payers for personal (non-business) telecommunication services. Services included mobile phones, fixed phone or fax landlines, cable broadband connection, ADSL, ADSL2 or ADSL2+ broadband connection, dial-up internet connection, mobile broadband connection and internet or VoIP (voice over internet protocol) phone, both pre-paid and post-paid. Of particular interest were those who experienced difficulty paying a bill, either due to bill shock or financial hardship. All participants were aged 18 years or older.
Fixed-line households were recruited through random digit dialling (RDD). The sample design also considered the increasing proportion of the population that does not have a fixed-line phone by separately recruiting a sample of mobile phone-only users from the Roy Morgan Single Source database.[1]
A total of 2,407 computer-assisted telephone interviews (CATI surveys) were conducted. This number comprised two sub-samples as mentioned previously—respondents with a fixed-line home phone connected (n=2,005) sourced through RDD and respondents who had only a mobile phone (that is, had a mobile phone and no fixed-line phone connected in the home) (n=402) sourced through re-contact of respondents from the Roy Morgan Single Source database.
All interviews were conducted on weekday evenings (5.00pm to 8.30pm) or on weekends (11.00am to 4.00pm) from 8 to 25 May 2012, preceded by a pilot of 50 interviews. Quotas were set for both samples so that their demographic profile (age, sex and area) was representative of the population of Australian telecommunications bill-payers aged 18 years and over. This included both fixed-line home phone and households with a mobile phone only, as determined by the latest Roy Morgan Single Source data.