Investigation Report: Compliance with the Telecommunications Consumer Protections Code C628:2007 and theTelecommunications Consumer Protections Code C628:2012 by Optus Mobile Pty Limited

File No. / ACMA2013/1354
Carriage Service Provider / Optus Mobile Pty Limited
ACN / 054 365 696
Type of Service or Product / Mobile services
Scope / Clause 6.4.1and 9.1.8,Telecommunications Consumer Protections Code C628:2007
Clause 5.5.1,Telecommunications Consumer Protections Code C628:2012

Findings

  1. The Australian Communications and Media Authority (ACMA) is of the view thatOptus Mobile Pty Limited(ACN 054 365 696) (Optus) contravened clause 6.4.1of the Telecommunications Consumer Protections Code C628:2007 (TCP Code 2007) from 23 November 2008 until 31 August 2012, and clause 9.1.8(c) of the TCP Code 2007 from October 2011 until 31 July 2012.
  2. The ACMA is also ofthe view that the same conduct would have contravened clauses 5.5.1and 8.3.1(a)(ii)of the Telecommunications Consumer Protection Code C628:2012 (TCP Code 2012), had that code been in force at the time.
  3. The ACMA is also ofthe view that as the billing inaccuracieswere ongoing past 1 September 2012, when theTCP Code 2012replaced the TCP Code 2007, Optus has contravened clause 5.5.1of the TCP Code 2012 from 1 September to 31 September 2012.

Background

  1. The TCP Code 2007 was registered under Part 6 of theTelecommunications Act 1997 (the Act) at the time thebilling incidentwhich is the subject of this report began in November 2008.The TCP Code 2007 contains rules about how carriage service providers (CSPs) deal with their residential and small business customers. The rules apply to a range of CSP business practices, including billing and complaint handling. The TCP Code 2012 was registered under Part 6 of the Act and came into force on 1 September 2012, replacing the TCP Code 2007.
  2. Optus is one of the main providers of telecommunications services in Australia.Optus is a carrier and a CSP within the meaning of the Act and a Supplier for the purposes of the TCP Code. Optus is therefore covered by the requirements set out in the provisions of the TCP Code as in effect at the relevant time.

Relevant facts

  1. In September 2013 Optus contacted the ACMA to advise that it had identified a serious billing discrepancy with two of its ancillary messaging options for post-paid services, SurePage[1] and SpinVox[2]. In information subsequently provided by Optus, it advised that following an IT project upgrade, over an extended period of time it mistakenly provisioned new post-paid mobile activations with the SurePage messaging option when this option was not requested by the customer. In addition, a subset of these activations resulted in customers being charged for a messaging option they requested but did not receive (impacted customers received the SurePage service rather than the requested SpinVox service). The billing problems reported to the ACMA by Optus are referred to throughout this report as “the SurePage billing incident”.
  2. Optus originally advised that the services impacted by the SurePage billing incident were activated during the period 1 July 2011 to 30 September 2012. During this period, Optus advises that it overcharged approximately 235,000 customers (approximately 258,000 services) a total amount of approximately $8.9 million. However, Optus subsequently advised the ACMA that the software coding issue that caused the overbilling of SurePage and SpinVox services was implemented in November 2008, almost 3 years earlier than originally thought. Optus has identified an additional 2600 customers that were overcharged during this initial period.
  3. Optusmet with the ACMA to discuss the SurePage billing incident on18 September 2013 and on 17 October 2013 it provided the ACMA with the SurePage Incident – Confidential Briefing paper (First Report).This report provideda summary of the incident and set out the steps that Optus proposed to take to compensate affected customers.
  4. On 24 October 2013, the ACMA wrote to Optus, indicating its intention to commence an investigation under paragraph 510(1)(c) of the Act into Optus’ compliance with the TCP Code 2007 and the TCP Code 2012 (with a focus on compliance with clauses relating to billing accuracy and complaint analysisof the TCP Code 2007 and the TCP Code 2012).
  5. Optus had a further meeting with the ACMA on 31 October 2013 and advised that it had engaged an independent auditor (the Auditor) to conduct an audit to ensure that Optus had adequately identified and reimbursed all affected customers. On 12 November 2013, Optus provided the ACMA with the SurePage Incident Report (Second Report), which also included copies of two invoices issued to customers in June 2012.
  6. On 20 December 2013, Optus provided the ACMA with a summary of the Auditor’s Report. The ACMA understands that the final software fix to address the root cause of the SurePage billing incident was implemented on 30 September 2012.
  7. By letter of 21 January 2014, Optus wrote to the ACMA conceding contraventions of clauses 6.4.1 and 9.1.8(c) of the TCP Code 2007, and that these contraventions would have been contraventions of clauses 5.5.1 and 8.3.1(a)(ii) (respectively) of the TCP Code 2012 had the conduct occurred after the TCP Code 2012 came into effect.
  8. On 7 February 2014, the ACMA provided to Optus the preliminary findings of this investigation. Optus responded to these findings on 18 February 2012 conceding the contravention of clause 5.5.1 of the TCP 2012 for the month of September 2012.

