An Open Letter to Telstra on 3G Data Use

Hello Telstra.

I’m one of your customers. I have my mobile phone service with you… the reception is reasonable, at least it seems to be better than most of the other Australian Telcos. You charge a little more for it, but hey, I’ve tried the others and I don’t mind paying a little more for a service that actually works…

But, Telstra, can I tell you what really sucks?

I recently bought a new wifi+3G iPad. It should really be a 4G iPad, but apparently you and Apple can’t agree on what the term 4G actually means. So ok, it’s still just a 3G iPad, and I guess I can live with that. But I’d like to buy some 3G data from you so I can use my iPad when I’m not in wifi range.

Now, for me, that’s not all that often. I’m in wifi at home, and in wifi at work. I could tether to my iPhone’s 3G data when I’m out of wifi range (and I often do) but it would be a lot more convenient if I just had a 3G SIM in the iPad itself. So I want to buy an iPad 3G data service from you. I don’t think I’ll need much, probably no more than a few hundred MBs each month to be honest. Some months may be way less – possibly even no data at all – and other months might be heavier usage. I don’t know for sure.

I’d LIKE to be able to buy a decent chunk of data from you – maybe a few GBs – and just use it till it runs out. After all, if I pay you for it, I should be able to use it till it’s gone, right?

Apparently you don’t see it that way. You let me buy data from you, and then after 30 days you just let whatever is still left over expire. Just like that. Gone. Don’t you think that’s a bit unfair? I mean, I bought that data. I paid for it. Why do you need to expire it at the end of 30 days? Why can’t I just keep using it till it runs out?

When I asked the customer service rep on the phone why this was the case, the probably-accurate but rather-brazen answer was “Because we’re a business and we need to make money”. Bravo Telstra, nice way to put the customer first.

This policy that all of the Aussie telcos have of selling data to customers and then insisting it be used in a limited period of time is a rort. An absolute ripoff. In any other industry you wouldn’t get away with it. Imagine if I filled my car with petrol and then didn’t drive it much that week, but at the end of the week the remaining fuel in the tank just “expired” for no reason other than it was now the end of the week. Fair? I think not. And yet, that’s what you do with my 3G data.

I’m not sure I understand the logic of why you feel the need to expire my unused data at the end of 30 days. If I’m using my iPad a lot that month, there’s a good chance of me running out before the 30 days is up anyway, and I’ll probably just buy more from you. Win-win.

And if I don’t use all the data that month, then it hasn’t really cost you anything anyway, since I’ve already paid you for data that is still sitting there, unused. Sure, I will use it eventually, even after the 30 days are up if you don’t automatically expire it on me. Maybe I’ll run out of that 3G data halfway through the next 30 day period, and then, guess what, I’ll probably buy some more from you. And instead of being a resentful customer who hates you for ripping me off by just taking away something I’ve already paid you for, maybe I’ll end up being a happy customer who loves you for being so fair minded.

Maybe I’d even tell my friends how wonderful you are because you treated me fairly and allowed me to use the data I bought from you in a timeframe that worked for my needs, not yours, and maybe when I do buy more data from you, I won’t do it  begrudgingly, thinking of you as a pack of bastards who are just out to rip me off.

Or maybe if you created a policy of treating customers like me with enough respect to let me use what I’ve paid for when it runs out, not just at the end of some arbitrary 30 day period, you might just be surprised at how many other customers would be interested in being treated the same way. Maybe even those hard to find New Customers.

Right now, you are getting my money for two 3G data plans, one for my phone and one for my iPad. But, frankly, the iPad data is a bit of a ripoff. Not because it’s a bad service or I don’t want to use it, but because you seem to feel that it’s ok to charge me for a product and then, if it is partly unused after 30 days, you feel it’s ok to just take that unused part and make it vanish, even though I’ve paid for it.

You see Telstra, there’s nothing fair about selling someone something and then just expiring whatever they haven’t used at the end of 30 days. It sucks. You might be able to get my business, but you get it begrudgingly and you don’t win me over as a customer. I may give you my business today, but as soon as an alternative comes along, I’m out of there because you’ve not done anything to earn my loyalty to your brand.

