Customer Service

Billshock!

Bill shock - the shock of receiving a massive and unexpected bill - is becoming increasingly common with mobiles phones, leading in many cases to severe financial hardship and even bankruptcy.

Here we look at some ways you can avoid big blowouts. Various financial counselling services have reported that mobile phone bills are the number one cause of people - especially young people - seeking bankruptcy guidance.

It seems that many people simply don’t understand how their mobile plans work, what their phones can do, and how much certain services cost. Ignorance is no longer bliss, if indeed it ever was. It’s also no excuse for phone companies, who expect to be paid no matter how bewildered you might feel.

So how can bill-shock be avoided? The two most vital things you can do are to know the products, and to be honest with yourself. Here are some general tips:

PREPAID IS ALWAYS THE SAFEST
With pre-pay, what you pay for is what you get, making it very easy to control your expenditure each month. This is an excellent option for people who aren’t sure where they’ll be in the future, and those with a bad credit rating. Even if your prepay credit is used up, you can still call emergency numbers.

CHOOSE YOUR CAP CAREFULLY
If you’re on a Cap plan, make sure it is big enough, and be careful not to exceed your limit. Cap plans are great value so long as you stay within your cap. However, call rates on Cap plans are truly terrible, and costs can really add up if you use up your available credit.

BE CAREFUL WITH SMS
SMS may seem cheap - only 20- 25c per text - but they can really add up. Many young people send hundreds of SMS per month, significantly adding to monthly costs. Premium SMS services - including reality show voting - generally cost at least twice the normal SMS rate, and usually aren’t included under cap limits.

UNDERSTAND YOUR PLAN
Different carriers calculate things in different ways, and are not above deliberately confusing customers with complicated terminology and details, as various cases before the ACCC attest. For a fun exercise, try a direct comparison between an Optus and a 3 Mobile bill. There is a huge proliferation of choice in the mobile phone market, but choice is only a good thing when you understand all the options. Otherwise, it becomes disempowering, leading to confusion, frustration and potential hardship.

OWN YOUR PHONE OUTRIGHT
You can buy a functional handset for under $60. Owning a mobile outright is always safer than paying one off on a 24-month contract. Depending on the carrier, the cost of paying out the handset if you break your contract might be bigger than you realise.

BE CAREFUL WITH YOUR HANDSET FEATURES
Phone companies aim to make spending money effortless. They provide handsets that can access expensive premium features very easily, sometimes by accident. These costs add up very quickly.

TAKE CARE WITH MOBILE DATA
Browsing the internet costs a lot more than making phone calls. Most Australian mobile data plans are smaller than you might realise, and it is very easy to exceed them, leading to very large bills. Additionally, if you have a smartphone, make sure you keep track of what your handset is doing in the background. Various data options are often defaulted to ‘on’.

BE VERY REALISTIC ABOUT YOUR NEEDS
Be honest about why you actually need a mobile. Basic calling functionality is generally the most anyone would ever truly need a phone for. Anything beyond that is a luxury, and luxuries are rarely free.

Our advice? If in any doubt, buy a handset outright, and go prepaid. You can always go on a plan later, once you better understand your needs usages patterns and choices.

Life and Work at Dog and Bone

So what's it like to work at Dog and Bone?

Information about what we do at Dog and Bone is not hard to come by. Simply searching through this website, or following our Twitter feed, will give you a pretty good idea of what we do and how we help people.

 

What we’ve never really talked about is our character as a company, and how that translates into our workplace. After all, we here genuinely think Dog and Bone is a pretty tremendous place to work (and not just because there are faceless men in dark suits standing behind our chairs commanding us to say that). It’d be a shame if that wasn’t communicated.

We have a great office in a converted art deco bank on High Street in Northcote. It turns out a bank safe makes for a very secure server room (especially that one time when the key broke). We moved here in 2008, having outgrown smaller premises in North Fitzroy (I admit I miss the post-work kicks of the footy in Edinburgh Gardens).

In that time have seen High Street undergo enormous changes. If it was great before, it’s positively vibrant now. When we relocated there were only a few decent cafes and restaurants, even by a generous estimate. Now we’re spoiled for choice. On the other hand, the great stuff that was already here hasn’t gone anywhere. Institutions like the Wesley Anne and the Northcote Social Club have barely changed at all.

 

Within the office, there are the standard pre-requisites for any Google-wannabe: Coffee machine – check; standing desks – check; moat stocked with live piranhas – pending. Creative lighting solutions – most definitely (our lighting is supplied by Vintage LED, with whom we have a close relationship). There’s a fish tank whose residents we strive valiantly to keep alive; sadly the mortality rate in that tank is about the same as that of a WW2 bomber crew.

The table tennis (TT) table was acquired on a whim soon after moving to Northcote, and has been a fixture of the office ever since. The table was once a feature of the main office – visiting clients and suppliers were always encouraged to test their skills against our reigning champion – but has now moved to its own special room. 

