Phone overcharges cost users millions
One in four corporate or government telecommunication accounts contains some form overcharges costing the industry millions of dollars a year. This conclusion is based on dozens of audits conducted by our company over the past 10 years and applies to all the major service providers in Australia. To be fair, a telecommunication invoice is one of the most complex in the industry, a simple home bill contains over 20 charge components. Corporate invoices are much more complex. Practically all the errors are to users’ disadvantage. The reason is very simple. Say that a default charge for a local call is 20c. Under a corporate deal this would be reduced to, say, 10c. If a particular line or one of company offices is not flagged for this rate, the default charge will apply with a 50% overcharge.
Phone billing has been a problem for decades and telcos have spend huge sums of money trying to get it right. They now promise accurate systems but the problem is not with the systems but with the people who apply them. We don’t believe that the overcharging is deliberate but rather a result of human errors and sloppy charging regime. Unfortunately, users don’t make the problem easier. Quite often they sign millions of dollars worth of contracts which are inaccurate and incomplete. And when it comes to an audit, the contracts can’t even be found. But let’s say you have discovered a problem, have a valid contract, evidence to prove the overcharges and you launch an application for a refund with your friendly supplier. This is when the problems start.
Telcos will use every conceivable excuse not to pay or at the very least procrastinate for as long as possible. Four to six months is typical, but we have seen a three years saga which is still unresolved. And that is with constant pressure to settle the case. if you don’t follow the original claim with constant reminders, you may never hear from your provider. Lack of resources, Christmas, complexity of the case, staff on sick leave are just a few typical excuses. It is easy to see why the telcos are not interested in your claim but that doesn’t relive them of their contractual responsibility.
To begin with your friendly account manager is hardly enthused in pursuing the case, most likely he gets a commission from your bill and the last thing he wants, is to see it reduced. Furthermore, in most cases he doesn’t understand the charging intricacies. The case goes to the billing team who are invariably overworked and have thousands of other, more important things to do than look at an overcharge claim. And when finally (due to your constant enquiries) they get around to doing it, the chances are, they will make more mistakes, after all they are the people who got it wrong in the first place. And if you eventually get your refund back you have still lost money. Failing to pay your tax on time will cost you a penalty and the interest for the delay. Not the case in the telecommunications industry.
Some problems are never fixed. We can fly a man to the moon but in the XXI century can’t get the billing right. A major national company has been monitoring their bills and reporting errors every month. After months of delay, the overcharges are refunded but the errors continue on the new bills. This causes considerable frustration and lost time, particularly as monthly costs are allocated to departments. Making subsequent corrections is a nightmare and an embarrassment. In another instant a government health agency has claimed hundreds of thousands of dollars. The telco has not resolved the problems, the agency refuses to pay the bills while the months long saga continues. In many cases users simply give up.
And we are not talking about trivial errors. In a recent audit, one of the major Australian telcos has been overcharging mobile calls of a government agency by a massive 60%. Over the contract period this added up to more than $400,000. A national franchise organisation had their international toll free calls overcharged by an unthinkable 72%. In another instant a company was overcharged by $350,000 for installation of new services. By a mistake, the charges were applied twice. The story gets much bigger. In one state we have discovered overcharge in 20 public hospitals. If the sample is representative of the entire state, the aggregate overcharges are estimated at some $15M. We took the case to the relevant department offering to extend the investigation but the offer was declined. The reason given was a new telecommunications deal which the state government was marketing to their agencies. Mentioning past overcharges was considered detrimental to the campaign.
So how do you avoid being inadvertently ripped off? In an ideal world there would be legislations and other safeguards protecting the industry against this wide spread problem. But we live in a real world where the user has to do it himself and here are a few suggestions to help.
- Ensure that your new contract is checked by the legal department and a telecommunications specialist. If you don’t have one in the organisation, get professional assistance.
- If you have sufficient clout, include penalty clauses in the contract.
- Make sure the contract contains all the relevant information, including any late amendments. Keep it in a safe, well defined place.
If you haven’t audited your accounts recently, do it now. You have a one in four chance of getting a pleasant surprise (or unpleasant, depending how you look at it). An audit is particularly recommended if:
- your account is over $40,000 per month or covering several sites;
- your organisation has recently undergone major changes, e.g.: relocation, new installation, network reconfiguration;
- your company has recently gone onto a new contract. This way you may save yourself the torturous process of trying to get the money back.
Once you overcome all the hurdles, a recovery of overcharges is a very rewarding exercise. Where else can you get a large sum of money without having to invest first, employ extra staff and manage a project? And remember, if you are in the middle of a contract, not only will you get a refund but the ongoing cost will also be reduced as a result of the corrected charges.
So next time you sing off a $100,000 bill for payment, don’t just assume it is right because the previous amount was similar. You could have overpaid by $30,000 on both occasions.
Alex Silber
Mr. Alex Silber is a director of A.S.Consultancy Pty.Ltd. The Melbourne based consulting firm specialises in telecommunications. a.silber@optusnet.com.au
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