REGULATION IMPACT STATEMENT
Creation of the International Mobile
Roaming Industry Standard by the
ACMA in response to Ministerial
Direction
June 2013
1
Table of Contents
Executive Summary ............................................................................................................................. 4
Introduction............................................................................................................................................ 6
Background ........................................................................................................................................... 7
International mobile roaming charges................................................................................................ 7
Regulation of international mobile roaming ...................................................................................... 7
The Direction on international mobile roaming ................................................................................. 8
Market Composition ......................................................................................................................... 10
Problem................................................................................................................................................ 11
International Mobile Roaming Market in Australia .......................................................................... 11
The cost and consumer awareness about data usage is the main issue .......................................... 12
Consumer complaints ....................................................................................................................... 15
Current consumer information on roaming provided by industry ................................................... 16
Alternatives to International Mobile Roaming ................................................................................. 18
Objective .............................................................................................................................................. 21
Options ................................................................................................................................................. 22
Option 1 – Minimal requirements under the Direction .................................................................... 22
Option 2 –Extensive requirements for alerts and spend management tools................................... 22
Option 3 – Multi-tiered approach ..................................................................................................... 23
Option 1 ................................................................................................................................................ 24
Costs .............................................................................................................................................. 24
Benefits ......................................................................................................................................... 24
Risks .............................................................................................................................................. 25
Option 2 ............................................................................................................................................ 25
Costs .............................................................................................................................................. 25
Benefits ......................................................................................................................................... 26
Risks .............................................................................................................................................. 27
Option 3 ............................................................................................................................................ 27
Costs .............................................................................................................................................. 27
Benefits ......................................................................................................................................... 28
Risks .............................................................................................................................................. 29
Comparative Impacts of Options 1, 2 and 3 ................................................................................. 29
Competition impacts of Options 1, 2 and 3 .................................................................................. 30
Preliminary Consultation and Stakeholder workshop ...................................................................... 32
2
Public Consultation Process .............................................................................................................. 33
Submissions................................................................................................................................... 33
Targeted Consultation ...................................................................................................................... 33
Consolidated Stakeholder Views ...................................................................................................... 34
Consumer Concerns ...................................................................................................................... 36
Other Views................................................................................................................................... 36
Consideration of stakeholder views.................................................................................................. 36
General.......................................................................................................................................... 37
Definitions ..................................................................................................................................... 37
Section 5........................................................................................................................................ 37
Section 6........................................................................................................................................ 37
Section 7........................................................................................................................................ 37
Section 8........................................................................................................................................ 37
(New) Section 10 ........................................................................................................................... 38
Conclusion and recommendations .................................................................................................. 39
Implementation and Review ............................................................................................................. 40
3
Executive Summary
Australians travelling overseas can receive unexpectedly high bills for their mobile devices when
utilising International Mobile Roaming (IMR). This is commonly referred to as ‘Bill Shock’. The
Telecommunications Industry Ombudsman (TIO) receives complaints relating to IMR charges
totalling around $6.4 million per year. The overall number of complaints is declining, but the average
value of each complaint is rising. Based on the analysis undertaken, the value of IMR complaints is
around $58 million.
The underlying cause of Bill Shock is the significant differences that can exist between both the types
of charges and the rate of charges when overseas compared to domestic use. The three Mobile
Network Operators (MNOs) advise that charges relating to data usage are the major source of Bill
Shock due to IMR. The rapid take-up of mobile internet connected devices such as smart phones and
tablets appears related. It is also more complicated for consumers to understand and estimate their
data usage, than voice or SMS. The growth in international travel by Australians, which has more
than doubled over the past decade, also likely has an influence. Many first time travellers may not
be aware of the relatively high roaming charges or alternative methods in accessing data or voice
services.
It is important to note that the three MNOs have been taking action in recent times that would be
expected to reduce IMR Bill Shock. This has been mostly evident over the past twelve months. This
includes attempts to better inform customers of the costs of IMR and also the growth of alternative
IMR services. Various resellers also provide some IMR services, however it is less clear what action
they have taken in relation to IMR.
The overall objective of this proposal is to meet the terms of the Australian Communications and
Media Authority (International Mobile Roaming Industry Standard) Direction (No. 1) 2012. The
Direction aims to enable consumers to better monitor and manage their spending while roaming
overseas.
Three options that could achieve this objective have been considered; option 1 - the minimum
required by the Direction, option 2 - extensive requirements for alerts and spend management tools,
and option 3 - a multi-tiered approach, with the main focus on data usage. Option 3 is similar to
option 2 but allows a longer lead time for resellers and removes some provisions that consultation
has revealed are unlikely to impact Bill Shock. That is, the intent of Option 3 is to largely target the
Bill Shock related to data usage.
The costs estimated for the three options fall largely on the three network providers. The costs of
establishing and running the three options over a 10 year period have been estimated at about
$xx million for option 1, about $xx million for Option 2, and about $xx million for option 3. However,
consultation with resellers has revealed that the compliance costs associated with all three options
are significant enough relative to the size of their IMR operations that it may cause them to exit to
IMR market. All options are expected to result in reduced choice and competition in the IMR market,
by raising the barriers to entry, and are inconsistent with the Competition Principles Agreement.
Option 2 is the most likely to result in resellers leaving the IMR market. The MVNOs that the ACMA
4
has liaised with note that they are a price-taker for IMR services and that it is not a core part of their
business model.
The major benefits under Option 1 are that all customers will receive notification and charging
information when they start roaming overseas. This should reduce the likelihood of Bill Shock, but
it’s likely to be at the margin given current practice in the industry.
Option 2 is more likely to reduce Bill Shock than option 1, particularly through the use of spend
management alerts. Option 3 is expected to result in total industry establishment costs of less than
Option 2, while delivering broadly similar benefits to consumers relative to Option 2. Option 3 is
likely to achieve this in a less costly manner largely by focussing on data - the main service that
causes Bill Shock.
It is worth noting that all three options build on the approaches already being taken by many
providers in the industry. Consequently some of the costs in complying have already been absorbed
by the providers.
The ACMA conducted extensive consultation on this issue, including with industry, consumer groups
and the general public. Feedback has helped both in defining the nature and extent of the problem,
and in identifying the likely impacts of the options. Indeed, feedback has helped shape the preferred
option, with the delayed implementation of elements of the Standard being one significant change
made in response to stakeholder responses.
Based on the impact analysis presented in the RIS, Option 3 is a relatively low cost option, while
delivering relatively low benefits. Overall, it is likely that Option 3 would result in a relatively low but
positive net benefit. Option 3 is the preferred option. The ACMA will also run a consumer education
campaign, to coincide with the launch of an IMR Standard, to raise consumer awareness relating to
the options available for overseas mobile use.
5
Introduction
1. The Australian Communications and Media Authority (International Mobile Roaming Industry
Standard) Direction (No. 1) 2012 (the Direction) was made1 by the Minister for Broadband,
Communications and the Digital Economy (the Minister) on 23 August 2012. This Direction
requires the Australian Communications and Media Authority (ACMA) to make a new industry
Standard for telecommunications providers of international mobile services to implement
certain specified consumer awareness measures.
2. In accordance with the Direction the ACMA is developing an International Mobile Roaming
Industry Standard (Standard) that relates to the setting of minimum requirements that providers
must adhere to when facilitating IMR services. The minimum requirements in the Standard are
stated within the Direction and its explanatory statement, and further requirements are
proposed as a result of an eight week consultation process involving industry, industry
representative bodies, consumers and consumer representative bodies. The proposed provisions
in the Standard are intended to build on and complement the recent changes in the
Telecommunications Consumer Protections Code which already contains some requirements to
provide specified information about IMR services.
3. In developing the Standard, the ACMA has considered the regulatory impact of the policy
proposals. The ACMA is aiming to strike a balance between the interests of consumers who use
IMR services and the practicalities of introducing new regulatory obligations for mobile
telecommunications services.
1
The Direction was made under subsection 125AA(4) of the Telecommunications Act 1997.
6
Background
International mobile roaming charges
4. In March 2008, the Department of Broadband, Communications and the Digital Economy
(DBCDE) engaged KPMG as consultants to investigate international roaming charges. In its
Report of findings on International mobile roaming charges published in August 2008, KPMG
concluded that the price of international mobile roaming is excessive, there was a lack of
consumer clarity around roaming plans and prices and that there were limited market incentives
for roaming prices to decrease.
5. The House of Representatives Standing Committee on Communications announced a
Parliamentary Inquiry into international mobile roaming charges on 19 June 2008. The release in
March 2009 of Phoning Home: Inquiry into international mobile roaming included a
recommendation supported by the Government that the ACMA facilitate a meeting of the
Communications Alliance to discuss the development of a minimum Standard for consumer
information and awareness of roaming and potential costs. This meeting has subsequently been
superseded by the Minister’s Direction to make a Standard.
6. In addition, the Department of Broadband, Communications and the Digital Economy (DBCDE),
in conjunction with its New Zealand counterpart, the Ministry of Business, Innovation and
Employment (MBIE) undertook a joint market investigation to establish whether there is market
failure in the Trans-Tasman roaming market.
7. DBCDE and MBIE released the final report on Trans-Tasman roaming on 9 February 2013. This
report largely focused on the options for price monitoring and regulation which is
complementary to the Direction under which the ACMA will make the IMR Standard. However,
the Trans-Tasman report notes that regulatory pressure in the form of a full market investigation
by DBCDE in Australia and MBIE in New Zealand has caused a reduction in IMR pricing for
Australians and New Zealanders travelling between the two countries.
