Vodafone relapse will lead to fines: ACMA

update The Australian Communications and Media Authority (ACMA) has issued two directions to Vodafone for failing to comply with the Telecommunications Consumer Protection (TCP) Code over its highly publicised network issues a year ago, warning the company that it may face a $250,000 fine.

In late 2010, Vodafone's 3G network began to struggle under the weight of its customers, leading to call drops and difficulty in connecting to the internet.

Initially, Vodafone blamed the issue on a software problem, but eventually the company came clean in early 2011, and announced an overhaul of its entire network, replacing 2G and 3G equipment with Chinese network vendor Huawei. Vodafone has tipped over $1 billion into the network upgrades.

But its initial hesitance to reveal the cause has led to a direction from the ACMA, which said that the company had breached the TCP Code, as it "failed to provide timely customer information about network performance in late 2010". In addition to this, the company was also found to have failed to classify and analyse complaints from customers.

The ACMA also took Vodafone to task for its "poor systems in place for protecting the privacy" of customers, through it Siebel-Oracle customer relationship-management system that was investigated by the privacy commissioner at the start of 2011. The privacy commissioner had found that in-store staff had been sharing passwords.

ACMA chair Chris Chapman said that the regulator had issued the directions to ensure that Vodafone keeps improving its customer services, and doesn't break the TCP Code again.

"Certainly, Vodafone has made positive changes over the course of this year, but, from this point on, if either Vodafone company fails to comply with the TCP Code, the ACMA can approach the Federal Court seeking civil penalties of up to $250,000," Chapman said in a statement.

In response, Vodafone CEO Nigel Dews said that the company has already been on the task of improving its network and service.

"We have supported the ACMA throughout their thorough and lengthy assessment, and, while we respect the ACMA's view of past events, we haven't waited for their report to tell us what we've needed to do," he said in a statement.

"In February 2011, we announced that we would accelerate network-improvement plans, and fast track our $1 billion investment in the new Vodafone network. Customer service improvements were also made, and we expanded the network information available to customers. Security measures were tightened for customer information," Dews said.

The Australian Communications Consumer Action Network (ACCAN) CEO Teresa Corbin said Vodafone got off much too lightly for its issues in the last year.

"There are no fines and no sanctions that the regulator can issue as a result of this investigation," she said. "If it had the right regulatory tools and adequate funding then it could do more to monitor compliance of service providers and undertake more effective enforcement action."

Corbin said that the ACMA needed to be able to investigate and respond to these incidents much quicker.

"The ACMA's Vodafone investigation makes it clear that the regulator needs stronger enforcement powers and that an industry code, governing vital telecommunication services, cannot be voluntary."

In October, the Communications Alliance outed its draft overhaul of the TCP Code. The changes include clearer advertising, bills and better spend-management tools to overcome the phenomenon of "bill shock".

Updated at 11:49am, 21 December 2011: added comment from ACCAN