Findings and Reasons

  1. Optus has advised that customers were affected by the SurePage billing incident between 23 November 2008 and 30 September 2012. Therefore, the ACMA has considered Optus’compliance with clauses 6.4.1and 9.1.8 of the TCP Code 2007 (for the period23 November 2008 to 31 August 2012) and clause 5.5.1 of the TCP Code 2012 (for the period 1 to 30 September 2012), having regard to:
  2. Information provided by Optus at the meeting with the ACMA on 18 September 2013;
  3. The First Report dated 17 October 2013;
  4. Information provided by Optus at the meeting with the ACMA on 31 October 2013;
  5. The Second Report dated 12 November 2013;
  6. The Auditor’s Report dated 20 December 2013;
  7. Admissions made by Optus in correspondence dated 21 January 2014: and
  8. Optus’ response to the ACMA’s preliminary findings dated 18 February 2014.

Compliance with clause 6.4.1 of the TCP Code 2007 and 5.5.1 of the TCP Code 2012

  1. Clause 6.4.1 of the TCP Code 2007 states that a Supplier must ensure and must be able to verify and demonstrate Billing Accuracy, except for inaccuracies caused by:

(a) the Supplier’s reliance on information provided by a person who is not their employee or agent;

(b) an action or failure of another person who is not the Supplier’s director, employee or agent; or

(c) an accident, mistake or any matter beyond the Supplier’s control, where the Supplier took reasonable care and precautions to avoid the inaccuracy.

  1. ‘Billing Accuracy’ is defined in the TCP Code 2007 to mean the correctness of Charges. ‘Charge’ is defined to mean the tariff or fee levied by a Supplier for the provision of a Telecommunications Product or transaction.
  2. Clause 5.5.1 of the TCP Code 2012 states that a Supplier must ensure it provides, and must be able to verify and demonstrate, Billing Accuracy except for inaccuracies caused by:

(a) the Supplier’s reliance on information provided by a person who is not itsdirector, employee or agent;

(b) an action or failure of another person who is not the Supplier’s director, employee or agent; or

(c) an accident, mistake or any matter beyond the Supplier’s control, where the Supplier took reasonable care and precautions to avoid the inaccuracy.

  1. Billing Accuracy’ is defined in the TCP Code 2012 to mean the validity of Charges and the correctness of the calculation of Charges. ‘Charge’ is defined to mean the tariff or fee levied by a Supplier for the provision of a Telecommunications Product or a related.
  2. The ACMA notes that clause 5.5.1 of the TCP Code 2012 and clause 6.4.1 of the TCP Code 2007, and relevant definitions, are nearly identical.
  3. Both clause 6.4.1 of the TCP Code 2007 and clause 5.5.1 of the TCP Code 2012 require Optus to ensure that it can verify and demonstrate Billing Accuracy, allowing for certain exceptions as specified in subclauses (a), (b), and (c) of those clauses. In its letter of 18 February 2014, Optus confirmed that it does not seek to rely on those exceptions.
  4. In both the First and Second Reports it provided to the ACMA, Optus advises that during a project upgrade an IT programmer took a short-cut step when creating new functionality for the menu to add options for an ancillary service unrelated to SurePage, which had the unintended consequence of charges being incorrectly applied to customer accounts. The reports also note that an oversight occurred in the quality checking “clean-up” of the software code for the new use, which meant that the background step which activated the diversion to the SurePage service number was not removed when the code was re-used for the new purpose.
  5. The Auditor’s Reportconfirms that over an extended period of time (November 2008 to 30 September 2012), Optus mistakenly provisioned new post-paid mobile activations with the SurePage messaging service option when it was not requested by the customer. Customers were therefore billed for services they did not request or use.
  6. Having regard to the foregoing, it is the ACMA’s view that from November 2008 to
    30 September 2012, Optus was not able to verify and demonstrate Billing Accuracy for some customers in respect of SurePage and SpinVox services and was consequently in contravention of clause 6.4.1 of the TCP Code 2007 from November 2008 to 31 August 2012, and clause 5.5.1 of the TCP Code 2012 from 1 to 30 September 2012. Optus has conceded both of these contraventions.
  7. It is also theACMA’s view that Optus would have contravened clause 5.5.1 of the TCP Code 2012 from November 2008 to 31 August 2012, had that Code been in force at the time. Optus agrees with this view.