Regulation of international mobile roaming
8. Existing consumer protection measures in place for IMR are the specific provisions in the TCP
Code, and the general protections offered by Australian Consumer Law 2011. The TCP Code
includes:
 A requirement to include information about IMR on a supplier’s website, including whether it
needs to be activated prior to departure, basic pricing information and information about higher
charges that may apply (including advice that there may be a cost in receiving a call when
overseas) (clause 4.1.3(i)); and
 The provision of a Critical Information Summary which includes warnings about roaming costs
(including international roaming charges)2 (clause 4.1.2(a)(iii)B).
2
Communications Alliance C628:2012 “Telecommunications Consumer Protections Code”
7
9. The IMR provisions in the TCP Code are focussed on domestic pre-departure information
provided at point of sale and available via a website. The rules concerning IMR are a small
element of the TCP Code which contains a range of provisions to protect consumers in their
interaction with providers within Australia.
10. However, the IMR provisions in the TCP Code do not require any information to be provided to
consumers when they actually roam internationally at which point in time both the financial
risks associated with international roaming and the need for information about costs and usage
are most acute. The timely, targeted, and country specific IMR information proposed under the
IMR Standard reflects the magnitude of the financial risk to consumers when they travel.
The Direction on international mobile roaming
11. The Direction made by the Minister requires the ACMA to make an industry Standard under
section 125AA(1) of the Telecommunications Act 1997 (the Act). The Direction specifies that two
minimum requirements must be included in the Standard, as follows:
(1) The industry Standard must set minimum requirements for all Providers to:
(a) give consumers information, on arrival at an overseas destination, about the charges
applicable for the Providers’ international roaming services at that destination; and
(b) permit consumers to decline continued provision of those international roaming
services, at any time, while at that overseas destination.
12. The Direction (and associated explanatory statement) makes it clear that the above
requirements are only the minimum measures for the ACMA to introduce. The ACMA has the
power to include further measures as follows:
(2) The industry Standard may deal with any other matter:
(a) related to international mobile roaming services that the ACMA regards as appropriate
including, without limitation, measures which will enable consumers to monitor and
manage the cost and their use of international roaming services; or
(b) that the ACMA considers ancillary or incidental to a matter specified in clause 6(1) above.
13. As per the Explanatory Statement to the Direction, examples of possible measures that are
captured by subclause 6(2) are included below:
8
Example of possible measures
On purchase and
before
departure
overseas
Information about a consumer’s ability to opt in or opt out of
particular IMR services or IMR services for particular countries.
On arrival and
while overseas
On arrival, a SMS or similar messaging alerting consumers to the
‘premium’ nature of IMR services (i.e., that IMR services are charged at
a premium rate), including provision of specific relevant pricing
information in easy to understand language, and details of where to
obtain additional information, such as a freecall service, and a
capability to opt-in or opt-out of the service.
Examples of matters about which a consumer might be notified might
include the cost of a 2 minute call in the overseas country, the cost of a
2 minute call to Australia, the cost of a SMS and the cost of a measure
of data.
Development of user friendly tools to manage IMR services and where
more information can be obtained while overseas. Measures might
include, but need not be limited to:
Instructions on how to turn off roaming services for one or
more of voice, SMS and data services;
enabling end users to choose between a cap or extending the
service. If the latter, pricing information should be provided to
facilitate a decision by the end user as to a pricing plan;
to the extent technically feasible, for post paid services, alerts
relating to percentage or dollar limit warnings and progressive total
spends totals for voice, SMS and data;
to the extent technically feasible, for prepaid, alerts based on
remaining credit; and
alerts would include a note on the accuracy and timeliness of
information if relevant (recognising that some information relies on
systems of overseas providers).
14. The Ministerial Direction implies that any regulation should combine the minimum consumer
safeguards required to protect consumers with other measures which would facilitate consumer
empowerment in this area. It also mirrors the requirements on providers domestically to ensure
that consumers can manage their own expenditure through the provision of spend management
tools.
9
Market Composition
15. The Australian domestic market for mobile services is dominated by the three MNOs: Telstra,
Optus and Vodafone.
16. There are a number of other mobile service providers in the Australian market who provide
services using the network of one of the three MNOs mentioned above. These providers are
referred to as Mobile Virtual Network Operators (MVNOs), and these service providers range
from established companies offering a variety of telecommunications services with hundreds of
thousands of customers, to small companies with hundreds of customers.
17. There are at least 50 companies who are MVNOs, not all of which offer the option of
international mobile roaming to their customers. However, the ACMA is unable to ascertain
exact number of MVNOs who offer IMR services, and in formulating and considering its
regulatory options has relied heavily on submissions from three of them (M2 Communications,
AAPT and Spintel) as well as industry bodies such as the Australian Mobile Telecommunications
Association (AMTA) and Communications Alliance (CA). The majority of MVNOs concentrate on
low cost pre-paid services.
18. Some MVNOs also act as aggregators or wholesalers, in that they receive services from a MNO
and resell all or part of these services to another MVNO.
19. The best available estimate for MVNO subscriber numbers is 1.5 million, compared to 30.1
million subscribers to MNO services3. This puts the total estimated size of the mobile
telecommunications market in Australia at 31.6 million subscribers, of which 4.75% are
customers of MVNOs. However, an alternative and more recent estimate of the market share of
MVNOs is at around 14%.4
20. In recent years there has been a growing adoption of smart phones in the Australian market.
With this change in handset use, mobile data use in Australia has grown significantly in recent
years. In the domestic market5:
i) Mobile phone use is now near-ubiquitous , with mobile services totalling 30.2 million in
June 2012.
ii) Mobile phone handset internet subscriptions increased by 21.5% over the 12 months to
June 2012, totalling 16.19 million. This figure includes tablet users with a SIM (i.e. those
who might use IMR, as without a SIM IMR is not possible).
iii) Mobile handset internet use increased from 3,695 terabytes downloaded in 2010-11 to
6,610 terabytes downloaded in 2011-12, an increase of 78.69% (one terabyte is equal to
one million megabytes).
iv) 32% of Australians (aged 14 years and over) used the internet via their mobile phone
during June 2012, up from 21% in June 2011.
21. Mobile internet use by Small to Medium Enterprises is also increasing, with 63% using
smartphones and 29% using tablet devices in the year to June 2012.
3
Buddecom Report 8 Jan 2013 “Australian Fixed and Mobile Telecom Statistics” and Buddecom Report 1 Aug
2012 “Australia Mobile Communications Statistics and Forecasts”
4
Roy Morgan survey, see http://www.roymorgan.com/findings/virtual-mobile-networks-gain-million-users201304050501
5
ACMA Communications Report 2011-12, “Key Indicators at a glance”
10
Problem
22. The discussion in this section focuses on describing the nature and extent of the problem in
terms of lack of consumer awareness on using IMR in Australia. The focus is on the nature of bill
shock, especially in relation to data, consumer complaints, as well as existing voluntary
measures by industry to provide additional consumer information on roaming and the
availability of alternatives to roaming. The evidence presented suggests that information
provided to consumers now is significantly different to the information, or lack of, that was
voluntarily provided by industry in the past. This has been most evident over the past twelve
months.
23. The major problem the Direction aims to combat is ‘Bill Shock’, which refers to both unexpected
charges and unexpectedly high charges on mobile devices when Australians travel overseas. It is
the differences between the charging of domestic mobile use versus international use. Mobile
providers advise the ACMA that charges relating to data usage are the major source of this
problem. The rise in mobile phone usage, in particular internet connected mobile devices, has
contributed to the billing issues relating to mobile phone usage. In addition, growth in number
of Australians travelling overseas is also likely to have a role.
24. Data accounts for around 72 per cent of mobile usage by overseas travellers. The rate at which
data is charged is significantly higher when using IMR. For example, the charges for data are at
least 10 times higher than domestic rates for a customer roaming in New Zealand.
25. Complaints made to the Telecommunications Industry Ombudsman (TIO) in relation to IMR are
currently trending downwards. In part, this is likely the result of MNOs introducing measures to
combat Bill Shock in recent years. The MNOs are now to varying degrees compliant with much of
the minimum requirements under the Minister’s direction.
26. It is also important to note that consumers already have the choice of a range of alternatives to
IMR, some of which allow them to retain their usual mobile phone number.
International Mobile Roaming Market in Australia
27. The global mobile market to the end of 2011 consisted of 5,891 million subscriptions6. This
compares with the Australian mobile market of 30.2 million subscriptions as at mid 20127.
Australian Network Providers, given their relatively small size in comparison to the global
market, tend to be price takers for wholesale IMR services rather than price makers, although
the Singtel and Vodafone entities are multinational operations.
28. Growth in international travel by Australians has been significant in the past ten years, with
short-term international departures from Australia increasing from 3.5 million in 2002 to 8.2
million in 20128. The destination with the largest number of short-term international departures
was New Zealand, which also has the largest number of short-term Australian arrivals.
29. This growth in international travel has led to a growth in the IMR market. A continuation of
growth in international travel by Australians would present further opportunities for
participation in the IMR market.
30. The three major providers have indicated that there are a high number of individual agreements
that allow customers to roam onto International networks; Telstra estimates it has over xx
6
7
8
http://mobithinking.com/mobile-marketing-tools/latest-mobile-stats/a#subscribers
ACMA Communications Report 2011-12, “Key Indicators at a glance”
ABS 5 Feb 2013, “International Movements – 2012”
11
individual agreements with overseas networks, with Optus estimating over xx agreements. There
is little scope for Australian suppliers to reduce IMR charges outside bilateral international
agreements. Despite the parent companies of Vodafone (Vodafone and Hutchison) and Optus
(Singtel) having a significant international presence, this does not appear to translate to lower
roaming prices relative to Telstra.
