Reconnecting the Customer

Transcription

1 Reconnecting the Customer Vodafone Hutchison Australia Pty Limited Submission to ACMA's public inquiry

2 1. Executive Summary 3 2. The dynamic nature of the telecommunications industry Growth of mobile broadband, data and content services The role of smartphones Complexity of supply chain 6 3. VHA's customer service objectives VHA VHA's culture How VHA deals with its customers Customer service metrics Are there any systemic problems in the telecommunications industry? Introduction 12 (a) Customer complaints should be taken in context 12 (b) The transition to new services and technologies may lead to complaints 13 (c) Growing awareness of the TIO leads to more complaints 'Best practice' standards and benchmarks Introduction Attributes of 'good' customer service and complaints handling practices Policy reasons for setting high level principles The TCP Code 19 (a) The Australian Standard 19 (b) Ofcom Code Improvements to the regulatory framework and current practices 21 (a) TCP Code 21 (b) Facilitating the operation of the existing regime 22 Appendix A: Summary of alternative regimes 23 Code of Banking Practice 23 Insurance Brokers Code of Practice 23 General Insurance Code of Practice 24 Mutual Banking Code of Practice 25 Utilities 26 Code of Conduct for Marketing Retail Energy in Victoria. 26 Electricity Industry Code (Queensland) 27 UK Telecommunications Regime 28 Page 2

3 1. Executive Summary Vodafone Hutchison Australia Pty Limited (VHA) is pleased to provide the following comments to the Australian Communications and Media Authority's (ACMA) consultation paper Reconnecting the Customer - ACMA Public Inquiry (Consultation Paper). VHA welcomes the ACMA's review into the regulatory framework for addressing customer service and complaints handling issues in the telecommunications industry and agrees that it is timely. VHA broadly supports the retention of the existing regulatory framework as it applies to customer service and complaints handling issues. However, VHA considers that this inquiry presents an important opportunity for stakeholders to work collaboratively to improve the manner in which the existing regime operates to produce better outcomes for consumers. More specifically, VHA's position is: 1.1 Service providers have a commercial incentive to adopt effective customer service and complaints handling processes. Having said that, VHA believes that it is appropriate for there to be minimum high level standards. This is because minimum regulated standards provide consumers with confidence regarding the level of service they can expect to receive from their service provider. 1.2 VHA considers that the current Telecommunications Consumer Protection Code (TCP Code) sets out appropriate standards and principles for the handling and resolution of customer complaints. To the extent that the TCP Code can be improved, this is more appropriately addressed as part of the current TCP Code review. 1.3 VHA does not consider it appropriate for customer service and complaints handling standards to be defined prescriptively in legislation or elsewhere for the following reasons: (a) (b) (c) (d) Given the dynamic nature of the telecommunications industry and the consequent changes in consumers' expectations and behaviours, it is imperative that service providers have flexibility in the ways in which they approach customer service and complaints handling. Prescribing specific standards removes the ability for service providers to differentiate their service based on customer service and complaints handling. Determining an appropriate customer service and complaints handling process necessarily involves trade offs. The choices service providers make in this regard is informed by the philosophical and cultural approach they take to customer service and complaints handling. It is not appropriate to mandate high level principles of the kind set out in the TCP Code in legislation. 1.4 VHA does not believe that there are systemic issues in the way the Australian telecommunications sector delivers customer service or handles complaints. Before drawing any conclusions from 'complaint statistics', regard should be had to: (a) the growth in users of mobile telecommunications services, mobile broadband and fixed broadband services over the past few years; Page 3

4 (b) (c) the increase of services available to mobile telecommunication subscribers and the uptake of these services. The availability of additional services, and the speed with which they have gone to market, means that it is increasingly likely that subscribers will need to contact their service provider; and the growing awareness of the role the Telecommunications Industry Ombudsman (TIO) plays in dealing with customer dissatisfaction. 1.5 VHA considers that there are other means by which stakeholders, including the TIO, can work collaboratively within the existing regime to produce better outcomes for consumers. VHA considers that the workshops and hearings which the ACMA proposes to conduct as part of this inquiry provide a useful forum for all industry stakeholders to discuss how the existing regime can be improved. 2. The dynamic nature of the telecommunications industry 2.1 Growth of mobile broadband, data and content services VHA agrees with the ACMA's observations in the Consultation Paper that the telecommunications industry is undergoing significant change. The rate and nature of technological development in the telecommunications industry over the last 10 years has been immense. The period from 2000 to 2005 saw rapid growth in demand for mobile telephony services mobile voice and basic data services such as SMS. However, the market for voice and basic data services is now relatively mature. With growth in voice slowing, mobile providers are competing to attract voice customers from other service providers rather than attracting mostly first-time or 'new' users, and are also competing to sell existing customers additional services. Internationally, the trend in mobile telecommunications is declining average revenues per user for voice services. Ovum forecasts that voice revenues in Australia will decline for the first time this year, while mobile data revenues will increase by a compound annual growth rate of 14.1% between 2008 and The relative maturity of mobile telephony services sits in stark contrast to the proliferation of mobile broadband services and other data and content services. The growth of data and content services has been brought about by rapid and significant technological developments, and the corresponding increase in consumer demand for such services. The evolution of network technologies from 2G to 3G and 3.5G means that the suite of services which mobile providers can offer subscribers is increasing. Mobile providers can now offer subscribers a vast array of mobile broadband and data services, such as video calling and streaming; ; media and content services such as news, music, mobile TV and live sport; and 1 See Geoff Long, 'Mobile sector told to brace for lower revenues, increased competition', Communications Day, 24 August 2010, p 3. Page 4

