Look before you leap

23 Aug 2005

The growing competition in the telecoms market has been an undoubted boon for the business community. As more new players enter the market, they have to offer exceptionally good deals in order to woo customers away from their existing service providers. But sometimes these deals are not quite as good as they seem, the Commission for Communications Regulation (ComReg) warned last week.

In an information bulletin, the telecoms regulator expressed concern over the potentially misleading pricing material being touted by some new entrants. The warning was issued in response to complaints by other operators and consumers, and about what they saw as deliberately misleading pricing information put out by these new firms.

One irked player is business telecoms operator Pure Telecom, which lodged an official complaint with ComReg back in May. Its beef was against Optic Communications, a new telecoms entrant that Pure claimed breached the carrier pre-select (CPS) Code of Practice by releasing misleading promotional information to Irish businesses. Pure had calculated customers could end up being charged four to five times the average market rate for local, national and mobile calls after switching to Optic Communications. The complaint was that Optic Communications was running a promotional campaign by fax, quoting rates on a “call unit” basis, when Irish customers are normally quoted on a per-minute basis. When call units were converted to minutes, customers could end up being charged four to five times the average market rate for calls.

At the time, Paul Connell, director of Pure Telecom, pointed out that Optic Communications was misleading customers with sales material that “an unseasoned telecoms professional wouldn’t understand”.

He noted while the fax campaign mentioned the call units, it didn’t explain them and customers needed to contact Optic Communications directly to request a document that explained this. In addition, he said, the information was misleading as it led the customer to think all calls were based on one-second increments, which was not the case. Pure argued the information was in contravention of clause 4.5 of the CPS Code of Practice, which states: “Advertisements or other offers should not contain statements or visual presentation that, directly or by implication, by omissions, ambiguity or exaggeration, are likely to mislead the consumer about the product or service advertised, the advertiser, or about any other product or advertiser.”

In its bulletin, ComReg notes per-unit rates as opposed to per-minute rates may be subject to minimum call charges and may not in reality be cheaper than current per-minute offerings. It advises users to ask for details of how their specific needs and call patterns will be impacted by any new offering and to compare this to their current provider. It also reminds new providers that they must clearly set out the charges and discount schemes to the potential customer and that any contract used by them must state the amount or rate of charges applicable.

ComReg concludes that for users to make informed choices between competing service providers, they must be “presented with clear, accurate, unambiguous and transparent tariff information”. Unfortunately, in a small number of cases, this is clearly not happening at the moment – as any business user looking to cut costs by switching provider would do well to realise.

By Brian Skelly