The cost and consumer awareness about data usage is the main issue
31. Australian consumers pay far more for mobile services when roaming than they pay for domestic
services. While the costs of delivering wholesale roaming services are higher than for delivering
domestic services, estimates suggest that mark-up on IMR services is much higher than for
domestic services.9
32. The graph below demonstrates the disparity between domestic and international data rates for
Australian consumers and highlights the potential for bill shock for consumers using IMR
services. New Zealand is used as an example as it is the most popular destination for overseas
travel from Australia according the Australian Bureau of Statistics (ABS). Note that the rates in
the graph below are the “default rates” chosen as they reflect the prices paid by travellers who
do not elect to avail themselves of a travel-specific product.
9
Trans-Tasman Roaming Final Report Feb 2013, available at
http://www.dbcde.gov.au/mobile_services/mobile_roaming/trans-tasman_mobile_roaming
12
Domestic vs International Data
Rates (per Mb)
$25.00
$20.48
$20.00
Domestic Data Rate
(based on excess usage
charge fee standard
post-paid service)
$15.36
$15.00
$10.24
$10.00
International Data Rate
(assuming no data pack
or travel plan purchased,
standard post-paid
service)
$5.00
$0.10
$0.25
$0.10
$Telstra
Optus
Vodafone
Source: Telstra, Optus & Vodafone websites accessed 24 April 2013
33. The difference between the prices paid by consumers for domestic and international voice &
SMS use is less pronounced, as per the following tables (New Zealand is again used as an
example as it is the number one destination for Australian travellers).
34. The magnitude of the retail roaming prices for voice, SMS and data paid by Australian travellers
in New Zealand are broadly comparable to the prices for these services paid by Australian
travellers in other top five destinations visited by Australian travellers. For example, prices
charged for voice call within New Zealand by all three providers range from $1.28 to $1.49 per
minute, while prices in China range from $1.24 to $2.10 per minute and prices in Thailand range
from $0.54 to $1.55 per minute. This difference in charging is far less pronounced than the
differences in global default data charging noted in the tables above. This view is also shared by
the MNOs who during consultation noted that the cost of data and lack of consumer awareness
is the main issue when it comes to mobile roaming.
13
Table for International Charges in New Zealand: default rates
Service Type
Telstra
Optus
Call within New
$1.28 per minute
$1.65 per minute plus a
Zealand
$0.40c connection fee
Vodafone
$1.49 per minute plus
$0.35 connection fee
Call to Australia
$2.80 per minute
$3.50 per minute plus a
$0.40 connection fee
$3.02 per minute plus
$0.35 connection fee
Receive calls
$0.64 per minute plus
$0.40 connection fee
$1.45 per minute
$1.17 per minute
Send SMS
$0.75 per SMS
To Australian number:
$0.55 roaming fee +
plan SMS rate.
$0.75 per SMS
To non-Australian
number: $0.55 roaming
fee + plan international
SMS rate
Receive SMS
Data
$0.00
$15.36 per MB
$0.00
$20.48 per MB
$0.00
$10.24 per MB
Australia – Domestic Rates
Service Type
Telstra
Call within
$0.99 per minute
Australia
+ 40c connection fee
Optus
$0.90 per minute plus
a + 35c connection fee
Vodafone
$0.98 per minute plus
+ 40c connection fee
Call to New Zealand $0.34 per minute
Landline
+ 40c connection fee
$0.30 per minute plus
a 35c connection fee
$2.20 per minute plus
+ 38c connection fee
Call to New Zealand $0.79 per minute
Mobile
+ 40c connection fee
$0.60 per minute plus
a 35c connection fee
$2.20 per minute plus
+ 38c connection fee
Send SMS
Unlimited in plan
$0.30 per SMS
Unlimited in plan
Receive SMS
$0.00
$0.00
Excess Data Charge $0.10 per MB
$0.25 per MB
(Prices are for a $60 post-paid plan, no data packs purchased)
$0.00
$0.10 per MB
35. The calculation of data use is not transparent to many consumers and this is exacerbated by the
often invisible data used by mobile devices to update location information services, e-mails,
apps, etc. Consumers are unable to choose an Australian service provider specifically for IMR
14
services and, with possible exceptions for frequent overseas travellers, it is unlikely that roaming
plays a role in consumers’ choice of carriage service provider.
36. A recent breakdown of IMR traffic indicates that data use is the main service used by travellers,
accounting for 72 per cent of usage. Voice and SMS use constitute 23 per cent and 6 per cent
respectively10. The high use of data correlates to the higher charges and unfamiliarity by
consumers over data usage, which both contribute to bill shock.
Consumer Complaints
37. An indicative measure of the prevalence of bill shock is the complaints data compiled by the TIO.
Over the past eight quarters (March 2011 to March 2013), there were 9,328 complaints to the
TIO relating to IMR11. The peak quarter for complaints was the September 2011 quarter with
1,531 complaints. This trend has been slowly declining since, with a low of 472 complaints in the
most recent quarter (March 2013). Disaggregated data (i.e. on a per country basis) is not
available. Overall, 3.4% of mobile complaints referred to mobile roaming charges in the 20112012 calendar year12.
38. Although a direct link cannot be established, this declining trend coincides with greater
consumer awareness information introduced by the industry, for example, the introduction of
notification systems.
39. IMR complaints to the TIO involved around $8m in disputed charges over the five quarters
between December 2011 and December 2012, averaging $1.6m per quarter13. The average
disputed amount per complaint was $1,700 for customers of the three MNOs (Telstra, Optus &
Vodafone) and $1,000 for the MVNOs14. For the most recent quarter of data, average individual
disputed amounts have increased. Complaints in this quarter are averaging $2,500 for customers
of MNOs and $1,300 for customers of MVNOs15.
40. This means that the average disputed amount per complaint to the TIO is increasing, with more
than 50 per cent of complaints to the TIO now for amounts greater than $1,000. TIO information
indicates individual cases of mobile roaming bill shock can be very significant for the consumers
who lodge a complaint with the TIO. This can, in rare cases, lead to extreme amounts being
disputed. In one instance, a customer who requested a $129 plan for a nine-week holiday in
Europe returned to a $75,000 bill. Subsequent bills increased this amount to $147,90816.
Chart redacted, Commercial-in-Confidence.
41. The TIO numbers do not reveal the entire bill shock caused by IMR charging as a number of
complaints are resolved by the service provider (customers must make a complaint to their
service provider prior to lodging a complaint with the TIO). These complaints that are resolved
prior to reaching the TIO generally involve the service provider writing off a significant portion of
the disputed charge amount; they also involve considerable time and expense on behalf of both
customer and service provider to resolve. Research conducted by the ACMA during the RTC
WIK-Consult, 30 May 2012, “Trans-Tasman Roaming: Service Costs”
Figures from quarterly TIO complaints data supplied to the ACMA March 2013
12
ibid
13
Telecommunications Industry Ombudsman, Feb 2013, “Submission on the draft International Mobile
10
11
Roaming Standard”
14
ibid
15
ibid
16
TIO Talks No 3 2012, “Roaming complaints down but disputed charges increase”
15
Inquiry indicated that 11 per cent of customers have lodged a complaint with the TIO; with 3 per
cent of customers surveyed doing so in the last six months to September 201117.
42. Using the average TIO disputed amount figure of $1.6m per quarter, IMR complaints constitute
$6.4 million annually. Assuming that only 11 per cent of complainants reach the TIO (as per the
ACMA’s research during the RTC Inquiry) and that the remainder of these complaints are
satisfactorily resolved with the charge reduced or written off by the providers, this puts an
approximation of the amount of disputed IMR payments at $58 million annually. Xxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx..
43. In addition to the above figures estimated and supplied to the ACMA, the TIO has also provided
a number of case studies as examples of bill shock. These case studies are provided as part of
the TIO’s public consultation submission and support the RTC Inquiry findings that a lack of
information on how charges are levied and a lack of information of how these charges
accumulate are the two core causes of bill shock.
Current consumer information on roaming provided by industry
44. Two of the three large providers already give their consumers some information via push
notifications about roaming on arrival. The first requirement therefore under the Direction may
only have minimal further impact on the number of complaints relating to IMR to the TIO. It is
anticipated that Telstra’s recent announcement of data alerts will reduce bill shock, however it
will be some months before any quantitative information on this impact is available.
45. While the status quo or business as usual approach has improved the IMR information
consumers of the major providers receive when they are overseas, it does not ensure MVNO
customers have the ability to opt-out of IMR services at any time while overseas. Customers of
MVNOs also may not receive information that they are roaming, information on arrival about
charges, usage alerts or spend management tools.
46. There is some prospect that the frequency of “bill shock” associated with IMR services would
reduce over time but not as quickly or to the extent likely to be achieved under the proposed
regulatory options consider in this RIS. With no mandated spend notifications or spend
management tool, the status quo does not ensure consumers can easily monitor and manage
their usage while overseas.
47. While spend management monitoring via apps is likely to be a very useful initiative for
customers who are familiar with organising, tracking and monitoring their IMR usage, it is less
likely to be useful to consumers who are unaware of the risks of using IMR services. It is these
customers who are more likely to be the subject of bill shock.
48. The key causes of bill shock were identified by ACMA research conducted during its
Reconnecting the Customer (RTC) Inquiry in 2011. The key causes are18:
(1) “A lack of consumer understanding of the basis on which charges are levied ...ACMA’s
research suggests that consumers who have experienced bill shock do not rate prepurchase information as particularly useful in preventing the risk of bill shock”
(2) “A lack of consumer understanding of the rate at which those charges accumulate.