5 internet browsing and internet access to enable the use of applications such as Facebook and Skype. 3G network technologies are highly efficient and provide greater capacity and faster data rates than 2G technologies. Hutchison 3G Australia Pty Limited (as VHA was then called) launched Australia's first 3G W-CDMA mobile telecommunications network in Vodafone, Optus and Telstra launched their respective 3G networks and service offerings in late 2005, and Telstra also launched a separate national 3G network in 2006, known as the NextG network. While 3G technology has been available in parts of Australia to varying degrees since 2003, growth of mobile broadband and 3G data services is a relatively recent phenomenon. While there were some early adopters of 3G capable phones and 3G services, the migration of customers from 2G to 3G was not widely experienced in the industry until 2006 when all four mobile carriers were offering such services. 2 The uptake of mobile broadband services has also increased significantly in the last two years. As at 30 June 2010, the number of mobile broadband subscribers in Australia increased 57% to million, far exceeding the growth experienced in other broadband platforms The role of smartphones While developments in network technologies continue to drive change, another significant driver has been the developments in devices used to access services. The recent 'consumerisation' of smartphones in Australia, driven almost entirely by the local launch of the Apple iphone in mid-2008, has fundamentally transformed the industry by making access to 3G services (including data usage) more intuitive and accessible for consumers. The ACMA has stated: Growth in the take-up and use of smartphones has been one of the important developments over the past two years, with smartphones expected to drive significant future growth 4 The iphone has played a pivotal role in increasing consumer awareness of smartphones while also revolutionising the way subscribers consume data. Consumers can now access data, content and mobile broadband services using the same mobile handset they use to receive voice services. There are over 200,000 consumer applications that are easily accessible to subscribers through the Apple's AppStore. 5 Consumers can also use their mobile handset for a range of other intelligent functions such as navigation and locationbased services, including at WiFi hot spots in airports, shopping malls and other public venues. Consumer uptake of data and content services has risen significantly in the last two years. For example, for the half year to 30 June 2010, million VHA customers subscribed to 3G services or used their mobile handset as a modem to access the internet, representing 2 Warren Chaisatien, Australian Mobile Services Market, 2008 Review & Forecast; Telsyte Market Analysis and Forecast Series Report, March 2009, p Miro Sandev, 'Mobile broadband subs surged 57% in FY 2010', Communications Day, 16 August 2010, p 1. 4 ACMA, Technology Developments in the Digital Economy, August 2010, p See accessed 8 September Page 5

6 an increase of 305%, up from 379,000 customers in the previous corresponding period. 6 At the end of March 2010, penetration of smartphones in Australia rose to 48.7% of all new mobile device shipments and some analysts predict that 62% of all mobile phones will be smartphones by It is expected that Android smartphones, which use an operating system developed by Google, will make a significant impact in the market in 2010 and The 'Android Market', which is the Android equivalent to the AppStore, has approximately 70,000 applications. A significant difference between the iphone and Android, is that the Apple system is a 'closed', proprietary system, whereas the Andriod system is an open system. This means that mobile operators, device manufacturers and other providers have the flexibility to design their own products for distribution via the Android platform. 2.3 Complexity of supply chain Another recent phenomenon in the telecommunications industry, which the ACMA alludes to in the Consultation Paper, is that technological developments and increasing convergence has resulted in more complex supply chains for the provision of services to users. 8 As discussed above, technological developments have presented new opportunities for growth and revenue, not only for the mobile carriers themselves, but also for a wide range of other service and content providers. In the light of the developments referred to in sections 2.1 and 2.2, mobile carriers no longer provide all the services which a subscriber might access using their mobile handset or other device. The number of other service providers involved in the provision of services is increasing. Content is an example. When 3G services were first launched, the focus for distribution was on mobile content being offered from within a mobile carrier's 'walled garden', that is, a carrier's content portal. A walled garden includes exclusive and non-exclusive content which has been sourced from content providers and packaged by the mobile carrier for supply to its own subscribers. However, users are increasingly consuming content and data in a number of other ways, including: through the 'open' internet; by using applications which are pre-loaded onto devices such as Skype or navigation applications; or by accessing content through alternative distribution platforms such as online stores using their mobile device. In most cases, the mobile carrier merely provides the means for the consumer to access the internet. 6 VHA, Half Year Results to 30 June 2010 announced to the ASX on 4 August B Head, 'Smartphones surge, spur telco revenues', itwire, 23 August 2010, 8 ACMA Consultation Paper, pp 3 and 7. Page 6

