Telstra vs Bill Shock

Here at Dog and Bone, it feels as though we’ve been writing about the scourge of Bill Shock forever. At last there is hope we won’t have to any more.

Telstra has announced new measures that it feels confident will eradicate Bill Shock, thus giving you 'unmatched confidence'. It is doing this by automatically activating a small data pack the moment you exceed your monthly data limit. You may recognise that as basically identical to the measure Optus introduced a couple of years ago.

Bill Shock, for those who’re unfamiliar with the term, is that wondrous phenomenon that occurs when you open your phone bill, only to discover that the total on the bill is many orders of magnitude larger than you were anticipating. This blowout should not be confused with a slight overcharge (this is Bill Startlement) or the discovery upon reading your credit card statement that your partner subscribes to a certain kind of website (this is admissible evidence).

Bill Shock is most commonly caused by excess mobile data usage or by using mobile data whilst abroad. Telstra’s new measure will address the first of these issues.

Now whenever you use up all of your allotted data, a 1Gb data pack is automatically assigned to your account for that month. Telstra has also reduced the price of these data packs from $15 down to $10. Thus the most you’re likely to pay for going over your data limit is $10.

$10 is also the least you’ll pay, which is an important point to bear in mind. For while Telstra’s pay-as-you-go (PAYG) rates were among the highest in the developed world, they have actually fallen in recent years. The rate is currently $0.03 per MB.

The upshot is that there are plenty of cases where it is cheaper to stay on PAYG and not get a data pack. Simply put, if you exceed your data limit by less than 333Mb, it remains cheaper to stay on PAYG.

Of course, it won’t be possible to make that decision on the spot. You have to nominate ahead of time whether you want your account flagged for the automatic data pack. You will be able to opt-in once the system goes live on May 12.

COMMENT

When Optus introduced their automatic data pack provision in 2013, their CEO Kevin Russell conceded that Australian telcos were ‘increasingly reliant on revenues from breakage fees’. In other words, telcos were banking on customers suffering bill shock, and (one must assume) structuring their plans in order to ensure this outcome. Russell’s admission wasn’t shocking because it was new information – merely by the fact that he made it. Naturally it was timed to imply that Optus’ new largesse resulted from them being no longer able to bear the crushing guilt of fleecing their customers for so long.

Telstra has apparently been able to cope with the guilt for a while longer; apparently with greater market-share comes more reasons to ignore those bad feelings.

Commendably, the last few years have seen a number of measures adopted by Australian telcos to reduce Bill Shock – admittedly at the behest of the regulator – including greater plan transparency, improved data usage tools, lower excess charge rates, and increased data allowances. These combined factors mean that customer misery contributes less to revenue than it once did. Being nice will now cost the telcos less.

But just how nice are they? How much will this putative kindness cost them? There are several factors to consider.

Firstly, those automatic data packs aren’t free. Telstra’s 1Gb pack costs $10, and as mentioned there are plenty of instances where this will cost the customer more than just staying on the PAYG rates. Sadly, we have no access to internal telco billing data, especially for residential customers. On the other hand, Dog and Bone's extensive data shows that business clients rarely suffer huge blowouts. It tends to be a few hundred megabytes, if that.

By linking the new provision with increased 'confidence' Telstra's intention is clearly to promote more carefree use of mobile data. What's the worst that could happen? Ten bucks? Pah! More surfing, less hassle! Perhaps we're just cynical.

Automatic data packs certainly ensure that Bill Shock is addressed. What would have been an enormous and potentially crippling phone bill – and government data suggests that this is a strong cause of personal bankruptcy – will now be reduced to a more manageable total composed of $10 increments. (One wonders whether it will have a greater impact than Virgin Mobile’s recent introduction of a monthly data rollover.)

It will address Bill Shock, but it won’t do much for Bill Startlement. In fact, it might even increase it a little.