Cracking down on telco billing bungles

Tackling inefficient billing is still a huge challenge for our telcos and you won't believe how much businesses are being overcharged.

It would come as no surprise to anyone that billing remains a huge challenge for Australia’s telecommunication carriers. Almost every single bill contains some sort of error and it would be tolerable if these mishaps only amounted to a few stray dollars. Unfortunately, the errors are far more severe and cause businesses a lot more pain.

Let's just keep in mind, carriers undertake monthly bills for millions of customers, all with a diverse range of products and price points. So we could all have some empathy (and perhaps even sympathy) for the scale and complexity of their undertaking. However, any goodwill for the telcos evaporates quickly when you see them routinely overcharge the vast majority of a number of clients I deal with by over $1000.  

At Full Circle, we have been conducting audits for well over seven years to determine the error rate of telco’s billing practices. We used the amount of funds we clawed back from the telcos, the hundreds of millions of dollars our clients paid in inaccurate bills, to determine that the actual error rate was around 2.4 per cent.

Draw this statistic out, and you could determine that out of the $20 billion Australian companies pay for telecommunication services each year, $480 million comes from erroneous charges annuals. That means that around 0.03 per cent of our estimated 2012 GDP of $1.57 trillion comes from incorrect telco billing.

I am certain that some more learned experts in this field will tell me that my statistics are misguided, but regardless of what they say, our client’s error rate still stands at 2.4 per cent.

However, that’s just the overall picture. In some cases we have seen our clients over charged by around 46 per cent. 

Making multiple mistakes

Here’s a brief account as to how this errors could happen:

Most of the telco’s business services are usually tailored for each individual client. Once there is an agreement between the telco and the client, the deal is entered into the billing system and it’s at this point that there is room for human error. As we are dealing with contracts, there is also room for ambiguity and multiple interpretations.

Over the life of the contract, items may be procured and changed, and those doing the ordering may not be on the same page as the telco and even internal staff may be responsible for creating problems by seeking flexibility for human account managers.

The willingness of telcos to help and provide great customer service may lead to the incorrect product being placed on a billing plan that cause a “crunch” and a billing error begins, and is always perpetuated.

It is widely accepted that errors will always exist. Telstra, for example, has invested millions in new billing systems to ensure better compliance and fewer errors. All credit to them for this approach, but it is not enough, especially if they are netting the lion’s share of these overcharging errors.

Before getting into the issues of responsibility, here are some questions that are worth pondering:

  • What if a company became insolvent (technically or otherwise) whilst waiting for a big cheque to clear from a client? What if the business telco had overbilled them by $50,000 and if the business had not paid this out it would never have gone under? Some people may suggest that any business must check its bills before paying, but in the “confusology” of telco contracts and rate cards, coupled with the thousands of monthly rows of billing data that make up a monthly invoice, is this really realistic that a company should have to pay for a resource to check the output of one of its suppliers?
  • How many suppliers put the onus on a client to check that their billing is correct? Is it not either fraudulent if you deliberately bill your client incorrectly, or negligent if you can not bill your client correctly.
  • What happens to the money you could have earned (e.g. interest) but was incorrectly paid to the telco? Does anyone have an automatic right to collect interest in these circumstances?

So what should be done about this?

Avenues of recourse

We know that consumers and small business can turn to the telecommunications industry ombudsman (TIO) to resolve telco billing disputes. But the avenues of recourse for bigger businesses are not so clear-cut.

Perhaps there should be an agreed margin or error or level of tolerance. If the telco exceeds this, they not only have to pay for the cost of undertaking the audit, not only pay for refunding the monies overpaid (plus interest), but a penalty should be automatically applied in the form of a substantial goodwill credit.

The telcos would deny that there is such a problem. So if that is the case, why wouldn’t they agree to a goodwill credit in instances when they get it wrong.

The other alternative is regulation. Perhaps the scale of the problem requires the ‘stick’ of a regulator to pull the telcos into line.

On that, we want to know what you think. How can we fix this problem, or better yet, share your experiences with this problem.

Have you been overbilled by a telco only the have the blame thrown back in your face? Have you lost more than money from their folly? Let us know in the comments below.

Tony Simmons is the managing director and founder of The Full Circle Group, an independent telecommunications consultancy firm focused on Telco expense costs and management.  

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