Telstra writes off $90m to mobile broadband 'bill shock'

It looks like Telstra may need to put more effort into explaining excess internet data use to its mobile wireless customers, as the company has recently posted up to $90 million in losses related to unpaid bills and waived fees throughout 2010.

Termed ‘bill shock’, it is the result of customers being unaware or confused about the difference between upfront mobile wireless broadband costs, and additional fees related to excess internet data usage. People are so surprised to receive a massive bill, they assume they have been lied to by the provider and subsequently refuse to pay. Telstra then has to write off the debt or waive associated fees in order to keep the customer.

Telstra chief executive David Thodey said about the issue, “We have had an increase in bad debt as customers' expectation of what they purchase and what they get isn’t quite right … we have seen some bill shock through larger wireless data costs, and people say, ‘hey, what’s going on here?’ So, there is a lot of work to do in that area.”

Telstra posted a total of $364 million in bad debts in 2010, and its chief financial officer John Stanhope said the $90 million mobile wireless debt was ‘self inflicted’ by the telco.

Mr Stanhope defined these ‘bill shock’ situations arising when a “customer may be described a plan and when they get the first bill it is hard to understand, or it doesn’t match the plan they thought they were going to get as described by somebody at the front of our house, or our agents … then, a dispute occurs with the bill.”

The chief financial officer said Telstra is attempting to rectify the situation by creating a ‘simplification program’. This program would help customers understand all aspects of an internet plan, and how it would be billed, spelling things out in simple terms.

Stanhope said issues like excess usage charges may not have always been Telstra’s fault, but that “sometimes they can end up in dispute”, presumably because they are extremely high. He said, ‘bad debts’ were created when customers refused to pay a bill, but that rebates given to customers after bill disputes were not counted in Telstra’s total ‘bad debt’ amount.

If you’ve ever received a massive bill for excess internet usage you may have experienced ‘bill shock’, a consumer phenomenon now much more prevalent in the Digital Age.

Excess data on mobile wireless internet and smartphone plans can be surprisingly expensive – especially when used overseas - and customers are sometimes unaware of the extra costs until the bill arrives.