Of course, you don’t have to play 'TT' to work here. (AiLin’s engagement with the game largely consists of long-suffering head shakes whenever a ball caroms into her monitor. Come to think of it, that might be why the table now has its own room.) But, somehow TT has a way of getting its talons into even those who’ve never before hefted a blade (yes, ping pong paddles are actually called blades, which is just one of many ways that table tennis is cooler than you realise).

The extra room comes courtesy of expanded floor space. Gone is the dodgy financial advisor upstairs, whose primary management techniques consisted of bellowing at staff and very heavy stomping. Now Dog and Bone controls the whole premises and has conducted dramatic renovations. There’s a snazzy new entry hall. The new board room is particularly fine. The old board room is still fine, though it’s now full of desks, with people working at them.

 

The last few years have seen us sustain near-constant expansion. Since 2007 (when I started) Dog and Bone has more than quadrupled in size. Fortunately, we’ve never lost sight of the core principles that define and shape our workplace. I’ve personally never worked in a friendlier place.

We still all go out for a weekly lunch, though now thanks to increased numbers it more often requires a little forward planning and booking in advance. (Or Dan just makes a ‘captain’s call’, because when have those ever gone wrong?) Once there, standard practice is to carefully peruse the menu, make a show of considering all options, and then just order the burger. Sometimes Dan lets us try his salted caramel milkshake.

Otherwise lunch is dominated by the The Age quiz – or the Herald Sun quiz if we’re feeling capricious – read out in Michael’s velvet baritone. James’ speciality is any question about Bradman. Pre-1980s rock music and regional Australian geography sit right in David’s wheelhouse. Discussion of actual work is not encouraged.

There are also social functions, which have evolved from Pizza Meine Liebe around the TT table – kind of miss those, actually – to become movie nights and trips to the opera. (Ok, so far no trips to the opera. Yet.)

Our Christmas parties are invariably inventive and memorable. For example, last year Dog and Bone forewent the clichéd spread at the lawn bowls club, opting instead for a full Christmas week. The entire office relocated to Lorne for the week, working from a beautiful house high on the hills with a full view of the glittering ocean, culminating in our families joining us for a barbecue on Saturday afternoon.  Another year we went yachting (kind of don’t miss that, actually).

Angus and Michael last year started Thursday Harvest, a weekly forum at which interested parties are invited to come for coffee and food before work to swap ideas in an informal though loosely structured manner. You can follow their musings at the blog here, and on Twitter here.

On a more structured though still attractively informal note, I mustn’t forget Dog and Bone’s annual planning day. Once per year all employees spend a day working with the Groupwork Institute at a strategic planning retreat. We break down into granular detail precisely how the business is operating – what is going well, what has been achieved, what can be done better – and where it wants to go.

It’s a great opportunity for all staff to provide valuable input into Dog and Bone, from the newest member all the way to the most senior and battle-hardened. By providing a facilitated opportunity to step back and examine the company, these planning days are instrumental in helping Dog and Bone become the company it is. Our very strong focus on customer service, for example, comes naturally from the very robust respect we have for each other, and a group-wide commitment to the improvement of ourselves and our services.

 

 

 

The Week: Broken Eggs

Vodafone has reported that over the last year its Australian division has shed another million customers. At the end of the March 2013 quarter the company still had about six million customers, while at the same point this year it has fewer than five million. Wasn't this supposed to be a company whose fortunes are turning around, all thanks to Bill Morrow?

Morrow was brought in as CEO of Vodafone Hutchison Australia (VHA) in March of 2012, specifically to reverse, or at any rate slow, the telco's accelerating decline. This dive attained terminal velocity in the middle of 2011, when a series of network disasters and customers service cock-ups combined to irreparably soil the brand.

Among other things, it provided a salutary lesson in why businesses must have sound fundamentals and place customer needs foremost. It also provided nourishment to those who overestimate the importance of social media, and ensured that the ubiquitous Samuel Johnson would be kept in voiceover work for the foreseeable future. There have been network guarantees a-plenty, twee ad-campaigns, and generous double-data offers. None of it seems to have helped.

Morrow had extensive previous experience as CEO of Vodafone Europe, Vodafone UK, Japan Telecom and several American organisations, including Pacific Bell. The prevailing narrative is that his time at the helm of VHA was instrumental in achieving the almost impossible task of re-energising the brand, and winning back customers.

Most recently he was appointed CEO of NBN Co, which was generally regarded by the Australian tech sector
as a reasonable, or even commendable, appointment. However, it has seemed to Dog and Bone that the prevailing optimism towards Morrow's appointment to NBN Co relied in large part upon perceptions that he'd done a sterling job at Vodafone, although the fact that he simply isn't Ziggy Switkowski should not be discounted.

I've never seen much real evidence that Morrow's time at Vodafone achieved all that much, aside from the deployment of a new LTE network. Dog and Bone primarily operates in the business and corporate spaces, and we've always found Vodafone to be a hard-sell, even before the problems of 2011, although they certainly didn't help. While our customers are interested in cost-reduction, they are more interested in performance and reliability, and would rarely consider Vodafone's bargain-basement offerings.

They certainly weren't swayed at all by the tendentious claims Morrow made on his own behalf: “We are seeing the brand perception scores go up, we are seeing our customer numbers go up, we are seeing growth come back into the business. So this is not an issue of it being too hard; it’s not an issue of bailing out or giving up on anything. I think you are going to see that in the results in the future.”

What he failed to mention was that a portion of that growth was due to widespread lay-offs - let's call it 'streamlining' - and that VHA's decision not to participate in the mobile spectrum auction will almost certainly have profound long-term ramifications. Telstra and Optus now own most of the highly-prized 700Mhz spectrum, and will no doubt be determined to buy up the remaining third when it is offered. Now these recent results show that customer losses aren't even slowing. The decline continues unchecked, and for those of us who believe Australia's telco sector needs a third strong player, this is no cause to celebrate.

Having prepared omelettes myself, I can vouch that you must break a few eggs to make one. But to quote Panait Istrati: "All right, I can see the broken eggs. Where's this omelette of yours?" And now Morrow is at the helm of Australia's largest ever infrastructure project - the NBN - a project that itself is looking increasingly like an explosion in a hennery. 

Customer Service Matters

Customer service in the telecommunications industry is now held in such low regard that even to highlight its few good points seems perverse. And it isn't a problem only for single consumers, but also for business clients.

Here at Dog and Bone we deal with this reality for large parts of every single day, although in somewhat different ways to the normal customer experience, since we don’t operate on the scale of single users. As consultants with strong connections to all parts of the industry we (mercifully) are not obliged to spend countless hours waiting in queues to speak to a service rep. Believe me, I am thankful for that, and I do sympathise!

This doesn’t mean it’s all roses, though. While a single consumer generally only cares about customer service when their phone stops functioning properly, the business and enterprise customers we work with are in constant contact with their telco provider for myriad reasons. Customer service is thus a daily reality. 

And believe me, the issues plaguing the industry aren’t confined to the front end, but invariably extend all the way back, and often all the way up. While it is deplorable that small consumers are given bad service by the front of house, you’d be surprised to learn that large organisations often fare no better, for all that they’re supposed to enjoy ‘premium’ service. 

There’s sometimes no substitute for an attentive Account Executive (AE), but there’s often nothing worse than an inattentive one. And these experiences will have a decisive impact on an organisation's ultimate decision on whether to stay with their current provider, or to leave and find a better fit.

Here are five related areas telcos really need to focus on.

1. Consistency

In my six years working as a consultant at Dog and Bone, I have lost count of the number of Account Executives with whom we’ve formed a ‘special relationship’, only to never see or hear of them again after a few months. There is a high degree of staff churn within the industry, which reflects a number of factors. But telcos should be aware that most customers like to form a relationship with their provider, because it makes their own job much easier. All businesses have their quirks and particular ways of doing things – a good AE or dealer will get to know these, and become invaluable.

We often hear from clients that they only ever hear from their Account Executive when their contract is due to expire. After twenty months of silence suddenly there will be a series of very friendly phone calls, generally highlighting new offers. In these situations AEs can stand revealed as nothing more than salespeople, and they should not labour under any illusions that their customers won’t see them as such. An AE or dealer that only contacts their clients every couple of years is doing themselves more harm than good.

There is also a tendency to promote new offers too aggressively, which is frankly off-putting for the client. AEs need to be aware that theirs might not be the only pitch the customer has heard that week, especially if they are shopping around for alternatives. Customers have heard it all before. Of course, the churn within the industry means that we often hear the same AE delivering a similarly rapturous pitch for a rival telco a few months later.

It’s surprising how effectively a genuine voice cuts through, and how truly nice it is for a client to have a provider who actually listens to what they say. Lots of people say they’ll listen – it's standard sales-speak – but few do it.

2. Flexibility

One of the most frustrating things that can happen in customer service is for your query or complaint to collide with the brick wall of official policy. Nearly every provider has a list of Terms and Conditions roughly the length of Finnegan’s Wake, and about as readable.

Now, T&Cs are obviously important, and ideally everyone involved is conversant with them. But this is rarely the case, and it is our experience that service staff have some discretion in enforcing them. The best companies are able to show a little leeway, despite boasting monumental T&C’s, and are willing to grant small refunds or concessions. While nothing travels faster than bad news, that doesn’t mean positive stories don’t get about, and their value is immense.

On a related note in the consumer space, getting the right result for a stonewalled customer can often entail nothing more complex than hanging up, calling back and getting a different service rep. Never underestimate the value speaking to someone in a good mood.

3. Promptness

Like many of the other points, this should be self-explanatory, but if someone is awaiting a response, provide one. Get back to people, keep them constantly updated, explain why there are delays. Delays sometimes cannot be helped, but almost everyone prefers to be kept in the loop than go for several days wondering what the hold-up is. Emails are quick and free, and customers will only resent it if they have to chase you up, which can be distracting and time-consuming. If you tell someone you’ll update them the next day, then do so even if you have no news (it should go without saying that you must do so if you do have news). We make it a huge point to always get back to people as quickly as we can. Frequently we're forced to explain to clients that we in turn are awaiting a response from their telco provider. 