50. The MNOs have introduced measures to provide IMR information to their customers beyond the
current regulatory requirements. All major providers meet some of the minimum requirements
17
18
ACMA Sept 2011, “Reconnecting the Customer Final public inquiry report”
Reconnecting the Customer Final public inquiry report September 2011
16
under the Ministerial Direction. It is unclear whether these measures would have been
introduced without the interest of the Government in IMR matters and whether it will be
maintained without regulatory intervention.
51. The three mobile network operators, Telstra, Optus and Vodafone, already allow consumers to
opt out of IMR services at any time.
52. However, consumers do not always have access to information about how to disable those
services while travelling. Nevertheless, there are a number of methods currently that provide
consumers with the ability to monitor their expenditure while travelling while there is no
requirement to advise consumers when high levels of expenditure have occurred. In many
cases, this expenditure can be inadvertently accrued through the use of data on smart phones.
53. Further information on current consumer roaming information provided by the three MNOs is
provided below.
Vodafone:
54. Vodafone appears to provide the most comprehensive notification systems among the big three
providers. Vodafone has provided ‘on arrival’ notifications to its customers since 2010. Vodafone
international roaming notifications are sent via SMS and include:
a. Notification that the customer has arrived in the destination country and is using IMR
services with information about the price of making a call, receiving a call and sending a
text;
b. A second SMS relating to data per MB (only sent if data is activated on that customer’s
service) and an invitation to the customer to purchase an add-on service.
c. Vodafone also provides an SMS alert for customers when they arrive back in Australia to
advise that they are no longer using IMR services, and to turn off and Overseas Data-add
on packs (if applicable).
55. Relative to the Ministerial Direction these notifications do not include the cost of receiving an
SMS message at an overseas location, advising customers at point of destination of the opt-out
mechanism, and the lack of warning message prior to the pricing information.
56. Vodafone offer an opt-out option via the MyVodafone app and webpage; customers who optout of IMR Services electronically can do so free of charge.
57. Customers can access usage details via MyVodafone, which is available online and as a
downloadable App for most mobile operating systems. No level of usage related push
notifications are included as part of Vodafone’s spend management suite.
Optus:
58. Optus requires customers to ‘Opt-In’ for IMR services at the point of sale for post-paid
customers. Optus customers can use the MyOptus app or call +61 2 8082 5678 to opt-out of IMR
services, which attracts a 50c flat fee.
59. Optus does not provide an ‘on arrival’ message to its customers, nor are pricing messages
provided to customers when they activate IMR services at an overseas location. Optus provides
push notification measures for many of its IMR customers, sending SMS notifications to postpaid non-corporate customers every time they use 5 MB worth of data.
60. Optus does not provide estimates of the customer’s spending. It does not provide information to
customers about when data packs expire and casual charging rates are levied.
61. Optus has introduced ‘unlimited data passes’ for residential customers in late 2010 xxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
17
xxxxxxx. More recently, Optus noted in its initial submission to the ACMA that xxxxxxx
xxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxx xxxxx xxxxxxx xxxxxxxx
xxxxxxxxx xxxxx. Xxxxxxxxxxxxx xxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxx xxxxx
xxxxxxxxxxxxxx
62. Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Telstra:
63. Telstra provides on arrival text messages that the customer is roaming to pre-paid and post-paid
customers. These messages do not contain pricing information; they consist of a warning
notification, a Telstra support message (different for pre-paid and post-paid customers) and a
message advising of the data usage notifications they may receive. Help line numbers are
included in this message (depending on whether a customer is pre-paid or post-paid). The ACMA
understands that customers can call these numbers and turn off international mobile roaming at
this time for a maximum fee of 50c, although this is not made clear in the notification.
64. On 30 April 2013, Telstra announced an international data usage alert system where an alert is
sent to customers for every 20MB of data they use overseas, except in Hong Kong. xxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxx xxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx. Telstra is sending a special message to
customers roaming in Hong Kong advising them that they will get 20Mb alerts, except in Hong
Kong. Telstra does not provide information to customers about when data packs expire and
casual charging rates are levied.
MVNOs:
65. The resellers the ACMA has liaised with require customers to ‘opt-in’ to use IMR services. The
TCP Code requires that IMR information is provided on websites and at the point of sale by
inclusion in the Critical Information Summary that is provided to all consumers. Many larger
MVNOs predominantly offer pre-paid services and this minimises the risk of bill shock due to
IMR.
66. At present, MVNOs are unable to provide notification that the customer is roaming, information
about charges; usage alerts or spend management tools. While the TCP Code addressed the
issues of consumer information and usage alerts, this was only in respect of domestic services.
Alternatives to International Mobile Roaming
67. A number of alternatives exist to utilising the IMR services of a domestic provider. These
alternatives include:
a. A customer purchasing a travel product from their domestic mobile service provider
b. Purchasing a travel product or travel-specific SIM from a third party
c. Purchasing a cheap phone & SIM pack at an overseas destination
d. Using an unlocked mobile device and purchasing a SIM overseas (many airports offer
SIM packs in vending machines)
e. Utilising free Wi-Fi: many hotels and large chains such as Starbucks offer free Wi-Fi .
68. The Three network providers (Telstra, Optus and Vodafone) offer specialist travel products
known as ‘data packs’ to their customers. These cover data use only; for Voice and SMS prices,
customers need to check the rates on their respective websites. An advantage of these data
18
packs is that the customer can often retain their usual phone number while overseas. It should
be noted that the default rates charged for excess usage after the purchase of a travel pack can
be the same as the casual rates, see the table below.
Data Pack
Telstra
Optus
Vodafone
(New Zealand)
Small
20MB: $29
Medium
120MB: $160
Large
500MB: $550
Default rate
$15.36 per MB
1 Day unlimited:
$10
3 Days unlimited:
$27
5 Days unlimited:
$40
$20.48 per MB
500MB: $25 per
month
1 GB: $50 per
month
1.5GB: 75 per
month
50c per MB
Vodafone
(Asia & Nth
America)
100MB: $30 per
month
250MB: $75 per
month
500MB: $150 per
month
$2.00 per MB
69. Travel specific products compare favourably with the rates for international roaming charged by
the Australian mobile network providers for some destinations. For some products customers
must unlock their phones and remove their domestic SIM card meaning they will not be able to
use their existing mobile phone number whilst travelling overseas.
Travel Products (New Zealand used as default destination)
Service Type
Woolworths
TravelSIM
Roamingsim
Global Roaming
Call within
New Zealand
$0.70 per
minute
$0.75 per
minute
$0.78 per
minute
Call to
Australia
$0.70 per
minute
$0.75 per
minute
$0.78 per
minute
Receive calls
$0.58 per
minute
$0.53 per SMS
$0.00
$0.65 per
minute
$0.59 per
SMS
$0.00
$1.00 per
MB
Send SMS
Receive SMS
Data (max
charge)
$0.00
$0.90 per MB
$0.64 per
SMS
$0.00
N/A
70. Including the alternative measures as a solution to bill shock is beyond the scope of the
Minister’s Direction, however a public awareness campaign has been planned to coincide with
the making of the IMR Standard.
71. The alternatives to IMR may be less attractive to consumers for a range of reasons. For
example, if a consumer purchases a new SIM for travelling, they may have a different contact
number to that for their domestic use. In addition, a customer may have to pay a significant
amount to unlock their mobile device prior to being able to utilise an alternative SIM. Free Wi-Fi
is widely available in some destinations; however it is not ubiquitous and may be subject to
variable performance and questions about data security. In short, many of the alternatives to
19
IMR do not provide a seamless experience for consumers, but nevertheless remain an attractive
alternative.
20
Objective
72. The overall objective of the IMR Standard is to meet the terms of the Australian Communications
and Media Authority (International Mobile Roaming Industry Standard) Direction (No. 1) 2012.
73. To meet this objective the ACMA will create an IMR Standard focussed on three key initiatives
identified in the Direction:
(1) Providing users of IMR services with easily understood information about the services
while they are overseas
(2) Allowing users of IMR Services to stop using IMR services, at anytime, cheaply and easily
(3) Enabling consumers to better monitor and manage their spending while roaming overseas.
21
Options
74. As the ACMA has been directed by the Minister to make a Standard, it has no discretion
regarding the mechanism for regulation. This effectively excludes the status quo as a feasible
regulatory option from the ACMA’s perspective. Accordingly, the RIS has considered three
feasible regulatory options in relation to the provisions to include in the Standard. However, the
status quo as presented in the problem section is used as an analytical baseline for assessing the
relative costs and benefits of the three feasible regulatory options. This is undertaken in the
impact analysis section.
75. The ACMA notes that all three options require incremental change to the existing voluntary
initiatives by industry and build on the approaches already being taken by many providers.
Consequently some of the cost in complying will have already been absorbed by the providers.
An education program about the risks of IMR and available alternatives to IMR will be
undertaken by the ACMA, irrespective of the option chosen.
Option 1 – Minimal requirements under the Direction
76. The Ministerial Direction requires that the ACMA set minimum requirements for providers to
give consumers information on arrival at an overseas location about the charges applicable for
IMR at that location, in addition to allowing consumers to decline the continued provision of
those services at any time while at that destination.