7 Depending on the content accessed, there may be a number of other third parties involved in producing, packaging and supplying the content. The nature of the relationship between the user, the user's mobile service provider, and the third party will often differ. With the rise of alternative content distribution platforms like the AppStore, users will increasingly be contracting with third parties for accessing content even though they are using their mobile device to do so. In some cases, users may pay those third parties directly, whereas in other cases, the mobile carrier may act as a billing agent. In that case, charges appear on the customer's mobile bill. 3. VHA's customer service objectives 3.1 VHA VHA was formed following the merger between Vodafone Australia Limited and Hutchison 3G Australia Pty Limited in VHA is the third largest telecommunications company in Australia and provides services to over 7 million customers under the Vodafone, 3 and Crazy John's brands. VHA is 50% owned by Vodafone Group plc and 50% owned by Hutchison Telecommunications (Australia) Pty Limited, which is listed on the Australian Securities Exchange with Hutchison Whampoa Limited being the ultimate majority shareholder. VHA owns 100% of the issued capital of Mobileworld Communications Pty Ltd which operates the Crazy John's brand. The growth in VHA's customer base and the take up of data and other services by them is illustrated by the following: as at 30 June 2010, VHA had 7.43 million customers. This increased from 6.89 million in December 2009 and 6.31 million in June for the six months to 30 June 2010, non-voice services contributed 39.4% of VHA's Average Revenue Per User, up from 33.8% in June This reflected a similar increase for the 2009 financial year, with VHA experiencing a 45.9% increase in non-voice revenue to $677.3 million. VHA had 782,000 mobile broadband subscribers by June 2010, an increase of 43.0% over the previous 12 months. 11 By contrast, in December 2008, VHA had 288,000 mobile broadband subscribers, while in December 2007, VHA had 82,000 mobile broadband subscribers; and in the six months to 30 June 2010, 1,535,000 customers subscribed to 3G services on their handset or used their handset as a modem to access the internet, an 9 VHA, Half Year Results to 30 June 2010 announced to the ASX on 4 August 2010 and Presentation made by Nigel Dews to the media accompanying the Half Year Results to 30 June VHA, Half Year Results to 30 June 2010 announced to the ASX on 4 August 2010, p VHA, Half Year Results to 30 June 2010 announced to the ASX on 4 August 2010, p 6. Page 7

8 3.2 VHA's culture increase of 305% from the previous 12 months. 12 In contrast, by December 2009, VHA had 717,000 customers with billed 3G services on their handset and in June 2009, VHA had 379,000 customers with billed 3G services on their handset. 13 A key part of VHA's strategic plan is 'to be one of the most recommended brands in Australia'. This goal now influences every aspect of VHA's interaction with its customers including customer service and complaints handling. VHA considers its approach to customer service and complaints handling an important means of not only reducing churn, but also differentiating VHA's services from its competitors. VHA's recent half year results show that VHA maintained an 'industry low post-paid handset customer churn level of 1.3% per month. Customer satisfaction, as measured by both internal and external surveys, continues to be strong'. 14 VHA's commitment to customer service and complaints handling in order to be one of the most recommended brands in Australia is demonstrated by: VHA's decision to benchmark its performance by reference to the higher standard required by the Net Promoter Score (NPS). VHA is using NPS to monitor its progress against this strategic goal; the significant resources VHA continues to commit in these areas; and the steps VHA takes to regularly measure customer satisfaction. VHA deals with each of these points in greater detail below. Providing a high standard of customer service is a key differentiating factor, not only for VHA, but also for many telecommunications providers. For example, in response to the March 2010 Roy Morgan report on the telecommunications industry, 15 and in particular, Telstra's decline in customer service, a Telstra spokesperson commented: Improving customer service is one of our top priorities and we want to be rated the best in customer satisfaction compared to the rest of industry by the end of FY VHA considers that many telecommunications providers take customer service seriously and spend significant time and resources on improving customer service. Competition in this area is therefore an important driver for service providers such as VHA to constantly improve customer service and complaints handling. 12 VHA, Half Year Results to 30 June 2010 announced to the ASX on 4 August 2010, p VHA, Half Year Results to 30 June 2010 announced to the ASX on 4 August VHA, Half Year Results to 30 June 2010 announced to the ASX on 4 August 2010, p S Corner, 'Telstra's mobile customer satisfaction plumments', itwire, 20 April 2010, 16 S Corner, 'Telstra's mobile customer satisfaction plumments', itwire, 20 April 2010, Page 8

