The Telecommunications Industry Ombudsman is a free and independent alternative dispute resolution scheme for small business and residential consumers in Australia with unresolved complaints about their telephone or internet services.

The TIO aims to inform consumers and the telecommunications industry about complaint issues and trends and increase awareness of consumer rights and responsibilities. The TIO publishes quarterly complaint statistics, issues consumer alerts as required and provides information to the media upon request.

The TIO can provide:

• Comments on the TIO's approach to investigating complaints within jurisdiction;
• Comments on TIO complaint statistics;
• Advice to consumers and small businesses on how to avoid or resolve problems;
• Quarterly statistics on the performance of the industry with regard to TIO complaint categories 
• Anonymous case studies (where available).

The TIO will not provide:

• Comment on issues outside of its jurisdiction, including government policy and the setting of tariffs and charges; Comment on individual complaints (except with the written permission of the complainant);
• Comment on the performance of an individual TIO member company;
• Assistance in identifying people who have experienced a particular problem. The TIO will not contact a complainant on a journalist's behalf.

NEWS:

Contracts Warning to small Business

Small businesses should be wary of telecommunications contracts offering cheaper services combined with incentives such as phone equipment, laptops or plasma-screen TVs.

The TIO is receiving up to 20 complaints a week from small businesses who say they were misled about, or did not fully understand, the nature and operation of equipment leases bundled with telecommunication deals when they signed up to them.

"Small businesses are telling us they are being approached by a sales person who offers a contract for call costs at the same price or less than what they are currently paying. They also say they were offered a handset, plasma TV, laptop or even an overseas holiday at 'no extra cost'," Deputy Ombudsman Simon Cleary said.

"What small businesses sometimes don't fully appreciate is that they are signing two separate contracts: one for the phone calls with a telecommunications service provider and the second being a lease of the equipment from a finance company.

"The two contracts are inter-related, with monthly lease payments often being offset by 'credits' on the phone bill from the telecommunications service provider. The size of these credits is similar to the monthly lease payments for the finance contract and the sales person will often ask to see a past telephone account for the purpose of calculating the credits.

"However, small businesses say that their call rates subsequently increase and the package proves to be more expensive than their previous arrangement. Importantly, if the business then transfers to another phone company, the small business will still be bound by the finance company lease but without receiving the credits.

"And far from being free, the equipment can prove to be quite expensive if the business ends up paying just the finance lease. We have received complaints of standard model laptops leased over a five-year period costing up to $20,000 in lease payments."

Mr Cleary said that while the dual contract arrangement might meet the needs of many businesses the TIO was concerned by the number of complaints from small businesses who said they had been misled and then found themselves locked into expensive equipment leases. The TIO can make binding rulings to direct service providers to release a small business or consumer from a telecommunications contract, but has no similar power over a finance company and their leases.

Given the number of similar complaints received by the TIO, the TIO warns small businesses who might be offered equipment leases bundled with telecommunication deals to take extreme care before signing contracts. In particular, small businesses should ask:

The following cases illustrate some of the problems that small businesses have experienced with equipment leases bundled with telecommunication deals. The cases are presented from the perspective of the small businesses and do not represent completed TIO investigations.

Example one  :

A small business owner was approached by a salesperson who said that for $400 a month - less than what she was paying with her current provider - he would provide four business landlines and also supply "at no cost" a 50-inch plasma television and $4,000 worth of phone handsets.

The salesperson said that to obtain the deal, the owner would have to sign a five-year contract. After gaining a verbal reassurance that the plasma television and the handsets were indeed "free", the owner signed the five-year contract. After a short time, the owner approached the TIO seeking to be released from the contract.

She claimed that: