Italy’s antitrust and competition authority AGCM has fined Telecom Italia (TIM) EUR 2.1 million (US $2.3 million) for unfair commercial practices in relation to a price hike applied last summer. Following a probe launched in response to complaints, the watchdog censured TIM for the use of what it described as “an opaque mechanism for acquiring the user’s silent consent” after it only permitted them to refuse the contract changes by sending an SMS.
On 01 July, the operator increased the data bundle for some of its mobile telephony customers while hiking the monthly cost, automatically activating the change without first seeking customer consent. The possibility of rejecting the change and remaining with the current offer by sending a specific command via SMS was considered insufficient by AGCM.
The recent fine imposed on TIM by AGCM highlights the challenge facing telecom companies when it comes to raising prices. Regardless of the reason, transitioning customers to pay more can be a risky proposition. Customers not only need to feel that they are receiving more value for increased prices, but that ultimately, they are in control of the transaction.
This lesson here is widely applicable, but especially to the dilemma facing telecoms with 5G services. Telecoms invested heavily in 5G technology but initially struggled to get customers excited about it. Many companies offered promotional access to 5G networks without raising prices as a way of letting customers test-drive the technology. However, transitioning customers into paying more for 5G services they’ve been using thus far for free could backfire in a big way.
The challenge for telecoms lies in finding the right balance between recouping their investment in 5G and maintaining customer trust. Operators should be cautious when changing contract terms and price plans, as customers who feel misled or treated unfairly are more likely to abandon their current provider in search of better treatment.