9 3.3 How VHA deals with its customers VHA considers that good customer service begins at the point when customers choose the products and services they want. In particular, VHA considers that if customers select products which are appropriate to their needs, and are well informed of the product's features, it is less likely that customers will need to contact VHA's customer service team to make an enquiry or complaint. Therefore, a key focus for VHA is ensuring that customers receive clear and transparent marketing information at the point of sale. To this end, VHA provides its front line sales staff with training and other resources and also pro-actively discusses with customers, during the course of their contract, whether the customer is better suited by another product. VHA's principal customer contact centres are being in-sourced and will soon be consolidated to one off-shore and one on-shore facility Mumbai and Hobart. Consolidation is intended to provide a simpler environment for customers and VHA staff. Customer service complaints are dealt with by trained customer service officers. VHA provides continuous training to its customer service representatives. This includes weekly coaching for representatives of all levels. VHA is also focused on improving its training and will implement a soft skills training course in 2011, focused on communication skills for staff. Customers are able to contact VHA through a variety of means when making an enquiry, or raising an issue or concern (or compliment). Currently, these include phone, and web contacts, access via social media networks such Twitter and Facebook, and online self-service portals such as My3 and MyVodafone. VHA is currently working to roll-out 24- hour customer care support across the whole of its business. Where a customer has raised a concern and is not satisfied with the initial proposed outcome, VHA offers the customer the opportunity to deal with a team leader, senior representative, call coach or even a Team Operations Manager. Currently, customer service calls are recorded at random and are reviewed by senior members of the customer service team. Customer interactions are recorded and analysed to ensure VHA can continue to improve its level of service. If appropriate, the customer service representative is coached on ways to improve their approach to customers. VHA may also assess the information the customer service representative consults when responding to a customer, with a view to ensuring that the representative provides accurate information. Where appropriate, VHA coaches individual customer service operators to address any issues that arise. [COMMERCIAL IN CONFIDENCE] Given the dynamic nature of the mobile telecommunications industry, 17 VHA considers it important to track customers' views on a range of issues. This includes the quality of the handsets and telecommunication services VHA provides, as well as customer service and complaints handling. VHA regularly obtains customer feedback using a variety of methods: 17 See Section 2 above. Page 9

10 (a) (b) (c) (d) (e) (f) (g) Touchpads are now available in the vast majority of VHA stores and allow customers to provide real time feedback about their instore experience. Currently, about 20,000 customers per month use this facility. VHA contracts an independent research organisation to conduct store interviews as customers leave the store. VHA conducts about 200 store interviews per month. VHA conducts regular customer surveys which measure, not only customer satisfaction, but also VHA's performance by reference to the NPS. The customer satisfaction surveys are designed to identify the causes of customer satisfaction (or dissatisfaction for that matter) at each of the stages in which the customer interacts with VHA. This feedback is used for coaching contact centre staff and improving customer-facing processes. These measures are dealt with further below. VHA conducts churn studies to understand why customers leave and uses this information to improve products and services. VHA has significantly expanded its 'friendly user testing' procedures. In the past, VHA tested a soon to be released mobile phone handset using a group of 6 people (Testers). VHA has now increased the number of Testers to 140 people. Further, at any given time, there are ten testers who are using a trial handset for a three week period. The testers provide feedback to VHA which VHA uses to determine not only the attractiveness of the handset to the market, but also the issues which may arise when the handset is offered to the public. VHA undertakes customer 'journey mapping', which is designed to provide VHA with an end to end view of how customers interact with VHA. VHA obtains information from research studies conducted by independent companies such as Roy Morgan. For example, Roy Morgan conducts a regular customer survey concerning 'customer satisfaction' with each telecommunications service provider. VHA has regard to this data as it measures VHA's performance by reference to others in the industry. The feedback VHA obtains from its customers informs the training customer service representatives receive. This ensures that customer service representatives are in a position to resolve customer queries comprehensively and in a timely manner. In addition, the customer feedback is used by VHA to improve its services by amending its policies and procedures as well determining when and where investments should be made in systems and servicing tools. VHA continues to evolve the tools and methodologies used to measure its customers' experience to ensure VHA continues to challenge itself on providing improved customer service. VHA ensures that its customers are informed of external channels for escalating issues, concerns or complaints, such as the TIO. Complaints referred back to VHA by the TIO are dealt with in Hobart by a specialist customer service team. The same customer service representative will take charge of the complaint for the duration of the complaint including any escalation by the TIO. This ensures continuity and timeliness of service for the customer. Page 10

11 3.4 Customer service metrics While VHA continues to track its performance by reference to a combination of the standards identified above (including customer satisfaction surveys), VHA has chosen to use the NPS as a key performance indicator (KPI) and a core operating principle. VHA considers that the NPS measure is far more challenging and sets a higher standard for customer recognition than 'customer satisfaction'. This is because it seeks to measure the extent to which customers are prepared to promote their service provider. In this respect, customer service and complaints handling directly affect a customer's preparedness to promote their service provider. NPS is a customer loyalty metric developed by (and a registered trademark of) Fred Reichheld, Bain & Company, and Satmetrix. The NPS score is obtained by asking a customer, on a scale of 0 to 10, "How likely is it that you would recommend our company to a friend, family member or colleague?" Based on their responses, customers are categorized into one of three groups: promoters (9-10 rating); passives (7-8 rating); and detractors (0-6 rating). The percentage of detractors is then subtracted from the percentage of promoters to obtain a NPS. VHA measures its NPS on a monthly basis by conducting various customer surveys. In this respect, VHA commissions a third party consultant to call a sample of Australian telecommunications users (not just VHA subscribers), with a view to determining the NPS for VHA and other telecommunications companies. The results of this survey are not publicly available. VHA's objective is to constantly improve its NPS score. One of VHA's targets for 2010 is to achieve [COMMERCIAL IN CONFIDENCE] The NPS scores for July 2010 showed an improvement for VHA over the previous month as well as showing that VHA was the leading NPS scorer of all mobile telecommunications companies: [COMMERCIAL IN CONFIDENCE] [COMMERCIAL IN CONFIDENCE] [COMMERCIAL IN CONFIDENCE] [COMMERCIAL IN CONFIDENCE] VHA's customer satisfaction and NPS performance is reported to VHA's Executive Team, VHA s Board and members of the customer service and complaints handling team each month. Page 11

