Good afternoon everyone, and thank you to the IIC for the invitation to speak about the ACMA’s views on consumer protections in the telecommunications environment.
It’s often said that the phones that we carry around in our hands, pockets and bags are more powerful than the computers used for the NASA moon landings.
Whether that’s true or not, the telecommunications networks that we rely on are extremely powerful.
It would be challenging if not near impossible for anyone in today’s modern world to navigate through daily life without them.
Just about every non-physical task can be done via a digital connection - from retail shopping to banking, attending uni lectures or joining work meetings, visiting the doctor or contacting government services. Disconnection from these services, even for a short time, has significant consequences.
They are also the central repository for our personal lives – the portal to our digital memories, our financial details, health records, our social connections and much more. The bricks and mortar, concrete and steel that previously protected this information no longer exists.
So, consumer protections for these communications services are as essential as the services themselves.
Australians have embraced telecommunications technologies as enthusiastically as any other nationality. That may in part be due to the effect of the ‘tyranny of distance’. And that’s not just the distances between Australia and the rest of the world, but the distances within our country.
Just looking at this slide of Australia’s mobile market, the difference between the mobile footprint and population coverage is stark. While only around one-third of the landmass is covered, the networks reach close to 100% of the population.
It’s also notable that while we have three mobile network operators, there are around 50 virtual network operators.
And when you look more broadly at telco service providers, there are currently more than 1,500 operators in Australia – from single-person entities through to some of our largest corporations.
The regulatory environment that these services operate in is primarily a co‑regulatory one. This featured was established in 1997 legislation as the Australian market was opened up to competition for the first time. Co-regulation usually involves the industry first developing its own codes, which are then registered with the ACMA.
The ACMA currently maintains a register of 22 of these industry-developed codes. Many of these codes are technical or operational in nature, so there is incentive for industry to follow them. Some of the codes are also customer-focussed.
If we believe there is a systemic gap in these self-regulation mechanisms, the risk of harm is significantly high or that certain codes are failing to meet their objectives, then we may intervene through the development of regulator-developed industry standards or other direct regulatory instruments. Alternatively, the Minister may make a direction through a legislative instrument.
Industry-led regulation was a perfectly reasonable approach to have taken in 1997, with a focus on market development and encouraging competition to deliver for consumers.
The co-regulatory system continues to have its place today. It can be an efficient way to move rapidly to address dynamic technology changes or urgent industry issues. Co-regulation is also most effective when there is clear alignment between industry interests and consumer interests.
A example of this has been the coordinated response to scams. It’s in the public interest to have scams blocked before they reach consumers. And it also mitigates risk for industry.
In response to the growing scourge, in 2019 the ACMA released its Combating scams action plan.
At the time of the ACMA action plan, the Australian Competition and Consumer Commission reported that about 47% of scams came via phone calls and about 14% via text.
In December 2020 the ACMA registered the industry-developed Reducing Scam Calls code. As of the end of June this year, the telcos report more than 1.4 billion scam calls have been blocked since the introduction of the code.
As we know, these scams are primarily the work of sophisticated international criminal networks that move fast. By 2022, texts had surpassed calls as the primary scam delivery method at 33%, compared with phone calls dropping to 29% of scams.
In July last year, the ACMA registered an enhanced industry code that required telcos to identify, trace and block scam texts. Since the new rules came into force, more than 257 million scam calls have been blocked by telcos and not reached their intended target.
These are heartening statistics but the fight against scams needs to be as relentless as the scammers themselves.
At the ACMA we are currently developing a SMS Sender ID register – a white list telcos can use to verify sender IDs and stop scammers masquerading as legitimate businesses and government services.
Another arena we would like to see the fight taken up further is on Over the Top platforms. It would be a really positive move if we saw a commitment from these services that follows the lead of the telco industry.
As Ian’s opening comments indicate, there is still a long way to go. And we continue to work with telcos, consumer groups and other regulators, including internationally, to see what further actions we can take on this insidious problem.
The National Anti-Scam Centre, or NASC, which was launched by the Government last month is a recent, and I think potentially very powerful example of where cooperation, coordination and co-regulation can work in everyone’s interest.
But there are also examples in the telco sector where we believe more direct regulation is necessary.
Earlier this year the Minister for Communications directed the ACMA to make an enforceable standard to ensure telcos provide appropriate support for customers experiencing financial hardship.
This decision follows ACMA findings that under the current industry code, the Telecommunications Consumer Protections (TCP) Code, telcos are not doing enough to let people who are under financial stress know about their options.
The TCP code, which first came into effect in 2007, sets out broad consumer obligations for telcos such as ensuring billing accuracy, how telcos should conduct debt management and also support people experiencing financial hardship.
The peak body that John represents, Communications Alliance, is currently undertaking a review of the code, with the plan that a revised code will be ready for registration by August next year.
For its part, last month the ACMA released a position paper on telco consumer safeguards. This sets out a strong evidence base — including consumer research and industry compliance data published by ourselves and others—to support our view that stronger rules should apply in a number of areas. This includes for issues like direct debit arrangements and helping customers in vulnerable circumstances, such as people experiencing domestic violence.
Co-regulation fits best when you have responsive and responsible participants across the whole industry and there are aligned consumer and industry interests at play.
As I mentioned previously there are estimated to be more than 1,500 operators in the telco industry. We don’t know who they all are and it’s not clear whether they all know their codified obligations to customers, or worse, might wilfully ignore them.
When consumer harm is heightened but industry incentive is low or costs are higher than they are prepared to commit, then there is a case for more direct regulation where compliance is compulsory and penalties unambiguous.
Telecommunications has come a long way since 1997, in Australia, much of it supported by regulatory frameworks strongly weighted toward industry development.
With that goal largely achieved, and telco an essential service, we believe now is the time for the telco regulatory framework to focus on telco consumers and give them the protections they expect and deserve.
With that I will leave you with a question. In such a diverse sector with so many players offering a variety of essential consumer services, is co‑regulation the right approach?