This means the following consumer protection measures would be mandated under the
Standard:
a. MNOs to send on-arrival notification that the customer is roaming to all consumers on
their network;
b. Communication Service Providers (CSPs), which is all MNOs and MVNOs, to give
consumers charging IMR information on arrival at an overseas destination;
c. communication systems to be established between first and second providers so that
charging information can be communicated to customers of MVNOs;
d. all consumers must be able to opt-out of roaming services at any time at an overseas
destination.
Option 2 –Extensive requirements for alerts and spend management tools
77. This option involves systems development well beyond the requirements in both the Minister’s
Direction and the TCP Code, and introduces new approaches to spend management tools.
78. It is designed to provide consumers with the maximum amount of information possible,
including spend alerts for voice, SMS and data usage while overseas. The timely provision of
information and alerts are seen as a key component of mitigating Bill Shock.
79. Spend management tools in this option involve providing real-time estimates of all customers’
usage and expenditure for voice, SMS and data. Specific requirements involve the elements
described in Option 1 above plus:
22
a. Alerts for pre-paid customers when they have reached specified percentages of their
credit;
b. Requiring consumers using post paid data packs to opt-in to an additional data pack
or lose service; and
c. Providing spend alerts each time consumers reach $100 expenditure for their
services.
80. Actual cost information would be provided on arrival overseas in a specified format. This would
require providers to provide personalised pricing information to each customer.
Option 3 – Multi-tiered approach
81. This approach involves establishing the consumer protections as prescribed in the Direction with
further measures as allowed for under the discretionary elements within the Direction. This
option also takes account of the ACMA’s own research as well as the feedback gathered by the
ACMA during consultation.
82. This approach focuses on seven significant consumer protection measures as follows:
1. A notification via SMS to be sent to all consumers upon arrival in an overseas destination,
warning them that significantly higher charges for using IMR services will apply.
2. A notification via SMS to be sent to all customers of CSPs that are also network providers
(and at a later date all CSPs), giving them pricing information for using a range of IMR
services, including services that would normally be free in the domestic market (such as
receiving a call on a mobile device).
3. Providing customers with the ability to decline the use of IMR services, at low cost, at any
time (including from an overseas location).
4. Available spend management tools for IMR services must be explained to customers.
5. Usage notifications via SMS must be sent to customers, for data usage only (except for
included value packs that include voice and SMS). These notifications are required for
AUD$100 increments for data usage and notifications at 50%, 85% and 100% of included
value in the event a customer has purchased an included value pack from their service
provider.
6. When an included value pack is exhausted, suppliers must notify customers of the charging
arrangements for continued use of IMR services. Pre-paid services are excluded from the
requirements for spending notifications and spend management tools unless they are
automatically topped up.
7. Delayed implementation (12 months after Standard takes effect, i.e. 23 August 2014) for
the requirement of the MNOs to notify the second or subsequent CSP (MVNO) when a
customer activates a mobile/SMS capable device. Delayed implementation to 23 May 2016
for MVNOs for to provide on arrival cost information and usage alerts to consumers, with
MVNOs to provide pre-departure information until that time.
23
Impact Analysis
Option 1
Costs
83. Option 1 is expected to result in total industry establishment costs of $xx million, with ongoing
costs of around $xx million per annum. Most of these costs fall on the MNOs. It should be noted
that MNOs are already complying with many of the elements of option 1, largely due to changes
they have made in the past few years. During consultation, some MVNOs indicated that the
compliance costs associated with this option may cause them to leave the IMR market.
84. The implementation costs for a warning SMS and basic price information SMS that meet the
minimum requirements of the Direction are estimated at between $xx million and $xx million
(combined) for Telstra and Optus to implement, exclusive of existing systems development
costs. Vodafone has not provided any figures, but notes that implementation costs will vary
significantly depending on implementation timeframes (longer timeframes would reduce costs).
As Vodafone already has a comprehensive warning notification system in place, its
implementation costs are expected to be relatively low. These costs relate to the alteration of
the arrival notification to include a warning about costs and information about opting out of IMR
services.
85. A major cost involved in option 1 would be the development of a communication system
between MNOs and MVNOs in order to inform the latter that one of its customers is roaming
within an hour of the first provider becoming aware that the consumer is roaming. This is
estimated to be approximately $xx per MNO with the implementation costs falling with a longer
lead time to implementation. This adds $xx million to the total establishment costs.
86. Separate development costs will also be borne by resellers who (due to their smaller size) may
find this impact to be financially greater, up to $xx per provider based on the resellers who have
made submissions to the ACMA. While MVNO engagement in consultation processes for the
standard was limited, two of the MVNOs indicated that this may cause them to leave the IMR
market. It may also deter new entrants into the mobile service industry from offering IMR
services.
87. The MVNOs that the ACMA has liaised with note that IMR is not a core part of their business
model, and in some cases is only offered to corporate clients. Each described itself as a pricetaker for IMR services.
88. It is also worth noting that some MVNOs may be aggregators/wholesalers themselves, and will
therefore be required to establish systems to pass on information to other MVNOs. This is an
additional cost that aggregator MVNOs will be required to cover, however no representation of
the scale of these costs is currently available.
Benefits
89. This option standardises and mandates the warnings and charging information consumers will
receive when they arrive overseas and ensure that this information is received by all consumers
no matter their service provider.
Specifically, Telstra customers will receive (compared to the status quo):
24

messages detailing pricing information for IMR services.
Optus customers will receive the following benefits (compared to the status quo):


an ‘on arrival’ message informing customers that they are using IMR services;
and
messages detailing pricing information for IMR services.
Vodafone customers will receive the following benefits (relative to the status quo):

a warning that significantly higher charges are likely to apply due to IMR
services.
90. The recent move by Telstra and Optus to introduce data alerts for mobile roamers indicates that
there is also likely to be a benefit to mobile roaming service providers (in addition to the
consumer benefit) to provide this facility. This benefit is not reflected within Option 1.
91. Customers of MVNOs will receive the benefit of a reduced likelihood of Bill Shock from all the
elements of this option. The additional information provision requirements on MNOs and
wholesale MVNOs will also enable MVNOs that wish to compete in the IMR market to know
when their customers are using IMR services and have improved information about IMR charges
from wholesalers. The customers of MVNOs will then benefit from the requirement that this
information is communicated to them.
Risks
92. While option 1 meets the terms of the Direction, it doesn’t enable all IMR consumers to easily
monitor and manage their usage while overseas. The information provided to consumers would
therefore be limited to an initial warning, and an ability to opt-out and information about prices.
Although it explains prices for IMR services, it does not assist consumers to understand or
measure how usage and IMR costs accumulate. Information about data usage on smart phones
remains opaque to the user. As travel packs purchased from MNOs may revert to the
considerably more expensive casual rates once the data allowance is exhausted, customers risk
bill shock as they will not receive usage notifications or spend management tools.
93. There is value in the ability to monitor usage in addition to sending price alerts on arrival.
Reducing the frequency of bill shock incidents – without also tackling the increasing ‘size’ of
those incidents as indicated by the TIO data - means that the cost to the community of IMR bill
shock incidents may remain relatively high.
Option 2
Costs
94. Option 2 is expected to result in total industry establishment costs of $xx million, with ongoing
costs of around $xx million per annum. Most of these costs fall on the MNOs. During
consultation, some MVNOs indicated that the compliance costs associated with this option may
cause them to leave the IMR market. Consultation also revealed that elements of this option are
likely to impose significant costs on industry but provide no tangible benefit to the issue of bill
shock.
25
95. Option 2 would have significant cost implications for industry. In addition to the cost associated
with option 1, industry would be required to quickly develop systems for providing personalised
pricing information, spend management and usage notifications for a comprehensive variety of
IMR services.
96. The actual cost information requirement in the SMS cost information message would require
integration back to existing billing systems. The notifications requirements would be prescriptive
and required to be implemented at the time the Standard is made. This helps standardise
information across the industry however adds up to $xx million in initial compliance costs across
the MNOs.
97. This option is the most costly to implement, involving substantial investment for resellers
relative to market share. Estimates put total development costs of this option at up to $xx
million for MNOs. This figure excludes any development costs for Vodafone except for the $xx
communications system development cost for MNO-MVNO communications.
98. Vodafone has a number of systems in place that are expected to keep implementation costs for
customer notifications and warning messages lower than for Telstra and Optus. This version of
the Standard does require different types of usage notifications to be sent for different types of
roaming customer (post-paid customers, pre-paid customers and automatic pre-pay service)
which represent a contributing factor to these higher costs.
99. These costs for industry exclude any ongoing costs for updates and maintenance which can be
substantial, with estimates for Optus running at $xx million. A reasonable estimate of ongoing
costs, extrapolated from Optus’ figures, is therefore a minimum of $xx million for MNOs.
100. Advice from industry indicates that the costs of establishing the more prescriptive elements
of this option are significant and may have the unintended consequence of forcing most MVNOs
out of the market. This outcome is even more likely than under option 1. It is likely to be
uneconomical for most MVNOs to build notification systems in a short timeframe, noting that
MVNOs have advised the ACMA that IMR services are not a core part of their business model.
The measures may also deter new entrants.
101. Some of the measures in this proposal, such as notifications at 100% of usage for pre-paid
consumers, are of limited benefit as this notification is mirrored by the service halting due to the
exhaustion of credit. Providers are unanimous in opposing measures such as this that impose
significant cost to industry that provide no tangible benefit to addressing the issue of bill shock.
Benefits
102. The benefits identified at Option 1 also apply to Option 2. Additional benefits under this
option are discussed below.