12 4. Are there any systemic problems in the telecommunications industry? 4.1 Introduction The Consultation Paper refers to the increase in the number of 'complaints' about customer service and complaints handling made to the TIO since In , customer service complaint issues were recorded as the leading cause of complaints to the TIO, with an increase of 94.2% across all services. 18 In , customer service complaint issues increased by 72% with the main areas of complaint reported to be: service providers giving incorrect, inadequate or inconsistent advice; service providers failing to action consumers' requests, such as the cancellation of a service or changing plans; and consumers being unable to contact their service provider or having to wait a long time before being able to speak to someone. 19 It is the rising number of TIO complaints that is the primary driver for this inquiry. 20 One of the ACMA's objectives in undertaking this inquiry is to understand whether this increase in complaints is a result of systemic problems in the way the telecommunications industry interacts and deals with its customers. As discussed above, VHA takes its role in providing customer service and handling customer issues seriously. This is reflected in VHA's internal statistics, which indicate that there were [c-i-c] complaints made to the TIO per [c-i-c] in May This represents [c-i-c] of VHA's customer base. VHA cannot comment on the policies and processes adopted by other service providers. Therefore, VHA is not in a position to conclusively state whether there are any systemic problems in the telecommunications industry in dealing with customer service and complaints handling. Having said that, VHA does not consider that there are systemic problems and is concerned that conclusions about this issue should not be drawn from the statistics reported by the TIO. VHA's concerns about this are set out below. (a) Customer complaints should be taken in context VHA agrees that it is important to have regard to the complaint statistics collated and reported by the TIO in considering the causes of customer dissatisfaction and in particular, whether there are any enduring problems in the way the telecommunications industry provides customer service and handles complaints. However, VHA is concerned to ensure that these statistics are considered in their context, not in isolation. In the course of conducting a public consultation process to determine whether to establish minimum standards for complaints handling (which is discussed in more detail later), Ofcom made the following comments about the number of complaints in the UK telecommunications industry compared to other industries: 18 ACMA Consultation Paper, p ACMA Consultation paper, p 9; TIO Annual Report ACMA Consultation Paper, p 22 (Attachment A Terms of Reference). Page 12

13 By itself, this is not a cause for concern given the highly transactional nature of the telecommunications industry, the fact that most of the population will have at least one account, and the rapid emergence of new and innovative services which are more likely to have teething problems. What we are primarily concerned about is the extent to which these complaints are resolved effectively. 21 The European Regulators Group for Electricity and Gas also recently commented in a report published on 10 June 2010 which considered customer complaint collection, handling and reporting in the electricity and gas sectors, that: A high level of complaints may indicate problematic issues, but it can also reflect the good functioning of a market where customers participate actively, being aware of their rights and therefore expressing a dissatisfaction when a difficulty occurs. Therefore, data on complaints should be analysed alongside other data. 22 The number of 'issues' relating to customer service and complaints handling, as reported by the TIO, increased from 5,106 in to 14,241 in 2008/2009. Yet over the same period, the number of users of mobile telecommunications services, mobile broadband and fixed broadband increased significantly. Over the financial years, VHA's customer base increased by 1.1 million, while its mobile broadband subscriber base increased by 338,000 subscribers. This increase is consistent with the increase experienced by the mobile telecommunications industry as a whole. (b) The transition to new services and technologies may lead to complaints As discussed in section 2, the array of new and innovative services available to, and used by, mobile telecommunications subscribers has increased significantly over the last 2-3 years. Subscribers now use their mobile telecommunications services for video calls, MMS, downloading video clips or other content such as live sport, and accessing the internet for browsing or to use applications such as Skype and Facebook. Handsets now have a myriad of additional functions and can be used as an MP3 player, video camera, modem and for navigation. While customers can access the internet on their mobile phone, many customers are also acquiring separate mobile broadband services for their internet connection for their computer or laptop using a separate device. The availability of additional services, the speed with which they have gone to market, and the relatively short period during which consumer uptake has grown substantially, means that it is increasingly likely that subscribers will need to contact their service provider, or will do so more often. VHA also believes that there will be anomalous peak periods for issues or complaints which can be directly attributed to the introduction of new services and technologies. From a customer's perspective, there may be differences between their experience of mature voice and text based service and their experience of new services. Customers may take time to become accustomed to these services. From the service provider's perspective, the relative immaturity of services may make it difficult to predict customer expectations or usage patterns. Consequently, it may be difficult to readily predict potential 21 Ofcom, A Review of Consumer Complaints Procedures, 22 July 2010, [3.22]. 22 ERGEG Report, p 7. Page 13