4. Honesty

One of the most transparent bits of sale-speak an AE can indulge in is to pretend there’s a close relationship when there isn’t one. I cannot believe that this ever works. In my experience the customer usually shakes their head and wonders aloud whether the telco rep has them confused with someone else. The most outrageous example I’ve seen of this coupled an insistence on the strength of the business relationship with a persistent inability to get the client’s name right. (On a related note: businesses always notice when you spell their name wrong, and it just looks sloppy.)

5. Online Services

Your billing engine may be the most sophisticated in the industry, your online portal might be streamlined to the nth degree, but if the people aren’t there to back it up then it will count for little. You can automate any number of processes, but there will always be exceptions to the rules.

Some telcos have automated their complaint handling, which is fine when it works. But there’s a special type of low key anxiety and frustration awaiting those customers whose specific case doesn’t appear to match any of the criteria. I’m sure we’ve all been there – wondering if our specific case will even get looked at, since it didn’t seem quite match any of the available criteria. When your ogranisation's communications systems might be depending on this, you don’t need any uncertainty.

Or perhaps there’s an automated procurement system, whereby customers can order new equipment such as handsets and SIMs. This is another great idea, but again there are always things that don’t quite match up. Recently in a Review for a large NFP client, the decisive factor in switching providers wasn’t cost, but the fact that with another telco the CIO could simply call the dealer, and have new equipment hand-delivered that day. Now when new stuff is delivered, the dealer also inquires whether everything is working fine, and whether there’s anything they can help with. That’s old fashioned service, and it works.

Automated online systems are great, and clearly the way of the future, but ultimately they still cannot compete with truly great personal service. 

Vodafone's New Roaming

Vodafone Australia recently announced a new initiative designed to curb international roaming mobile charges. Customers travelling to select destinations - The USA, Britain or New Zealand - will now pay $5 per day to access their plan as they normally would at home. This will hopefully limit the number and severity of excessive cost spikes for international travellers. 

As you’re probably aware, using your mobile phone overseas is astronomically more expensive than using it in your own country. Not only that, but it is often very unclear where the extravagant charges are coming from, and working it all out is rendered almost impossible by the fact that the charges often don’t all appear at the same time. For example, charges for the calls you make and the data you use might appear on your very next bill, while the charges for incoming calls might be held over until the subsequent month. Meanwhile, the ‘airtime fee’ – this is the fee the foreign network charges your local provider, who then passes it on to you – will often appear later even than that. The whole thing is basically a mess, one that is costly for travellers, and lucrative for carriers.

Vodafone’s announcement that it will limit charges to $5 per day for its customers travelling to Britain, New Zealand and the USA is therefore a very welcome one. The reason it can do this is because, as a global telco giant, Vodafone has networks operating in those countries (the US it will partner with AT&T). The better question is why it hasn’t sought to do this already.

The answer, sadly, is that until now it hasn’t felt it had to. But Vodafone Australia is not in a happy place. It lost a further 550,000 subscribers in first six months of 2013, and hundreds of thousands in the six months before that. Most of those left due to poor coverage and customer service. (Coincidentally, Telstra recently  announced it added 1.3 million new subscribers in the last financial year.) With their brand now tarnished almost beyond repair, Vodafone have been compelled to make significant changes, as opposed to the usual deck-chair rearrangement that passes for change in the telco industry.

There has of course been Vodafone's huge, heavily-advertised and ongoing network investment and the fairly successful recent launch of LTE services. There have been improvements to the customer service experience: the ratio of helpful staff to disgruntled clients is improving all the time, partly as a result of better hiring and training practices, and largely because so many disgruntled customers are leaving. As CEO Bill Morrow admitted: ''We are recovering a brand. We have to have points of difference.'' Addressing Bill Shock! is one of these.

Bill shock! – the blanket term for receiving a bigger bill than you expected, and legally requiring an exclamation point – is currently a pressing issue for telcos, whereas before it was merely a pressing issue for customers. It is further tarnishing an industry that was already mostly rust.

For its part, the ACMA forced through some fairly weak legislation in an effort to combat this: the rather grandly-titled International Mobile Roaming Standard. It mainly forces telcos to be more upfront about how charges are derived. But while Dog and Bone certainly subscribes to the idea that knowledge is power, it was probably always going to be the case that real change was only going to come when the market forced carriers to change their practices. Well, the market is forcing telcos to do all sort of things at the moment.

Optus recently launched a new range of mobile plans – My Plans – which limit excess usage to more manageable $10 blocks in an effort to curb Bill Shock! I’ve already argued that despite acting like martyrs about the whole thing, Optus probably stands to gain in the long term, and that it is no doubt perfectly aware of this. The new plans are a bit of a bait-and-switch, but they’re still a decent idea, and will certainly help to curb some of the more outrageous blowouts.

