The Australian telecommunications industry is no stranger to copping criticism from the public, but are our telcos mending their ways? Well yes, but there’s still a lot of smoke and mirrors at play.
When it comes to managing customer expectations while protecting key revenue generators, telcos are sticking to the game plan of 'what the consumers can’t see won’t hurt them'. But is the NBN headed down the same path?
Complaints to the Telecommunication Industry Ombudsman (TIO) rise and fall in line with how well the industry is responding to customer expectations. As complaints to the TIO spike the industry moves to fix the problem, lest the government step in to take the associated political heat out of the debate.
It’s an equilibrium of sorts, where many Australians see the industry as a necessary evil that has in the past grown fat overcharging consumers and failing to provide products and services that keep up with their expectations.
International roaming is a good example of this dynamic. For two decades the telecommunication industry swore black and blue that it was impossible to lower international roaming telephone call charges and more recently international roaming data charges.
The excuse used by the industry was the outright refusal of international telecommunication companies to lower charges for Australians when overseas, yet in the space of little over a year this “impossible” outcome was achieved.
Did the telecommunications industry suddenly twist the arms of their international counterparts, or find an ace up their sleeves that they could use to convince the rest of the world that Australians deserve a better deal? No.
It was only when government threatened regulation and a big stick that the telecommunications industry finally got the hint that the rip-off was over, lowered prices and provided consumers with some control over their international roaming experience.
The great data battle
Australians are swamped with advertising about how good telcos' connection speeds are, and the mobile cellular marketing campaigns are awash with claims of who has the “fastest” network.
But behind the scenes an evil lurks that is unlike any other in corporate history.
Telco executives will tell you that there’s insufficient capacity throughout the network for everyone to get peak speeds at all times so there is a need to restrict or throttle connections to limit overall data usage.
This lack of capacity and connection throttling are the ingredients that cause what we call congestion.
The US Federal Communications Commission (FCC) chairman Tom Wheeler sent a letter in late July 2014 to Verizon Wireless CEO Daniel Mead stating he was “deeply troubled” by Verizon’s announcement that it plans to slow down select customers' connection speeds on the Verizon 4G LTE network starting in October.
CNET reported that Wheeler stated in the letter "it is disturbing to me that Verizon Wireless would base its 'network management' on distinctions among its customers' data plans, rather than on network architecture or technology".
What this means is that Verizon was caught out targeting high-usage “unlimited data” customers for data throttling on the 4G LTE network, a practice that already existed on Verizon’s capacity-constrained 3G services.
Verizon stated, "What we announced last week was a highly targeted and very limited network optimisation effort, only targeting cell sites experiencing high demand. The purpose is to ensure there is capacity for everyone in those limited circumstances, and that high users don't limit capacity for others."
Telecommunication companies are masters at offering plans that build up consumer expectations and then taking steps behind the scenes to ensure that consumers don’t get what they’re paying for.
The Australian Competition and Consumer Commission (ACCC) has a constant battle on its hands to prevent telecommunication companies marketing plans to consumers that are misleading. In the past five years the ACCC has taken action against some of the biggest players in the telecommunications market including TPG for “unlimited” plans that weren’t, and Optus for “max cap” when it wasn’t really a maximum cap price, among others.
Recently the ACCC took a pre-emptive strike against NBN Co about how FTTN and FTTB products and plans could be advertised. At the centre of the ACCC’s concern is NBN Co’s intention to use infrastructure that does not provide a guaranteed connection speed for all consumers connected to the NBN.
The ACCC correctly pointed out that NBN Co’s intention to offer five speed tiers for FTTN and FTTB infrastructure, including 12/1Mbps (download/upload), 12/5Mbps, 25/10Mbps, 50/20Mbps and 100/40Mbps, could mislead consumers into ordering plans that their broadband connection is not capable of delivering.
To allay this concern NBN Co indicated that selecting the correct speed tier would be “the responsibility of the end user and the provider”. This means is that service providers will resort to using terminology such as “up to” when describing plans.
But there is a bigger concern for Australian consumers that the ACCC has failed to tackle.
Capacity versus congestion
Telecommunication companies are guilty of drip-feeding increased capacity into the network to ensure that transmission costs remain low and profit remains high. Congestion across the Australian telecommunications network is unacceptably high and the extent of the problem remains hidden by an industry that is desperate for the facts to remain hidden.
Any attempt to break the wall of silence surrounding capacity and congestion will be met with stern resistance and claims of commercial in confidence.
Yet Australians are now provided with open and transparent information about capacity and congestion on public transport and road networks and almost instant notification of congestion that should be avoided.
So what is different about the telecommunications network? Nothing -- except the paranoia surrounding what will happen if Australians find out the facts about network capacity and congestion.
Last year, the Australian Communications and Media Authority (ACMA) hosted a Mobile Network Performance Forum, which focused on discussions surrounding consumer experience and how the industry informs consumers about network performance.
During a panel discussion on the ways forward, I made the suggestion that mobile cellular providers add a congestion meter to mobile handsets. This is technically doable and would not add much cost to the customisation already carried out by telcos before handsets are sold.
I suggested that there are two types of congestion that consumers are interested in. Mobile users would like to know about congestion occurring in the mobile cell that they're currently in. Meanwhile, all users need to know about congestion anywhere on the network that might affect their connection’s performance.
At the forum, Communications Alliance CEO John Stanton vigorously defended the telecommunications industry’s position regarding capacity and congestion and argued that congestion meters were unnecessary. Stanton was unable to articulate clearly why mobile users suffered poor performance, drop-outs and congestion problems, but was adamant that congestion meters were not a solution.
The last thing the industry wants is for customers to see how bad the congestion really is.
Where does that leave the NBN?
Now that NBN Co is considering the inclusion of FTTN, HFC and FTTB there is a need to revisit the capacity and congestion problem because with this multi-technology mix congestion will be a lot worse than if FTTP were utilised. In 2011 NBN Co released network design rules that clearly addressed the capacity and congestion problem by providing ample infrastructure to cope.
In NBN Co’s recently updated NBN for Business Product Fact Sheet the AVC Traffic Class 1 (primarily voice calls) performance capacity utilisation is set to remain less than or equal to 70 per cent. But how will this be achieved over FTTN, HFC or FTTB?
Australian consumers will demand a far greater customer experience from the NBN than what is currently provided by the ADSL2 and mobile cellular networks. Yet, 10 months after being instructed to build a multi-technology mix NBN, NBN Co has not released a single document explaining how capacity and congestion will be dealt with for FTTN, FTTB and HFC.
Are Australian consumers about to spend $43 billion on a one-lane freeway?