103. This option provides the most comprehensive suite of benefits to consumers in a short
timeframe, including the consumers of resellers who utilise IMR services. It requires that
resellers develop systems to mirror the services provided by the MNOs, covers a comprehensive
array of notification requirements (both at and after the first roaming contact) as well as
covering the mandatory elements in the IMR Direction.
104. As travel packs purchased from MNOs may revert to considerably more expensive casual
rates once the data allowance is exhausted, customers will benefit from usage notifications and
spend management tools. The additional information provision requirements on MNOs and
wholesale MVNOs will also enable smaller MVNOs to provide spend management tools and cost
information to their customers which is currently not possible. Depending on the associated
26
costs this could be a significant improvement on the status quo for both the MVNOs and
consumers as they will both be kept more informed. It is likely to reduce the likelihood of bill
shock for consumers and substantially reduce the magnitude of bill shock when it does occur.
105. The inclusion of spend management tools will provide consumers with an increased level of
confidence in using IMR services overseas.
Risks
106. The main risk of this option relates to the incremental benefits achievable relative to the
costs of the option. The main problem identified with mobile roaming has been the consumer
lack of awareness and propensity to accumulate large costs due to data usage. This option
includes mandated requirements and costs related to voice and SMS and pre-paid and post-paid
services. In other words, it is less clear that the large cost of this option would deliver significant
benefits relative to options 3 analysed below.
Option 3
Costs
107. Option 3 is expected to result in total industry establishment costs of $xx million, with
ongoing costs of around $xx million per annum. Most of these costs fall on the MNOs. During
consultation, some MVNOs indicated that the compliance costs associated with this option may
cause them to leave the IMR market. The cost of option 3 is expected to be slightly higher than
for option 1 and significantly less than for option 2. The extra cost relative to option 1 is largely
due to the requirement for spend management tools, though this is somewhat offset by the
delayed implementation of the common elements under option 3. The lower cost relative to
option 2 reflects the later implementation date, and the removal of certain ineffective
provisions. These relate to pre-paid services, voice and SMS spend management tools.
108. The major cost involved with this proposal is the development of a communication system
between the first and second provider in order to inform the latter that one of its customers is
roaming within an hour of the first provider becoming aware that the consumer is roaming. This
undertaking is the same as that required in Options 1 and 2. However, Option 3 allows the
providers 15 months from registration to establish these communications systems and spend
management tools. MVNOs then have until May 2016 to build their systems to provide on
arrival cost information and usage alerts to consumers. This is estimated to be slightly less than
the $xx estimate per MNO as per Option 1 due to the longer lead time to implementation.
109. This requirement, as with Options 1 and 2, will also be borne by resellers who (due to their
smaller size) may find this impact to be financially greater. Estimates for MVNOs are up to $xx
per provider though likely lower due to the longer lead time to implementation which means
that systems development can be planned in advance. As per option 1, the impact of option 3
may cause some MVNOs to leave the IMR market and may deter new entrants. The MVNOs that
the ACMA has liaised with all note that IMR is not a core part of their business model.
110. MVNOs that offer pre-paid services only, will not have to develop spend management tools
(from 2016) unless they require automatic top-up payments from their customers. This should
reduce compliance costs relative to option 2 and therefore reduce the likelihood of MVNOs
exiting the industry. It is also worth noting that some MVNOs may be aggregators/wholesalers
27
themselves, and will therefore be required to establish systems to pass on information to other
MVNOs.
111. Option 3 can be implemented at significantly lower cost than Option 2 because the spend
management requirements apply only to post-paid data services and the implementation
timeframe for the building of inter-operator systems is extended. The implementation costs for
MNOs for this proposal at estimated at $xx million, assuming that the extended timeframe for
the development of MNO communication systems between MNO-MVNOs falls from $xx to $xx
each. This $xx million establishment cost is $xx million dollars less than the establishment costs
for Option 2 and $xx million more than the establishment costs for Option 1. Ongoing costs are
estimated at $xx million dollars per annum.
112. The delayed commencement of some provisions contained within this option will lead to
MVNOs who would have exited the IMR market earlier under Options 1 & 2 continuing to offer
IMR services to their customers until such time as compliance costs cause them to make a
business decision regarding the continued supply of IMR services. Therefore, lessening of
competition in the small but growing provider sector of the IMR market remains a likely
outcome despite a delayed implementation of the Standard.
113. Those that continue to offer IMR services may increase prices for some domestic services to
recoup systems establishment costs. This may have a small impact on competition in one
segment of the market, although the magnitude of the impact on competition is difficult to
ascertain. It is probable that in the absence of competitive pressures from smaller MVNOs, the
market may become more concentrated towards the larger providers and toward alternatives to
IMR services.
Benefits
114. The benefits of Option 1 identified above also apply to Option 3. The following additional
benefits are expected under this option.
115. The proposal builds on the MNOs’ moves to improve data usage tools for post-paid
customers. It acknowledges the benefits in these moves while adding value by requiring data
usage estimates be converted into dollar estimates for casual use, acknowledging that charges
for such use vary substantially and requiring alerts to be pushed to customers.
116. The key benefits of this proposal are the targeted way that the measures relate to the major
causes of bill shock. Disclosure of prices and charging methodology is increased and provided at
an opportune time. Consumers receive a targeted and timely warning about the use of IMR
services at the time their IMR service is activated overseas.
117. In addition, consumers will be able to better manage their spending habits while overseas,
via a combination of information available with various spend management tools and with the
notifications they will receive (data package and post-paid customers) that alert them to usage
at relevant times. The spend management tools have been focussed on those customers most at
risk of bill shock - post-paid customers using their mobile devices for data. Monitoring of data
usage is currently difficult for the consumer using IMR services.
118. Behavioural economics research suggests that up-to-date information on usage is best
“pushed” out to consumers, who are inclined to discount the consequences of a high bill in the
future unless it is brought into their present”.
Specifically, Telstra customers will receive (compared to the status quo):
 messages detailing pricing information for IMR services;
28


SMS information about how to opt out of IMR services; and
spend management alerts (as distinct from usage alerts) for included value packs
and post-paid data services.
Optus customers will receive the following benefits (compared to the status quo):




an ‘on arrival’ message informing customers that they are using IMR services;
messages detailing pricing information for IMR services;
SMS information about how to opt out of IMR services; and
spend management alerts (as distinct from usage alerts) for included value packs
and post-paid data services for all customers.
Vodafone customers will receive the following benefits (relative to the status quo):



warnings that significantly higher charges are likely to apply due to IMR services;
SMS information about how to opt out of IMR services;
push notifications of spend management alerts for included value packs and
post-paid data services.
Customers of MVNOs will receive the entire suite of benefits under this proposal. This option allows
MVNOs which choose to remain in the IMR market the opportunity to compete with MNOs in terms
of service. It requires MNOs to provide MVNOs with information that gives the customers of MVNOs
transparency about IMR charges and allows MVNOs to offer usage management tools. Consumers
will be able to opt out of IMR services at any time, cheaply and easily.
119. The benefits above compare favourably with the benefits expected in Option 2, largely
targeting and mitigating the main causes of bill shock identified during the ACMA’s RTC Inquiry.
The longer lead times and later commencement dates may also keep some MVNOs in the IMR
market as investment can be planned and costs managed over a three year period.
120. As travel packs purchased from MNOs revert to the more expensive casual rates once the
data allowance is exhausted, customers will benefit from usage notifications and spend
management tools. This is an improvement on the status quo for both the MVNOs and
consumers and is likely to substantially reduce the likelihood of bill shock.
Risks
121. Given the number of individual SMSs that a consumer may receive while overseas (including
welcome messages from a visited network and pricing information for the majority of
consumers), there is a risk that the impact of the warning message may be diluted. The ACMA
plans to mitigate this issue by allowing a 14 day period in which a customer receiving a
notification in one country will not receive the notification again from the same country within
these 14 days.
Comparative Impacts of Options 1, 2 and 3
122. In order to provide an illustration of the differences between the costs and benefits under
the three options considered in this RIS, the estimated costs under each option are compared to
the estimated value of complaints that would be required to be reduced in order for the “costs
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of reform” under each option to be paid off. For the purposes of this “break-even” analysis, the
three MNOs and five MVNOs are assumed to provide IMR services over a 10-year period, while
the estimated annual amount of disputed charges for IMR of about $58 million using the TIO
data is used as the annual existing level of detriment (or maximum benefit to be realised). No
indexation is applied over time as trends in overseas travel by Australians, IMR charges and
changes in data download speeds are difficult to predict. Ongoing costs are assumed to be
stationary for the purposes of comparison.
123. Using the information and data presented in the RIS, the table below provides a guideline for
the annual percentage reduction in disputed charges required for the costs to be met under
each option.
Option 1
Option 2
Option 3
Total establishment
costs
$xx million
$xx million
$xx million
Annual costs over a 10
year period
$xx million
$xx million
$xx million
Total impact over 10
years
$45.2 million
$112.3 million
$54.9 million
Amount of disputed
charges over 10 years
$580 million
$580 million
$580 million
Total reduction in
disputed charges
required to ‘break
even’ over 10 years
7.8 per cent
19.4 per cent
9.5 per cent
124. The illustrative analysis suggests that Option 1 requires a 7.8 per cent per cent total
reduction over 10 years in consumer complaint value to reach a ‘break even’ point. Option 2
requires a 19.4 per cent reduction in consumer complaint value over 10 years. Option 3 requires
a 9.5 per cent reduction in disputed charges over 10 years. In relative terms, Option 3 provides
very similar benefits to Option 2 but with a much lower estimated “break-even”. While Option 1
has the lowest estimated “break-even”, its benefits are likely to be less than those achievable
under Option 3 (and Option 2) as much of the provision of mandatory information under Option
1 is largely consistent with current practice by industry.
Competition impacts of Options 1, 2 and 3
125. The analysis presented suggests that the feasible regulatory options (1 to 3) all restrict
competition in one small but growing segment of the market because the implementation costs
analysed are likely to lead some smaller businesses cease their participation in the roaming
market leading to a reduction in consumer choice. The negative competition effects cannot be
ascertained with confidence given the corresponding growth in Australian travellers and the
emerging market in alternate suppliers of travel products.
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126. The “direct” competition impacts are focussed on MVNOs, noting that a substantial
proportion of smaller MVNOs do not offer IMR services (including fast growing MVNOs such as
Kogan and Aldi). Exit from the IMR market by some small providers is a likely result, and the
proposed regulation is likely to increase the barriers to entry in that relatively small segment of
the market. While alternative IMR products and services may result in being viable substitutes, it
is difficult to envisage the extent to which these would place competitive pressure on the
incumbent providers in the absence of competitive pressures from MVNOs.
127. Restrictions on competition are contrary to the requirements of the National Competition
Policy (NCP), and the Competition Principles Agreement which was put in place by the Council of
Australian Governments in 1995. NCP “is based on an explicit recognition that competitive
markets will generally serve the interests of consumers and the wider community, by providing
strong incentives for suppliers to operate efficiently and be price competitive and innovative. A
key principle of NCP is that arrangements that detract from competition should be retained only
if they can be shown to be in the public interest”. NCP does recognise a need for government
intervention in markets, where this is justified.
128. The RIS requirements in the Australian Government’s Best Practice Regulation Handbook
(June 2010) state:
Where your particular proposal restricts competition, the RIS must demonstrate that it will
deliver benefits to the community that outweigh its costs, and that there are no alternative
means of achieving the same objective without restricting competition. This is required to
meet the Australian Government’s commitments under the intergovernmental Competition
Principles Agreement, which is designed to promote competition in the economy and the
benefits that it can bring to the community.
129. While the Ministerial Direction and the requirement of the ACMA to implement a Standard
preclude the ACMA from considering the status quo as a feasible option, the RIS has attempted
to demonstrate that there are community benefits that outweigh the costs. These include:
a. The timely delivery of better information to consumers about the costs of IMR
services;
b. Better consumer control of access and use of IMR Services;
c. Improved information flow between MNOs and MVNOs which allows MVNOs to
offer IMR services which can be used by consumers with more confidence; and
d. Expectations of a reduction in the incidence and size of ‘bill shock’ events associated
with IMR services (currently estimated at $58 million per annum).
130. Based on the analysis presented in the RIS, Option 3 is a relatively low cost option, while
delivering relatively low benefits. Overall, it is likely that Option 3 would result in a relatively low
but positive net benefit. In contrast, Option 1 has lower costs than Option 3, but it is likely that
benefits achievable under Option 1 would be marginal, given the narrowing gap between
existing industry practice and the minimum mandatory requirements under this option. In terms
of Option 2, it is expected to have the highest costs, but it is unlikely for benefits under this
option to be significantly different to Option 3, given that Option 3 targets data usage as the
main concern of bill shock. Hence, Option 3 is the preferred option.
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Consultation
131. Consultation is important to ensure that all affected stakeholders are provided the
opportunity to provide input into the development of the Standard. In particular, the ACMA
wanted to ensure that the appropriate balance is found between protecting consumers and
imposing costs on industry. The ACMA was also interested to hear the views of resellers, as the
IMR Direction applies to all CSPs offering IMR services, regardless of their level of market
participation.
132. There were three main elements to the ACMA’s consultation:
(1) Preliminary Consultation including stakeholder workshop
(2) Public Consultation
(3) Post-public consultation (targeted consultation)
Preliminary Consultation and Stakeholder workshop
133. Following receipt of the Ministerial Direction, the ACMA wrote to Telstra, Optus and
Vodafone on 7 September 2012 seeking responses to the following questions:
a. Do you notify customers when they are to incur IMR charges? If so, how, and in which
jurisdictions, are the notifications provided?
b. Is there any facility to cap the total charges which may accrue while a customer is travelling
outside Australia? In which jurisdictions are such caps available?
c. Are your customers provided with an opt-in or opt-out default for using IMR services? When
are these decisions made and at what point(s) can they be changed?
d. Do you provide customers with any usage notifications when they are using IMR? If so, how
and when are the notifications provided?
134. Feedback was sought until 12 October 2012. Further to this a stakeholder workshop was
held on 27 September 2012 in Sydney.
135. The objective of the workshop was to allow Industry, Industry representative bodies and
Consumer representative bodies to provide an input into the process of creating the Standard.
136. Representatives from the following organisations attended the 27 September workshop:









Communications Alliance
Australian Mobile Telecommunications Association
Telstra
Optus
Vodafone
TPG
Spintel
Telecommunications Industry Ombudsman
Australian Communications Consumer Action Network
Invitations to the workshop were extended to iiNet and M2 Telecom who did not attend.
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137. The ACMA also met individually with representatives of various service providers prior to
drafting the Standard to clarify issues raised and to ask individual questions in response to
submissions.
Public Consultation Process
138. Following the information gathered in the preliminary consultations, the ACMA drafted an
IMR Standard for public consultation.
139. On 13 December 2012 the ACMA released the draft consultation IMR Standard for public
comment. As per section 132 of the Act, the ACMA is required to undertake public consultation
prior to determining a Standard and invite submissions for a period of at least 30 days. As the
public consultation period occurred over the Christmas break, the public consultation period was
extended until 1 February 2013 to allow sufficient time for all relevant stakeholders to
contribute a full and considered response.
140. Individual meetings were held with the three major providers during the public consultation
period to respond to clarify the intent of the drafting within the Standard.
Submissions
141. A total of 26 formal submissions were supplied to the ACMA as part of the public
consultation process. The submissions were received from a variety of sources:
 12 from consumers (including 1 SME) and 1 from the peak consumer advocacy body, the
Australian Communications Consumer Action Network (ACCAN).
 3 from MNOs
 3 from MVNOs
 2 from Representative Industry Bodies
 2 Government organisations
 Submissions from the Telecommunications Industry Ombudsman (TIO) and the Australian
Compliance Institute (ACI)
The submissions to the public consultation process have helped the ACMA gauge the concerns of
interested stakeholders as described below.
Targeted Consultation
142. Due to the number of amendments that followed public consultation, the ACMA held a
number of one on one teleconferences and meetings with key stakeholders throughout
February and March. As a result of these meetings a final draft Standard was prepared, with a
short public consultation process held from 4 April to 11 April 2013. Specific contributors the
ACMA had previous correspondence with and submission from were advised of this
consultation.
143. Seven responses were received by the ACMA; from the three MNOs, the ACCC, ACCAN,
AAPT, and a combined submission from CA and AMTA. These are available online at the ACMA
website.
144. This final consultation process included direct contact with a number of key stakeholders to
ensure they had a chance to provide final input into the Standard after the consultation period
33
had finished. In addition to meetings and teleconferences held before and after this consultation
process, the ACMA continued e-mail updates and responses with stakeholders to ensure the
process of finalising the IMR Standard was as collaborative an effort as possible.
Consolidated Stakeholder Views
Notification Requirements
 Vodafone and Telstra currently provide notifications for their retail customers upon arrival
at an overseas destination, however this is not in real-time and significant delays may
occur. These notifications are sent in SMS form. One MNO does not have the functionality
to send welcome messages however it is being introduced for their retail post-paid
customers. Developing or altering this capability will have a financial impact.
 One MNO noted that allowing “maximum” price information in notifications in lieu of
personalised price information is a much cheaper solution that has similar benefits for
customers.
 There are contractual and separation issues in sending welcome messages to wholesale
customers who do not have a direct relationship with one of the MNOs.
 MVNOs note that as the MNOs already have the capacity to send notifications, MNOs
sending notifications on behalf of MNVOs is the most efficient industry solution. There is
no market efficiency in replicating this ability.
 Some mobile devices such as tablets/iPads may not be able to receive an SMS and/or
consumers may not know how to readily access an SMS that is received on the device. This
is only a fraction of the market at this stage however there is some incentive for the
Standard to be as future-proof as possible.
 E-mail is not a solution to the tablet/iPad issue as there are costs in downloading e-mails,
and if a download has not occurred for some time there may be significant charges as all emails are downloaded in bulk at an overseas location.
 Customers should be allowed to “opt out” of receiving notifications.
Prescriptive Nature of Notifications
 MNOs and MVNOs expressed a desire that the Standard avoid being prescriptive where
possible in the wording of notifications. There was agreement that the ACMA should not
dictate the wording of warning or pricing alerts, with increasing costs, complexity, interoperator arrangements and longer implementation times all offered as arguments against
prescriptive wording.
 If the Standard is prescriptive, this reduces differentiation between providers.
 Existing European regulations do not stipulate the technology that must be used to deliver
notifications.
Usage Notifications
 Usage notifications are problematic for Voice calls and SMS as there are delays of 24 hours
to 60 days in receiving this information from overseas providers.
 Due to the differences in international routing, data usage is “near real-time” so
notifications for data can be sent as soon as designated benchmarks for customer usage
are reached.
 Usage information is not the same as charging information so there is potential for
customers to be misled or for complaints to arise when a customer receives their bill.
 Different charging regimes in different countries create the potential for confusion.