Compliance with clause 9.1.8 of the TCP Code 2007

  1. Clause 9.1.8 of the TCP Code 2007 states that in order to identify recurring or systemic problems and prevent reoccurrence, Suppliers must:

(a)for complaints resolved at first point of contact, implement processes, procedures or systems to facilitate this

(b)classify and analyse complaints at least every 3 months, and

(c)address areas requiring attention as soon as practical.

  1. The Auditor’s Report states that the original coding error that resulted in the SurePage billing incident and customers being overcharged was made in November 2008. The first impacted customers were identified in April 2009 and error numbers increased to 10-15 instances a month in May 2009. From January to July 2011, error numbers increased from 20-30 to 3000 instances a month.
  1. According to information supplied by Optus, the SurePageproduct manager became aware of the problem in late August 2011 and engaged other Optus teams to assist in identifying the cause of the problem in October 2011. The Auditor’s Report states that although Optus then pursued multiple avenues of enquiry, the root cause of the problem was not identified until July 2012, and a permanent fix to address the root cause was not implemented until 30 September 2012.
  1. In its letter to the ACMA dated 21 January 2014, Optus advised that it is of the view that it had contravened clause 9.1.8(c) of the TCP Code 2007. Optus further stated:

“We acknowledge[s] that the initial management of the [SurePage] incident was sub-optimal and we have apologised to our customers in addition to fully compensating them with interest”.

  1. In coming to a view on whether Optus complied with clause 9.1.8(c) of the TCP Code 2007, the ACMA has taken into account the following facts:
  1. Optus began to inaccurately bill customers from at least April 2009;
  2. The root case was not identified until over three years later in July 2012, and a permanent fix to address the root cause was not implemented until 30 September 2012;
  3. Complaints were received by Optus about the SurePagebilling inaccuracy from at least October 2011 and most likely even earlier;
  4. The SurePagebilling inaccuracy was systemic in nature, affecting over 237,000 customers and involving charges to the value of approximately $8.9 million over a period of several years; and
  5. The decision on what action to take once the problem was identified appears to have been left to the discretion of the product manager.
  1. Taking into account the facts above, the ACMA is of the view that Optus contravened clause 9.1.8(c) of the TCP Code 2007 from October 2011 until July 2012.
  1. The ACMA is also ofthe view that the same conduct would have contravened clause 8.3.1(a)(ii) of TCP Code 2012, had that Code been in force at the time. Clause 8.3.1(a)(ii) requires Suppliers to monitor complaints to identify emerging issues requiring specific attention and address those as soon as practicable. Although Optus had a system to monitor complaints and identify systemic errors, its failure to identify the root cause and resolve the error within a reasonable time of its discovery, meant it did not address areas requiring attention as soon as practicable.

ACMA Investigation Report – Optus Pty Ltd – Compliance with Telecommunications Consumer Protections Code 1

[1]Customers using the SurePage product have their calls diverted to a live operator; the operator takes a message and then sends this message via Short Service Message (SMS) to the customer. Customers with SurePage are charged for the diversion to the operator and are also charged for the SMS

[2] The services collectively referred to as SpinVox are Voice to Multimedia services (V2MMS) and Voice to Text (V2TXT)