14 issues or concerns which would facilitate appropriate training for customer service representatives. VHA recognises that service providers need to support and assist customers in their transition to new services. VHA pro-actively seeks to do this by ensuring customers receive products and services that are appropriate to their needs and usage. For example, on acquiring new devices or services, some customers may experience higher than expected bills. VHA has a number of measures in place to manage the incidence of 'bill shock' and prevent it from re-occurring. For example, VHA contacts customers to identify the cause of 'bill-shock' and works with the customer to address the cause, whether it be by assisting the customer's understanding of the service or product or ensuring the customer is subscribed to a product or service that suits their expected usage. However, over time, customers' familiarity with new products and services will improve. Similarly, service providers themselves will also have a greater understanding of the issues that are likely to arise and how best to resolve them. Having regard to these matters, it may reasonably be expected that service providers will be able to more effectively address customer issues concerning those services as they arise. There is another aspect to the introduction of new technologies which may result in an increased number of complaints. VHA received a record number of 'complaints' coinciding with the launch of the Apple iphone 4. VHA's view was that some customers were using the complaints process as a means of seeking to upgrade their mobile handset for free to the iphone 4. VHA considers that these anomalous peak complaint times include some calls which are not genuine complaints. This fact should be taken into consideration when reviewing the statistics. (c) Growing awareness of the TIO leads to more complaints There is growing awareness of the role the TIO plays in dealing with customer dissatisfaction. VHA understands that in the past few years awareness of the TIO has steadily risen and that aided awareness of the TIO is around 51%. In contrast, consumer awareness of alternative or external dispute resolution processes in other countries, is much lower. For example, in 2008, Ofcom reported that: 15% of telecommunications complainants were aware of at least one of the ADR schemes available in the UK; 8% of the general population was aware of at least one of the ADR schemes; and 23% of complainants who could potentially go to ADR (i.e. their complaint had lasted 12 weeks) were aware of at least one of the ADR schemes. 23 Interestingly, although awareness by telecommunications complainants of the ADR processes is low, Ofcom generally considers that telecommunications consumers in the UK are more likely to complain for example, 23% of respondents had made a complaint in 23 These figures comes from the Ofcom Tracker Survey and Synovate market research - Ofcom, A Review of Consumer Complaints Procedures, 22 July 2010, [3.39]. Page 14

15 the preceding year, compared with 4% in post, 12% in energy, and 6% in financial services. 24 The TIO is intended to be an office of last resort when a customer is unable to come to a satisfactory resolution with its service provider. Before approaching the TIO, customers are expected to work with their service provider to resolve their complaints. This may include having more than one discussion with the service provider and may also involve escalating the customer's complaint in accordance with the service provider's internal complaints handling policy. However, VHA understands that customers may be using the TIO as an office of 'next resort' and approaching the TIO after having made limited attempt(s) to deal with their service provider. In other cases, the customer may complain directly to the TIO without contacting the service provider. If correct, this is a misuse of the TIO and may either be attributed to a misunderstanding of the TIO's function or illustrate willingness to circumvent the complaints handling process. This may underscore the service provider concern that a number of the issues raised with the TIO should not initially be recorded as complaints The TIO reported that in the last financial year, 90.2% of disputes were level 1 disputes which are referred back to the service provider for resolution. Of these, only 7.6% remained unresolved and returned to the TIO as a level 2 dispute. Approximately 82.6% of all complaints referred back to service providers were resolved by the service provider. VHA is concerned that a significant number of these complaints, should never have gone to the TIO. These statistics also support the sentiments expressed by Ofcom that it is not the number of aggregate complaints that is important, but rather the extent to which these complaints are resolved effectively. In this respect, VHA notes that it is inherently difficult to collate statistics that accurately reflect customer dissatisfaction about customer service or complaints handling. For example, identifying when a customer enquiry with the TIO amounts to a 'complaint' is subjective, as is identifying when the complaint relates to 'customer service' and 'complaints handling'. The problem is particularly acute in the context of customer service and complaints handling as those 'complaints' are typically of a secondary nature. That is, the customer has contacted the TIO because they are essentially dissatisfied about another matter. For example, customers call the TIO to make a primary complaint, the majority of which relate to billing. At the same time, the customer may raise a number of secondary issues which could include the service provider not informing the customer of the outcome of their complaint and customers not receiving acknowledgement of their written complaint. In this case, the TIO will record one complaint as well as separately recording two 'complaints handling' issues. 24 These figures comes from the Ofcom Tracker Survey and Synovate market research - Ofcom, A Review of Consumer Complaints Procedures, 22 July 2010, [3.22]. Page 15

16 5. 'Best practice' standards and benchmarks 5.1 Introduction One of the ACMA's objectives in conducting this inquiry is to identify 'best practice' customer service and complaints handling practices and understand how these practices might become entrenched in the telecommunications industry. 25 VHA's view is that there is no single best practice standard or benchmark for either customer service or complaints handling in the telecommunications industry. VHA considers, however, that there are a myriad of factors that are indicative of 'good' or 'better' customer experience, and therefore customer service and complaints handling. While VHA chooses to benchmark itself against metrics such as the NPS and other companies which achieve high NPS, 26 VHA does not believe it appropriate or desirable to define prescriptively what constitutes good customer service and complaints handling. There are a number of policy reasons why specifying minimum high level principles or standards may be appropriate for the regulation of customer service and complaints handling, particularly for the telecommunications industry. The customer service or complaints handling rules adopted by other regulatory regimes specify minimum high level standards or principles, not prescriptive rules. 5.2 Attributes of 'good' customer service and complaints handling practices There are a number of attributes which VHA considers to be indicative of a 'good' customer service regime. VHA strives to meet these attributes as part of its goal of continually improving the experience of its customers. Those attributes include: effective and active resolution of customer queries or issues, including, where possible, resolving issues at the first interaction; effective internal training and re-training programs and other initiatives to ensure: there is a consistently high standard of knowledge across all support staff and all issue or complaint categories; and support staff possess 'soft skills' to establish a dialogue with customers and actively work to achieve a resolution, including by 'empathising' and understanding the issue from the customer's perspective; dedicated teams with specialist knowledge or expertise that are empowered to resolve specific or technical customer experience issues; responding to and resolving queries or issues promptly and in a manner which respects the customer's time. This may include reducing the time a customer is placed 'on-hold' or arranging 'call-backs' to customers; 25 ACMA Consultation Paper, pp 1 & See Section 3. Page 16

17 providing accessible customer care support including during and after normal business hours support and ensuring that support is accessible through different channels; a customer-focused corporate culture which promotes customer service as a key priority, including by rewarding good customer service; providing access to customer service and complaints handling processes at no charge; and providing accurate and timely information about customers' products or services, including billing, changes, fees and charges. The method and timing will depend on the nature of the information and the needs of customers. This could include proactively notifying customers or ensuring the information is easily accessible to customers when necessary. 5.3 Policy reasons for setting high level principles VHA does not believe it is appropriate, or desirable, for legislation or other regulation (such as an industry code) to describe or characterise what constitutes 'good' customer service by reference to rules or processes that are more prescriptive than that set out in section 5.2 above. VHA's reasons are set out below. First, the telecommunications industry is dynamic, with the consequence that consumers' expectations and behaviours are constantly changing. In this regard, VHA refers to section 2 of this submission regarding the increasing take up of mobile broadband, data and content services and the take up of smart phones. It is imperative that industry participants have flexibility in the ways in which they approach customer service and complaints handling. Prescribing specific rules and processes in legislation or in an industry code necessarily involves limiting service providers' flexibility to depart from those rules and processes and therefore their ability to adapt to meet customer expectations regarding customer service and complaints handling. For example, VHA recognises that ensuring customer care support and complaints handling processes are 'accessible' is an important element of good customer service. However, customer expectations as to what constitutes 'accessible' support will change and evolve with technological and social developments. In the past, contact by mail, telephone or 'in person' were the main channels in which customers expected to access support. Today, customers expect to be able to contact their service provider through a number of different channels, including , online self-service portals (such as 'My3' or 'My Vodafone'), 24/7 call centres, and social media networks such as Twitter and Facebook. VHA requires flexibility to adapt to and meet customer expectations and needs. Often, investment and additional staffing resources are required to meet those needs. For example, VHA now employs a dedicated team of full-time personnel that is responsible for servicing customers via social media networks such as Twitter and Skype. Currently, there are more than [COMMERCIAL IN CONFIDENCE] that are resolved per month via this channel. Second, prescribing specific rules and processes removes the ability for service providers to differentiate their services based on customer service and complaints handling. That is, Page 17

18 some service providers may use different metrics or adopt higher benchmarks to differentiate themselves as a means of improving customer retention and attracting more customers. For example, some service providers may focus on speed of answer benchmarks while others focus on first call resolution. VHA takes speed of answer seriously. [c-i-c] However, speed of answer is not VHA's only focus. First call resolution is as important to VHA as speed of answer. VHA's focus on first call resolution necessarily involves a trade off with speed of answer as customer service representatives spend longer on the call in an attempt to resolve it at its earliest stage. Determining the right customer service and complaints handling model is therefore dependant on the service provider's preferred focus. Determining an appropriate customer service and complaints handling process necessarily involves trade offs. The choices service providers make in this regard are informed by the philosophical approach they take to customer service and complaints handling. For example, whether they are focused on speed of answer benchmarks or on first call resolution. Prescribing a 'one size fits all' approach removes service provider's ability to make this choice. Nor does it account for the differing customer bases and business models adopted by service providers. The importance of service providers differentiating their service from their competitors through their customer service and complaints handling procedures, was recognised by the ACMA: Best practice customer service standards must also be examined in the light of competition in the market and the need for a range of products, including low-cost products to meet consumer demand. Of course, price is a key factor that consumers take into account when choosing a product or service. Good customer service - and especially very good customer service - may impose higher costs on providers and hence, higher prices for consumers. But good customer service also enables a service provider to differentiate its services from those of competitors, providing commercial benefits through customer loyalty and higher customer retention rates. 27 A similar point has been made by the Australian Securities and Investment Commission (ASIC) and Ofcom. In 2008, ASIC issued a consultation paper, Dispute resolution review of RG 139 and RG 165, 28 which sets out ASIC's proposals for updating its policy on the dispute resolution requirements that apply to financial service providers. 29 In particular, ASIC considered the degree to which internal dispute resolution procedures should comply with Australian Standard ISO ASIC's preferred option was to 'give financial services providers flexibility to tailor their IDR [internal dispute resolution] procedures to suit their specific circumstances'. 30 In this respect, ASIC commented that: 27 ACMA, Reconnecting the Customer, July 2010, pp September These are Australian financial services licensees, unlicensed issuers and secondary sellers. 30 ASIC, Dispute resolution review of RG 139 and RG 165, 8 September 2008, [55]. Page 18

19 An alternative approach would be to require IDR procedures to comply with AS ISO in full. This would be more prescriptive and less flexible than requiring IDR schemes to comply with the Guiding Principles and specific sections of AS ISO 10002, and may involve significant compliance costs for financial services providers. For this reason, we do not prefer this approach. 31 When making its recommendations in the UK (discussed below), Ofcom recently stated that: When considering regulatory intervention in this area we have been careful to balance the importance of regulation for consumer protection against the detrimental impact that regulation may have on efficient, effective and innovative customer service which benefits all consumers. While such high satisfaction levels are to be commended, we are concerned with the experience of the small minority that do have problems and the extent to which any resulting detriment is avoidable. We recognise that customer service and customer relationship management is an important way in which CPs can distinguish themselves and compete for customers. We also think it is important that consumers should have freedom to choose CPs based on the level of customer service that is appropriate for their needs. However, we want to make sure that when something goes wrong consumers are able to easily find out how to make a complaint and can be assured that their provider will have processes in place to receive and handle their complaint. 32 Third, prescribing specific rules, metrics or processes for all service providers does not necessarily equate to 'good' customer service. For example, prescribing a 'speed to answer' benchmark or metric might mean customers do not wait more than a specified time before they speak with a customer service representative, but it does not follow that a customer's issue is resolved appropriately or effectively. 'Good' customer service and complaints handling is neither 'one-dimensional' nor 'static'. 5.4 The TCP Code VHA considers that the existing approach adopted in the TCP Code is appropriate for the telecommunications industry because it specifies minimum high level standards and principles. Both the approach, and the principles set out in the TCP Code, are consistent with the Australian Standard on Complaints Handling and other regimes adopted in Australia and overseas including the Uniform Code of Practices for Complaints Handling recently issued by Ofcom (Ofcom Code). We deal with both of these below. (a) The Australian Standard The Australian Standard sets out a number of guiding principles which are recommended for effective handling of complaints. Those guiding principles are: visibility: ensuring that information about how and where to complain should be well publicised to customers, personnel and other interested parties; 31 ASIC, Dispute resolution review of RG 139 and RG 165, 8 September 2008, [56]. 32 Ofcom, A Review of Consumer Complaints Procedures, 22 July 2010, [3.5] [3.6]. Page 19

20 accessibility: a complaints handling process should be easily accessible to all complainants; responsiveness: receipt of each complaint should be acknowledged to the complainant immediately and addressed promptly in accordance with their urgency; objectivity: each complaint should be addressed in an equitable, objective and unbiased manner; charges: access to the complaints handling process should be free of charge; confidentiality; customer-focused approach: the organisation should adopt a customer-focused approach, should be open to feedback including complaints and should show commitment to resolving complaints by its actions; accountability: the organisation should ensure that accountability for and reporting on the actions and decisions of the organisation with respect to complaints handling is clearly established; and continual improvement: the continual improvement of the complaints handling process and the quality of products should be a permanent objective of the organisation. The TCP Code seeks to meet each of those objectives. Relevantly, the Australian Standard also provides that the organisation should continually improve the effectiveness and efficiency of the complaints handling process and suggests that this could be achieved through corrective and preventive actions and innovative improvements. The Australian Standard further provides that organisations should take action to eliminate the causes of existing and potential problems leading to complaints in order to prevent recurrence and occurrence respectively. A service provider's ability to continually improve its customer service and complaints handling processes, as specified by the Australian Standard, would be compromised if customer service and complaints handling regimes were prescriptively defined in legislation, regulations or industry codes. (b) Ofcom Code In late 2009, Ofcom commenced a public consultation process with a view to establishing the Ofcom Code. Following this consultation process, Ofcom decided to establish minimum standards for complaints handling procedures, which will apply to all communications providers. 33 The minimum standards include: The Customer Complaints Code should be concise and easy to read. It should be well publicised and easily accessible on the service provider's webpage. 33 The minimum standards for the handling of complaints will come into force on 22 January 2011, with the exception of proposals to increase awareness of ADR, which will come into force on 22 July Page 20