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


Due to delays in using the voice and SMS service and the Mobile Carrier receiving charging
information, there may be significant delays in a customer reaching a designated
notification level, and the notification being sent to the customer.
There will be development costs involved in complying with any usage notification
requirement which may be significant.
Notifications are unnecessary for pre-paid users as they are immune to bill shock (service
ceases once credit runs out).
Spend Management Tools/Apps
 The cost in setting up prescribed App is a major imposition upon MNOs & MVNOs, and the
Standard should seek to keep costs upon industry to the minimum imposition possible if a
viable alternate exists.
 Third party Apps currently available do not meet all of the requirements of the first draft of
the IMR Standard. Prescriptive requirements to replicate this market are inefficient, as
Apps require constant updating for multiple mobile devices and operating systems.
 Any App that relies on handset usage information is likely to be inaccurate, and there are
difficulties in obtaining usage information on iOS platforms.
 As some CSPs already provide Apps or are developing Apps, overly prescriptive App
requirements will disrupt existing Apps and/or plans which add cost to compliance for no
consumer benefit.
 There is usually at least a 48 hour delay in receiving Voice & SMS information from
overseas providers, and evidence suggests most of the bill shock issue relates to data usage
and customer inability to reconcile data usage with charging information. As such, spend
management tools should focus on data usage.
 Tools to manage data usage are cheaper and easier to implement, and data usage
information can be provided in near real-time.
Reseller Issues
 Currently, MNOs do not liaise directly with the customers of MVNOs due to the operational
separation that is a key contractual issue between wholesalers and resellers. There may be
an impact on contracts already in place between providers, if the generic warning message
is required to be sent to customers of MVNOs by MNOs.
 Having more than two service providers in the “chain” of servicing a customer (i.e. with
“aggregator” providers between a CSP and the MNO) causes further complexity with the
issue of contacting customers.
 MNOs do know which mobile numbers relate to customers of MVNOs on their network,
but have no way of knowing to which reseller a wholesale customer belongs to.
 The MVNOs that have responded to the ACMA do not currently have the capacity to send
notifications to customers. If this requirement was to be mandated, many would not offer
IMR services to their customers, which would have the net effect of reducing competition.
 It is in the interests of MVNOs to provide consumers with as much pre-departure
information as possible to reduce bill shock, as complaints regarding this issue “take
considerate time and resources to resolve”.
 MVNOs usually have IMR service set to off as a default, and customers are required to
contact their provider to activate these services prior to departure.
 Spend management tools are difficult to implement due to the delays in receiving
information from MNOs, and may not be economically feasible for smaller MVNOs.
 Accurate charging information can be difficult for MVNOs to calculate in advance
35
Implementation Issues
 Some MNOs are largely complying with the provisions in the IMR Standard, while others
have to build systems from scratch. Time implications should be taken into account as
much as the cost.
 A phased implementation schedule is recommended for the more technically challenging
aspects of the Standard.
Consumer Concerns
 The Standard does not resolve the issue of push notifications to non-SMS enabled devices
(e-mail suggested as an alternative, issue with e-mail noted above under the notification
sub-heading)
 Customers should be informed about their phone being locked and methods of unlocking
their phone from their network
 Any application should be seen as complementary to other spend management tools
 Cruise ship systems and other non-national networks are not accounted for
 If a MNO fails to provide the generic warning message, this may create issues for the
specific customers who are overcharged without receiving the message
 The cost of retrieving voicemail messages and the cost of sending an SMS within the same
overseas country should be part of the warning information.
 The cost of diverting calls to voicemail while someone is overseas may also attract charges,
and this should be made clear by the CSP.
 Data charges should be quoted in higher denominations (i.e. per MB or GB) as price per Kb
can make costs appear low to non-tech savvy consumers.
 Some customers want a hard cap on prices in place for overseas travel, either a nominated
mandatory amount or a customer set-limit organised pre-departure.
 An easy method of checking balances should be in place such as the use of USSD codes (i.e.
2 Degrees Mobile New Zealand use *100*1# for information).
Other Views
 The TIO notes that there are occasions in which the MVNO and the MNO require dispute
resolution regarding charges accrued by a customer of a reseller.
 Consumer education is as much a key as mandatory conditions, e.g. What does a MB or GB
of information actually mean? What alternatives to roaming are there?
 A focus should be made on the ‘less transparent” costs associated with IMR, such as
receiving a call or message, or automatic updates on a smart device that use data
downloads.
 There is broad agreement amongst major providers that timely provision of information
and transparency of pricing helps to mitigate the effects of bill shock, supporting the
findings of the ACMA’s RTC Inquiry noted earlier.
Consideration of stakeholder views
145. Post-consultation, the ACMA made a number of amendments to the Standard in response to
the balance of concerns submitted from the telecommunications industry, consumers and
relevant stakeholder groups. This is important as it enables more effective implementation of
the Standard and reinforces the seriousness in which the ACMA takes submissions to the public
consultation.
146.
The changes applied since the first consultation draft of the Standard are:
36
General
a. References to elements of the Standard complying with the Spam Act 2003 (Spam Act) and
the Privacy Act 1998.
Definitions
b. Updated to reflect terms introduced in the final version of the Standard.
Section 5
c. Allowing CSPs to use their own wording and terminology in lieu of the prescribed wording
proposed. If a CSP does use their own language, a note is included to ensure they comply
with the Spam Act.
d. Amending the cost requirements from a 2 minute to a 1 minute phone call, and adding the
cost of receiving a 1 minute call and an SMS.
e. Extended implementation (12 months after Standard takes effect i.e. 23 August 2014) for
the requirement of the first CSP (effectively the MNO) to notify the second or subsequent
CSP (MVNO) when a customer activates a mobile/SMS capable device.
f. No obligation to send SMS’s or notifications to customers if they activate their device in the
same country within 14 days of the first message is sent.
Section 6
g. Extended implementation (23 May 2016) for the requirement of the second or subsequent
CSP (MVNO) to send a detailed pricing SMS applicable to that overseas location when a
customer activates a mobile/SMS capable device.
h. Prior to 23 May 2016, for CSPs who do not provide a detailed pricing SMS, they must
provide an ACMA fact sheet and detailed pricing information to a customer at the time IMR
services are activated.
i. Added a requirement to inform a customer about any network unlocking fee.
Section 7
j. Establishes an obligation to provide a low-cost opt-out option for customers by two
methods (calling an Australian number and/or via the website of their CSP).
k. Sets the maximum charge to customers as AUD$1.00 to opt-out by phone, and no charge
to opt out electronically.
Section 8
l. CSPs must inform a customer of the spend management tools available when they activate
IMR on their account.
m. No differentiation between ‘smart’ and non-smart’ devices in the Standard as CSPs cannot
determine the customer equipment a service uses.
n. Place an obligation on CSPs to provide customers with at least one spend management tool
such as an application or an online portal.
o. Usage notifications for post-paid services to apply only to data usage and exclude voice
calls and SMS use (unless voice and SMS are offered as part of an Included Value Pack).
p. Remove the requirements for alerts for pre-paid and automatic pre-paid IMR services.
q. Notifications for Included Value Packs are only to apply to plans that have been introduced
to the market from 1 March 2012 or later (aligning the Standard with the TCP code).
37
r. Extend the implementation of this clause for second providers who are MVNOs until 23
May 2016.
(New) Section 10
s. Establishes a review date of the Standard of 23 May 2018 or earlier.
38
Conclusion and recommendations
147. The problem section shows that the underlying cause of Bill Shock is the different charging
of domestic versus international mobile phone use. In particular it is data use that causes most
Bill Shock. The recent level of instances of Bill Shock reflects strong growth in international
travel, growth in the use of mobile internet devices such as smart phones and tablets, along with
the greater level of complexity in understanding data use in comparison to call or SMS.
148. Option 1 does less to address the causes of Bill Shock than options 2 and 3, but also has
lower costs. This is due in part to MNOs being already compliant with many of the elements of
option 1. However, it does not facilitate consumers’ management of their spending as much as
the other options, with only basic alert notifications provided.
149. Options 2 and 3 better address these underlying causes by making it easier for customers to
monitor their spend while using IMR. Option 2 is unlikely to provide significantly more benefits
to consumers than Option 3. On the other hand, Option 3 is likely to impose significantly lower
compliance costs relative to option 2 as it largely targets data usage and post-paid services.
150. All options are likely to decrease competition in the market by raising the barriers to entry
and are inconsistent with the Competition Principles Agreement.
151. The benefits of option 3 include the timely delivery of better information to consumers
about the costs of IMR services and better consumer control of access and use of IMR Services.
The allowance for longer transitional timeframes under option 3 for MVNOs recognises the extra
challenges MVNOs face when developing these systems.
152. Overall, it is likely that Option 3 would result in a relatively low but positive net benefit,
given that its expected costs and benefits are relatively low. Option 3 is preferred by the ACMA.
39
Implementation and Review
153. The IMR Standard must be made on 27 August 2013 in line with the requirements of the
Direction. The Standard will coincide with a public awareness campaign that will seek to ensure
providers and consumers are aware of the Standard, as well as noting alternatives to using IMR
services.
154. A review period of up to 23 May 2018 is included in the proposed version of the IMR
Standard; this does not preclude the ACMA from revising the Standard earlier if it deems there is
a need to do so.
155.
The success of this regulation will be measured across four areas:
i. A decrease in complaints to the TIO about IMR
ii. A reduction in the average amount of IMR complaints to the TIO
iii. A reduction in write-offs associated with IMR
iv. A reduction in the percentage of consumers experiencing bill shock caused
by IMR in a regular ACMA telecommunications consumer survey.
40