Eventually, when the resentment becomes bad enough, I’ll decide that I really don’t need 3G data on my iPad that much anyway, and just go back to tethering on my phone’s data plan. And then you lose me completely as a customer for that second data plan. The irony is that if you just let customers buy data and use it till it’s gone, you’d keep me. You’d have happier, more loyal customers, and probably more of them, who would gladly top up their data plan again and again because you’d be offering a service that works on their terms, not yours.

Have you ever stopped to consider how many potential customers you don’t get because of this short-sighted approach to providing a 3G data product under fair and reasonable terms?

Here’s a tip. Treat your customers with respect. You have a good product technically, but your customers don’t love you. They endure you. They tolerate you. They stay with you because you are less worse than the other telcos. If you treated us with more respect by recognising that when we pay you for a product we deserve to be able to use that product until it’s finished, you’d probably find a whole lot of new customers that you never knew existed and a whole lot of existing ones that felt far better about doing business with you.

Think about it.

CC BY-SA 4.0 An Open Letter to Telstra on 3G Data Use by Chris Betcher is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

28 Replies to “An Open Letter to Telstra on 3G Data Use”

  1. Hear, hear!

    I just about turned blue in the face trying to explain the unfairness of this type of policy with data on my prepaid smartphone. I changed to Amaysim who allowed me to rollover unused data. The following month they adopted the use it or lose it policy. Let me know if you find a telco who will treat customers fairly.

    1. Thanks Femme F.

      In Tesltra’s defense, at least they charge per KB for data access. Amaysim charge per MB… another massive ripoff. That means if I send a 140 character Tweet via 3G (140 BYTES of data) my account would be debited but 1MB (or 1024 bytes) of data.

      Telstra are no worse in their 30 day expiry than most other Telcos; they all do it. In fact, Telstra’s per KB incrementing of data use actually makes them much better than most, but I still think 30 day (or even 365 day) expiry of data that a customer has paid for really sucks.

  2. Hi Chris, you asked us leave comments if we disagree so here goes.

    I imagine that in Telstra’s mind they are not selling you the data, but rather the opportunity to use their service to download the data. Legally for a contract to be binding it needs to be certain. A contract to buy unspecified data that may or may not even exist yet would not be enforceable.

    This is why the petrol analogy doesn’t work: you have bought a physical product that is transferred into the tank of your car at the time of purchase. The thing you have bought becomes your property. The data you may or may not download in the future is not your property at the time you make your contract with Telstra.

    Even if you did know, at the time of ‘purchase’, exactly which data you wanted to download, an open-ended right to download it whenever you feel like it at any point in the future would count as a business liability for Telstra. They need to keep their books balanced and it wouldn’t be good business practice to let those liabilities pile up indefinitely. It’s much the same philosophy by which my employer won’t let me store up my leave indefinitely, but requires me to take it.

    As you know I spend a lot of my working life thinking about what is fair, and discussing it with other people who think a lot about it. On a list of unfair things, I think that a consumer contract for a non-essential item (you’ve said you can always tether your ipad to your phone and you don’t really need the 3G data on the ipad itself), based on full disclosure of the terms before any commitment is made, would be some way from the top. Forgive me if I’m wrong, but I didn’t read anything in your blog as suggesting you’d been tricked in any way.

    Nor have I ever heard Telstra claim to put the customer first, so I’m not sure why you would bother criticising them on the basis that that aren’t doing so. As the rep you were talking to indicated, businesses need to put profits first, not people. Personally I think that’s a shame, but you might as well criticise a lion for eating meat. And in practice, because profits come from people, they have to strike a balance.

    Finally can I just add that I am no fan of Telstra’s either – but my beef against them is more on grounds of inefficiency, incompetence, and uneconomical pricing structures (especially for landlines … and see, I didn’t call it price-gouging … woops). There have even been moments when I’ve felt that I was tricked by them. But sorry I don’t agree that 30-day expiry on data plans is unfair.

    Cheers – Lizzie

    1. Hi Lizzie,

      Thanks for the comment. I appreciate the opportunity to hear a dissenting opinion, even if I still don’t agree with you.