Vodafone’s new $5 roaming announcement is made in a similar vein, but are more unambiguously good for its remaining customers. Global roaming costs can get truly astronomical, and this measure, even limited to three countries for the time being, should really make a difference for some poor souls. Indeed, Vodafone has always been a decent carrier option for those obliged to traverse the globe, and this will only make them more attractive. For their sake, and the sake of decent competition in the Australian mobile space, we hope it helps. If anything, we hope they go further.

 

UPDATE August 21, 2013: Optus has now announced new flat fee global roaming provisions, similar to Vodafone's. Post-paid customers can obtain a Travel Pack for $10 per days, allowing unlimited calls and text, as well as 30Mb of data per day, to most commonly-visited countries.

Australian Consumer Law and Phones

Did you realise there’s a good chance you can still get faulty or damaged goods replaced or repaired, even out of warranty.

Hands up if you’ve ever owned an item of electronics equipment that stopped working just after its paltry one year warranty expired. Yes? Hands up if your subsequent frustration expressed itself via extravagant curses, roaming across several romance languages you hadn’t realised you were conversant in. Hands up if you then smashed the offending item to pieces in a fit of pique. No? Perhaps that’s just me. Maldita sea!

Anyway, you may or may not be pleased to hear that despite the warranty on your item having expired, it was more than likely still covered under Australian Consumer Law (ACL), and that there was a good chance you could have had it replaced free of charge. Of course, you can’t now that you’ve smashed it, so that’s a shame. Anyway, the point is that where Australian Consumer Law and an individual product warranty are contradictory, the former trumps the latter.

For those of you who forewent the cheap catharsis of a good smashing, you should know that the ACL provides consumers with a basic level of guarantee for products, including electronic goods, which can be repaired even "after any manufacturer's voluntary or extended warranty has expired”. This applies “for the amount of time that is reasonable to expect, given the cost and quality of the item”.

This is typically murky legalese, although it’s a lot clearer than the wording used to be under the Trade Practises Act, and there’s plenty of wriggle room in there for manufacturers to argue if they’re inclined to. However, while we of course cannot guarantee the behaviour of anyone else, it is our experience that most manufacturers or retailers are willing to play ball.

This brings me to mobile phones. As you no doubt know, most mobile phones in Australia are paid off over the course of a 24 month phone contract, with the implication being that the device should be covered for the duration of the time you are paying it off. However, most phones traditionally only carried a 12 month manufacturer’s warranty. This meant that damaging your phone after 13 months would see a customer having to continue paying it off for another 11 months, with no recourse to ‘free’ repairs or replacement.

However, after the ACL came into force, the ACCC ruled that for phones 24 months was “the amount of time that is reasonable to expect, given the cost and quality of the item”. Consequently – although the telcos would claim otherwise –Optus, Telstra and VHA all now provide 24 month warranties on all the phones they sell.

But not all phones are necessarily covered in this way. The iPhone is the most notorious example of this. Apple only offers a One-Year Limited Warranty, even through Telstra (although Optus and Vodafone offer 24 month iPhone warranties).

But just because Apple says that the device is only covered for one year doesn’t mean that this is the end of it. They will usually repair or replace your device even after the 12 months has expired. This has been our overwhelming experience at Dog and Bone. This also covers devices besides phones, such as computers (although they’re even less keen for consumers to know that, especially because that would cut into the putative value of the premium AppleCare Protection Plan). It is our experience that repairs and replacements are more likely than refunds.

Also bear in mind that if you got the phone through a contract with a telco, then you should take it to them (whatever its make). While the Australian Consumer Law does cover both manufacturers and retailers, we have found you’re generally better off taking it to the telco’s service centre. This is especially true if you’re determine to get a refund, since only the retailer can provide that.

A big - and important - exception is if breakage occurs through dropping it. As far as we know, no telco or manufacturer will repalce, repair or refund those devices. This is a shame, since broken smartphones, with their characteristically spider-webbed shatter pattern, are common.

In conclusion, if you feel that your device has stopped working within the 'time that is reasonable to expect, given the cost and quality of the item', you should be all means seek to have it repaired or replaced, no matter what the warranty actually says. The emphasis is mine - a great deal hinges on that word 'reasonable' - but you'll never know if you don't give it a try. And if you're phone is less than two years old, then most definitely seek repair or replacement. Please don't smash it.

Even Out of Warranty

There’s a good chance you can still get faulty or damaged good replaced or repaired, even out of warranty.

Did you know that where Australian Consumer Law and an individual product warranty are contradictory, the former trumps the latter?

Hands up if you’ve ever owned an item of electronics equipment that stopped working just after its paltry one year warranty expired. Yes? Hands up if your subsequent frustration expressed itself via extravagant curses, roaming across several romance languages you hadn’t realised you were conversant in. Hands up if you then smashed the offending item to pieces in a fit of pique. No? Perhaps that’s just me. Maldita sea!