      Of course, you’re absolutely right about it being a consumer contract for a non-essential item that provides full disclosure of the terms of use. There is no argument about the fact that this agreement between Telstra and I is entered into voluntarily and there is nothing misleading about it in the sense that I know exactly what they are offering and I have a choice about whether I choose to enter into it or not. They aren’t “ripping me off” in the sense that I’ve been misled or misinformed. That’s all true. My contention is that the “rip off” aspect of it is based on creating an arrangement that does not treat me in a way that feels fair, and takes money for a product that they choose to expire before it’s used by me.

      While you say you spend a lot of your working life as a lawyer thinking about what’s fair, it seems more likely that you spend a lot of your working life thinking about what is legal and lawful and within the terms of any given contract, I’m not sure I agree that thinking about what’s contractually accurate is the same as thinking about what’s fair.

      Of course, it’s not really a lawyer’s job to think about what’s fair, only what’s lawful. Your comment above kind of makes that point obvious. To suggest that any data I may or may not download in the future is not my property at the time of entering into the contract is just hair-splitting, ass-covering legal speak. I think you’d be hard pressed to find a regular consumer who thinks that the 30 day expiry approach is fair and reasonable. If you’ve paid for it, you should be able to use it. The 30 day expiry approach is simply their way of making sure that Telstra’s interests are well taken care of before the customer’s needs. And while their fiduciary responsibilities might be to put their shareholders first, doing that at the expense of long term customer satisfaction is a very short-sighted business strategy, especially in this day and age. To quote from the mantra of another large (and extremely profitable) company “put the customer first and all else will follow”.

      The bigger point I was making was that it would be in Telstra’s long term interest to offer a pay-for-it-and-use-it-till-its-all-used option, not because it would be easier for them to administer (it wouldn’t) but because it would do wonders for their PR. It would differentiate them from their competition. It would create happy, loyal customers. And really, for the vast majority of users, it would not really change the way they use data. They would still use it and recharge it when it runs out. If anything, they would probably end up selling MORE data to MORE customers.

      1. Chris, as a constitutional and media law academic, I have very little to do with contract law. I just know the basic principles, and I tried to use them to explain what Telstra (I presume) thinks it is contracting for – not the data itself, but the right to download the data.

        I brought up the question of whether the data is your property or not to explain the faultline in the petrol analogy you used. I was not splitting hairs and I certainly wasn’t covering anyone’s ass. But once again, the main point is that you’re unlikely to get a hearing from Telstra if you approach them with a version of what is going on here (you are buying data) that is totally at odds with what they think is going on (you are buying the right to download data).

        And you may surprised to know how much fairness and justice come up in the day to day work of practising lawyers. Certainly of legal academics.

        You may well be right that Telstra’s strategy is short-sighted and will be damaging to their business in the long term. But that’s a different argument to it being unfair. As I said, they have to balance their profit motive with good treatment of their customers. What you are really saying is that you don’t think they’ve got the balance right. I’m sure they’d be very pleased to hear from you on that.

        Lizzie

        1. I just don’t see how I’m buying “the right to download data” and not the data itself. It’s not like I’m expecting to get a rebate for unused data at the end of the month… I simply think the equitable and fair thing is to provide a customer with the amount of product – in this case data – that corresponds to the amount of money they paid for it.

          I don’t understand why that isn’t obvious.

    1. Hi Jon,

      I haven’t tried it, but I’m aware of it. It’s still a case of a given amount of data in a given amount of time. While it might be stretched out over 12 months instead of 30 days, it’s still the same basic unfair idea. If I get to the end of 12 months and have only used 8GB of data, why should I lose the extra 4GB that I’ve paid for? It makes no sense.

      More likely though, I WILL end up using the data within the 12 month period. Let’s say I use all 12GB in 10 months. At that point I will probably renew for another 12 months, and I’ll be a happier customer because I’ll feel like I got the opportunity to extract the value that I’ve paid for.

      The other problem I have with the 12 month plan is that the per GB data cost is 1.2 cents/MB, compared to 1 cent/MB that the monthly plans get. Usually when you buy something in bulk you get gets cheaper, not more expensive.

      And of course, we are talking here about DATA, an entity whose cost just gets cheaper over time. Telstra’s cost for that data 12 months from now is going to be cheaper than it is today. So by buying in bulk and paying in 2012 dollars for a product that I would still be using in 2013, where the real cost of that product become cheaper to provide, I would have expected the per MB cost to be less than if I’d have bought it on a month to month basis.

      This whole industry needs a massive shakeup.

    2. Have you noticed that the $150 for 12GB of data plan was recently adjusted to now cost $180 for the same amount.

      In a world where data storage and data transfer should be getting exponentially cheaper, it astounds me that Telstra can justify RAISING the price of data.

      And yoiu should see what they’ve done with their prepaid plans lately… a $50 recharge used to buy you 2GB of data. As of July 2012 it will now buy you 800MB (or .8 of a GB). That’s a 60% REDUCTION in data, with no explanation, no reason provided, and no offer to grandfather in their existing customers.

      In any other industry there would be a fucking mutiny.

  3. The Telco’s charge if you over use generally so I think that, if you under use in a given period, you should be able to bank that unused data allowance. That’s seems like it would be two way fairness to me. You should be able to purchase by time block OR data allowance block.

    1. Agreed. I’m happy for them to sell me 3GB of data and let me use it all till it’s gone. Or sell me data access for a month and don’t put a limit on it. But this BS of selling me a limited amount of data to be used in a limited amount of time is just trying to have it both ways. Give us a fair plan, price it however you like… the market will decide whether it represents value or not.

  4. I agree with all that you have said, Chris. If I have paid for something then I expect to be able to use it whenever I want, not within the month limit. One of my issues was that for my iPad there was a minimum amount that I had to buy every month. I never got close to using it all, except when I was holidays and away from my wi-fi. I would have been happier if I could have purchased a $5 amount for the month. I don’t think I would have minded losing some of the data if I I hadn’t spent so much. I gave up and ended up getting the $150/12gb which has solved an enormous headache of having to get more data each month. I doubt I will use all of that either. Loyalty is a big thing and Australia is small enough that happy customers talk to other potential customers and word of mouth about good products helps to sell more of those products!

    1. I had someone point out to me that the unused data at the end of a prepaid period can be rolled over to the new prepaid period. If I understand that correctly then it’s a bit of an improvement… sort of.

      So, let’s say I pay $150 for 12 GB of data. Fine.

      Let’s say I’ve only used 8GB of data as the end of the 365 days approaches. Apparently, as long as I renew my prepaid data plan before the actual expiry date, then the unused 4GB of data will be added to the new prepaid period of the next 365 days, so I now have another 12GB of data + the unused 4GB, so 16GB of data to use in year 2. Fine.

      Let’s say I do a similar thing in the second 365 day period. I use about 8GB. I have another 8GB of unused data left over (16GB – 8GB). Now, when I roll over into the third 365 day period, I will carry the unused 8GB with me to be added to the new 12GB so I now have 20GB to use for the next 365 days…

      You might think, this is good. I’m not losing any data, it just rolls over.

      But unless my usage increases to take advantage of all this extra rolled over data then I’ll eventually lose it. If I stay around the 8GB mark for mobile data each year, I will just accrue a huge bank of potential data that I’ll probably never get to, and will eventually lose anyway. So again, I’ve paid for something that I will never get to use.

      Would it really be so awful if I paid for 12GB of data and took 14 months to use it? As a happy customer who just got great value for money, I’m going to just renew it after it runs out anyway, right?

  5. It’s not as clear-cut as that. This is a pricing model that is used pretty much all over the place and it has the huge advantage that it is easier for providers to more easily predict usage for all customers in a given period. I’d imagine this makes it far easier to manage things…

    (Not saying it’s ideal, I’m just saying it’s not just like that to be to be “unfair”)

    1. A couple of points I would respond with…

      a) just because this is a pricing model used “pretty much all over the place” by lots of Telcos doesn’t make it right. (I actually think the whole “monthly usage” thing is just a leftover from the old landline days where telcos charged a monthly line rental fee. In a digital age, there’s really no justification for such a pricing model. You should pay for what you use, and get what you pay for)

      b) I couldn’t give a rat’s ass whether this pricing plan makes it easier for the telcos or not. Not my problem. I’m not interested in what they want, I’m interested in what I want.

      c) It makes it easier to manage things? Seriously? If their current billing system isn’t set up to fairly charge customers for the services that they actually use, then they should change it so it is. I’m not going to sympathise with the telcos because their accounting software finds user-pays a difficult concept.

  6. Chris, I feel the same as you, but they can claim an economic justification.

    Most of the cost is for the creation and maintenance of infrastructure capacity, whether it gets used or not. Think of networks, cells (access points), maintenance and power which cost the same even if unused. Telstra’s marginal costs per byte transferred are tiny. Telcos are passing that cost structure on to us, which economists would say is rational.

    SMS, on the other hand, billed at $1500 per MB…. words fail me.

  7. Chris.
    In the same boat. I tried to buy 3 150 gb prepaid data cards for my leadership team to go into the new ipads -limited to use over 12 months – worse they wouldn’t put this onto the school account but had to buy them separately with cash – complicated but in the end they won when I organised a more expensive plan that went on the school plan for 12 months. Guess what I will be shopping at the end of the 12 months. It seems that they didn’t care that the school account/s as well as the data cards as well as the school mobiles (4) were all at stake. I wonder if another telco who wants $15,000 worth of business each year will deal. Will be in contact.
    Mark

  8. The government should bd able go legislate to ptotect prople from a degree of incompetence from telstra that surely constitutes misleading and deceptice cocduct from the perspective that they are selling producrs thst malfunction are put customers through torture to get the product in workjng order. Many people just give up the fight in ordrr to savd their well being from plummetting. How many people gave paid more than their legal obligation because thry had no more time andenergy to continue the fight with staff who are either obtuse or feign obtuseness as a tatic. I cannot go into a mryiad of specifics herr as i am doing this on my phone and feel totally depleted by telstra. it is nothing but a force of evil.

  9. I agree with what you have written here, for people like me that doa lot of remote work I have to stream my workstation either to my phone or my ipad and it uses a fair amount of data when out of the office.

    I originally had a 5gb data plan with telstra for a year, however my usage would barely tip the 1gb scale so i scaled it back to 2gb.

    Unfortunately, this month alone i’ve nearly hit my 2gb mark with a lot of after hours work. I’m annoyed that the 10’s of gigs i’ve lost over the last year can’t be used to credit my account so instead i’ll be getting charged 25 cents for every MB i’ve gone over my 2gb limit.

    And as the data usage takes up to three days to refresh for 3G I have no idea how much I may have gone over.

    We are definately being ripped off, when i talk to my friends in the states to hear what mobile plans they are on 4g networks, and unlimited data plans for $40.00 USD per month it clearly shows the lack of competition in Australia and the greed that a monopoly like telstra has.

    I doubt that we will ever have unlimited data plans for mobiles under $50 a month, but they could at least start by rolling over our unused data.

  10. Bravo Chris, you’re not alone, I’ve been harping on to Telstra about this since I arrived here from the UK over 2ys ago & was horrified to see what Australians pay for their phone, mobile, Internet compared to the UK & Europe. It amounts to pure theft in my book, maybe as customers we should be allowed to take back what money they don’t spend that we pay them, bet that would make them reconsider.

  11. when hell freezes over telstra will be fully private and then other telcos will enter the market and the artificial floor will fall and we can live in the land of valuefor money product, complete with rainbows and justice for all

    1. Oh really? When did that happen? I have noticed that my data usage has gone through the roof lately, but I didn’t know why. That’s crazy! 1MB per handshake? Ridiculous. I’m off to the Telstra store to complain.

  12. Bit of an old page but . . . My data usage is blatantly bollocks! I’ve just gone through four gigs on a tethered iPhone, on 3g, in a couple of days. That’s just normal web surfing, a bit of facebook, gumtree, mail, etc.
    Telstra are ripping me off so badly they may as well come round to my house with a gun and steal my fucking cash. Bastards. When will this country get some decent service!?

  13. I think Telstra is a complete rip off if only the other telcos could provide the same coverage Telstra would be out of business tomorrow as I repeatedly inform Telstra if another could match your coverage as to were I live I would drop you guys like a stone and I believe 60% of Telstra customers would do the same

That's all well and good, but what do YOU think?