Anyway, you may or may not be pleased to hear that despite the warranty on your item having expired, it was more than likely still covered under Australian Consumer Law, and that there was a good chance you could have had it replaced free of charge. Of course, you can’t now that you’ve smashed it, so that’s a shame.

For those of you who forewent the cheap catharsis of a good smashing, you should know that the ACL provides consumers with a basic level of guarantee for products, including electronic goods, which can be repaired even "after any manufacturer's voluntary or extended warranty has expired”. This applies “for the amount of time that is reasonable to expect, given the cost and quality of the item”.

This is typically murky legalese, although it’s a lot clearer than the wording used to be under the Trade Practises Act, and there’s plenty of wriggle room in there for manufacturers to argue if they’re inclined to.

This brings me to mobile phones. As you no doubt know, most mobile phones in Australia are paid off over the course of a 24 month phone contract, with the implication being that the device should be covered for the duration of the time you are paying it off. However, most phones traditionally only carried a 12 month manufacturer’s warranty. This meant that damaging your phone after 13 months would see a customer having to continue paying it off for another 11 months, with no recourse to ‘free’ repairs or replacement. After the ACL came into force, the ACCC ruled that for phones 24 months was “the amount of time that is reasonable to expect, given the cost and quality of the item”.

This has changed markedly since the ACL was introduced at the start of 2011. Optus, Telstra and VHA all offer 24 month warranties on all the phones they sell, partially due to pressure from the ACCC.

But not all phones are necessarily covered in this way. The iPhone is the most notorious example of this. Apple only offers a One-Year Limited Warranty, even through Telstra. However, Optus and Vodafone offer 24 month iPhone warranties.

In any case, just because Apple says that the device is only covered for one year doesn’t mean that this is the end of it. They will actually repair or replace your device even after the 12 months has expired. This has been our overwhelming experience at Dog and Bone. This also covers devices besides phones, such as computers (although they’re even less keen for consumers to know that, especially because that would cut into the putative value of the premium AppleCare Protection Plan). It is our experience that repairs and replacements are more likely than refunds.

Also bear in mind that if you got the phone through a contract with a telco, then you should take it to them (whatever its make). While the Australian Consumer Law does cover both manufacturers and retailers, we have found you’re generally better off taking it to the telco’s service centre. 

The Yatango Model

 Does crowd-sourced customer service work? In this case, the numbers don't quite add up.

Last month, a new mobile carrier called Yatango was launched in Australia, with an intriguing new modular pricing model, backed up by an encouragingly customer-focussed mission, leveraging what they term ‘collaborative consumption’. A good review of how it works can be found here (Lifehacker). I encourage you to read it, since it is worth the look. The crux of ‘collaborative consumption’ is that discounts accrue as more customers join, and that the customer service is crowd-sourced among the user-base. Helpful people are rewarded. The focus is very much on social media. In fact, you cannot even sign up without a Facebook account.

For the nuts and bolts, Yatango is a mobile virtual network operator (MVNO) which operates on the Optus network, although it doesn’t provide LTE services (‘Yet’). It is also SIM only, as is increasingly the trend in this space, meaning you have to bring your own phone.

By running some simulations, Dog and Bone ascertained that Yatango’s customisable voice packs provide better value than comparable plans from Layer One providers such as Telstra and Optus.These results were consistent across most reasonable price points. However, the price difference is not especially substantial, and it should be borne in mind that the big telcos also provide 4G.

Then again, Yatango has a few benefits. It offers greater flexibility, since there are no contracts, and voice pack configuration can be adjusted month to month. On the other hand, Yatango costs considerably more than budget MNVOs such as Vaya, Amaysim or Kogan, who are equally as flexible. How does Yatango realistically hope to compete?

We ascertained that for Yatango’s plans to be at all competitive in the budget space, a customer needs to take advantage of the ‘collaborative consumption’ provisions. For example, bringing in a new customer generates a $20 discount to your account. Meanwhile, every time you successfully answer a fellow-customer’s query (as voted on by other users), you receive a 50c discount.*

As far as we can model, in order for Yatango to be even comparable to any of the truly budget resellers, a customer would have to be very active indeed. Let’s say you’re a lighter user, with a total Yatango spend of about $50 per month. Let’s say you bring in one customer per week (likely unsustainable) and help 10 of your peers – that will bring your monthly bill down to $25, which is at least in the ball park of the budget MVNOs, although it’s still quite a lot more than Vaya’s cheapest plans.

The obvious upshot is that the most helpful people will be the most rewarded. But here we run up against an issue with crowd-sourced behaviour, notably the shortcomings of finite rewards. The limit here is defined by the number of customers actually needing help each month. Only so many people will ever need help, therefore there are only so many credits that can be accrued by helping them. Securing these credits therefore becomes competitive. In fact, it becomes something like a game.

In order to gain enough credits for Yatango to be comparable to the other budget providers, a customer will have to do well at this particular game. Anyone who has spent much time on Whirlpool, Delimiter or any other tech site will probably have noted that the same bunch of people tend to spend all day on there. Like me, you might have wondered where they find the time. Anyway, Yatango’s crowd-sourced model is seemingly tailor made for people like this.

Now, I’m pleased that people providing assistance will be rewarded for their efforts, and the goal of the policy is admirable: people with problems will see them resolved.But I don’t think anyone should sign up to Yatango dreaming that they’ll earned worthwhile discounts merely by providing the odd bit of advice. That’s just not how the internet works.

For whatever reason, some people just have to ‘own’ being helpful. Various ‘up-voting’ systems merely exacerbate this, which is to say, they make it even more game-like. In many ways it’s a good thing – you feel like you’re levelling up while helping people. By making it competitive you incentivise certain outcomes. But the downside of it being competitive is that competitive people will gravitate towards it.

Yatango is not competitive with the budget carriers when it comes to price, and although it is on average slightly cheaper than comparable plans from the big carriers, it offers none of their advantages, such as LTE (4G). Furthermore, I cannot for the life of me see how general users wil gain enough benefit from the ‘collaborative consumption’ model to see true value. Five years ago, it would have seemed revolutionary. In 2013 it's more of a nice idea that seems unworkable unless the prices are slashed heavily. This is a shame, since they seem like good people trying to do the right thing.

 * Numbers are taken from the Yatango website, and were correct at time of publication.

The 3 Ways Cap Plans Have Gotten Worse

Do you think your phone cap plan is not as generous as it used to be? Well, you're right. Cap plans are both more expensive and provide less value than they used to. This applies to both consumer and business plans.

 

Australian telcos giveth and they taketh away, although you'd be fooling yourself to believe these transactions are ever equivalent. Telcos taketh freely, but giveth only grudgingly, and too often only under direct threat from the ACMA and the ACCC. The newly implemented Telecommunications Consumer Protections (TCP) Code is a good case in point. Even though it is fairly toothless legislation, even in its blunted form it had to be extracted virtually at knife-point by the regulator. The threat was that if this industry wanted to continue regulating itself (in the area of customer service) then it needed to agree to a code that was worth the paper it had congealed on.

 

A requirement of the TCP is that all Australian telecommunications providers must supply unit pricing on all mobile phone plans. A consumer can now see just how much a two minute phone call will cost on a given mobile plan, or how much a megabyte of data will cost. The idea is that plans can more reliably be compared. Another benefit of unit pricing is that even an average customer can now easily see that mobile phone plans are much worse than they were only a year ago. This has happened in three main areas:

 

1. Data Inclusions Are Much Smaller

 

Telstra and Optus have both unveiled and then expanded new LTE '4G' networks this year, and are currently in a race for market share. Now, for those of you who are reading a telecommunications blog but somehow don't know this, 4G is seriously fast. You can expect downstream speeds of 30-40Mbps, far exceeding the speed of ADSL2+.

 

All this speed is great, but it isn't worth much if you have little data to use. It simply means you could tear through your already paltry data inclusions in minutes, and then start enjoying the immense benefits of PAYG data rates, which would become apparent when your monthly bill arrived and features a total only expressible in scientific notation. The telcos have responded to this obvious issue - collectively termed 'Bill Shock' - by lowering their data inclusions by an average of 30%. This is true of all telcos, including Vodafone, which doesn't even have a 4G network. To take an example, an old $59 cap on Telstra included 1.5Gb of data per month. The new $60 cap gives users only 1Gb. At 4G speeds, you can chew through that in a matter of minutes. 

 

There's always the option to buy an additional data pack for some added headroom. Unfortunately, either the price on these has increased in the last 12 months (Telstra) or the data inclusion itself has gotten smaller (Optus and Vodafone).

 

When quizzed about this obvious loss of value, the providers have all responded with a variation on the theme that they are providing greater flexibility for their customers. That is certainly one way of looking at the practice of charging extra for goods and services that were previously included for free. They claimed that most of their customers weren't using anywhere near the included data amount, with the implication being that those users shouldn't have to subsidise the needs of heavier users. I am sympathetic to this argument, but in this case it is misleading, since the cost of the plans themselves hasn't gone down at all. The 'light' users are still paying the same.

 

The real goal, aside from a desire to increase revenue, is to alleviate network congestion, which sees many mobile networks slow to a crawl in metropolitan areas at peak times. 

 

2. Call Inclusions Have Also Gone Down

 

As with data, the included call credit in most cap plans is now smaller than it was. A cap that once gave you, say, $800 of credit will now only include $650. This isn'tquite as big a problem, for a couple of reasons. 

 

Firstly, in most cases users do not get anywhere near their call limit. Secondly, if you do exceed your call limit, due to the cheaper nature of phone calls, and the way they are made, it is very unlikely that you'll run up a truly extravagant bill. Bill shock is generally due to data and premium services, rather than calls (the exception is international calls). Thirdly, this decrease in credit has been partly offset by many caps now including unlimited SMS, and, in an increasing number of cases, unlimited calls. Nonetheless, the value has gone down, and it's hard even for a telco to sell this as flexibility.

 

Meanwhile Telstra has gone the other way and increased the cost of the actual calls. Calls on cap plans were already ludicrously high (that's why they give you so much 'credit'), averaging around $2.15 for a two minute call (35c flagfall + 90c per minute call rate). Telstra has raised its call charge to 40c flagfall and 99c per minute, which means a two minute call will now cost $2.38, an increase of just over 10%.

 

3. Handsets Cost More

 

There was a time when you could get an excellent mobile phone included on a relatively cheap cap plan (on a 24-month contract), such as an iPhone 4S on a $49 cap. Those days are gone. In the telco's defence, these handsets were often being sold at a loss to them, in order to attract customers. It was, arguably, unsustainable from their point of view. You can still get the same latest-generation devices, but you will have to pay extra each month. For example, you can obtain an iPhone 5 on an Optus $60 cap, but you'll have to pay an extra $10 per month for it. 

 

Telcos argue that $240 (24 x $10) is still a wonderful price for an iPhone 5, but that's entirely misleading. The monthly charge used to account for the handset value. $60 would include a monthly handset payment as well as call and data inclusions. Now it doesn't.

 

In the interests of flexibility, which we apparently cannot get enough of, some caps are available in a BYO form. A BYO plan doesn’t provide a handset at all, but costs less each month, and features slightly more inclusions. Telstra in particular has grown infatuated by this model. Their BYO plans are all $10 cheaper than plans that include devices.

 

Why Has This Happened?

 

The reasons for this wholesale and widespread drop in value are many, and as touched on earlier relate to maintaining certain performance and usability thresholds, as well as stellar profits. There is also the consideration that these new 4G networks aren't cheap to construct and run, and that 4G plans in general were priced the same as previous 3G iterations. 

 

The other reason is that Vodafone, due to its ongoing woes, has haemorrhaged a large proportion of its customer base, most of which moved to Telstra or Optus, although some have bled off to smaller carriers. It is no coincidence that these are the two providers that have reduced their cap values the most. The market is in a part of the cycle where the focus has moved away from attracting customers, which invariably is the part of the cycle where prices go up.

2012 TIO Report Released

The Telecommunications Industry Ombudsman (TIO) has released its 2011-2012 Annual Report into telecommunications industry service levels.

This report is released each year, and provides very useful data about how people are accessing the TIO's services, and about the nature and number of their complaints. This year, entirely by coincidence, the report's release comes just a month after the new Telecommunications Protection Code (TCP) was implemented. It is consequently too soon to say that the TCP has had much of an impact on the newly released figures from the TIO. 

It should also be noted that the Australian telecommunications landscape is dominated by three providers - Telstra, Optus and Vodafone. Consequently the customer service records of these three providers has a very large bearing on the TIO's figures. 

The good news is the overall complaints made to the TIO have decreased, by about 2% over the previous year - which is negligible - but by a more significant amount over the first half of this year. It would be nice to believe that the telcos are doing something right. In some ways they are. However, if the big three dominate telecommunications in this country, it must be conceded that Telstra dominates everyone. Telstra's performance can really skew the figures. 

Complaints about Telstra continue to fall, as they have consistently in the years since David Thodey took over from Sol Trujillo, and insisted that under his watch the nation's premier telco would work to repair its damage image. It seems that his efforts are being rewarded. Complaints from Telstra customers have fallen by an impressive 21%. It should be acknowledged that Telstra was working from a pretty low base here, but it is still nice to see strong improvement in this area.

Complaints from Optus customers have risen sharply, on the other hand, by almost 47%. However, there is some cause for hope. Complaints for the most recent quarter are actually well down on earlier this year. This is particularly significant as the most recent quarter coincides with Optus' release of 4G services in selected metropolitan centres, suggested that the 4G rollout has gone quite smoothly for Optus customers. 

Complaints from Vodafone customers have also risen, by a more modest 11%. The TIO notes, however, that the nature of the complaints has altered completely. Firstly it is worrying that Vodafone-related complaints have risen at all, given that last year could hardly have been worse for them, given the notorious network issues and much-publicised customer-service shortcomings. The newest data reveals that the complaints are now predominantly around delivery issues such as poor spend-controls and mobile data usage.

If we break down the complaints by service type, it can be seen that far more people contact the TIO about mobile phone related issues than about fixed line phones or non-mobile internet. This area has seen a sharp jump in complaints over the previous year. The most common areas are disputed billing (which is a somewhat vague term, admittedly), lack of management tools (perhaps reflecting greater community awareness of such things), and excess mobile data charges (no surprise there).

Relating to this somewhat, the number of complaints around fixed line internet services, particularly around credit management and financial hardship, have continued to fall. This part of the industry has had stronger provisions in place for some time - certainly stronger than the mobile sectors - and this has led to greater awareness and less hardship. This would certainly support the goals of the new TCP, which partially aims to bring some of these measures to the mobile sector of the industry.

For further detail, the full TIO Annual Report can be found here.