Synergies was engaged by the Australian Communications Consumer Action Network (ACCAN) for advice on estimating the value of consumers’ time wasted (“time forgone”) trying to resolve customer service issues and the cost to consumers of intermittent or delayed supply (“reliability”). The aim of the advice was to provide an evidence base and a source of practical guidance on matters including how to apply non-market valuation techniques in the telecommunications context and the strengths and limitations of the different techniques. In doing so, the advice sought to support ACCAN’s advocacy on behalf of consumers for measures to improve service in these areas
The Australian Communications Consumer Action Network (ACCAN) is Australia’s peak body for consumer representation in communications. It has identified long wait times to resolve problems and poor reliability as significant issues facing telecommunications consumers. The value of these aspects of telecommunications services are not reflected in prices. This is because consumers are generally not offered different tiers of reliability or response times.
Yet slow response times and poor reliability will impose costs on consumers and the broader economy. The size of these costs is relevant to regulatory questions concerning customer service standards, service guarantees and obligations to pay customers compensation for inconvenience or damage when standards are not met.
ACCAN required practical assistance with applying non-market valuation techniques to measure the value of time forgone and reliability to consumers of fixed and mobile communication services.
Synergies provided general introduction to non-market valuation techniques to provide an appreciation of the diversity of approaches and their strengths and weakness. Then Synergies carried out two literature reviews to identify how in various sectors and jurisdictions (1) customer time foregone has been valued; and (2) the value of reliability to customers has been defined and measured.
Based on the literature reviews, Synergies considered whether and how benefit transfer techniques might support the preparation of estimates of the value of time foregone and reliability in an Australian telecommunications setting.
Synergies also prepared guidance for ACCAN should it undertake primary research of its own to produce valuations specific to the Australian telecommunications context
Value of time forgone
Synergies found that studies of the value of time forgone are most prevalent in the transport sector and that this sector has developed the most sophisticated and well-supported framework for the valuation of customer time.
ACCAN published Synergies report and promoted extracts through a dedicated webpage
Synergies found that studies of the value of reliability are prevalent in the electricity and water sectors. In both cases, attributes and methods have become relatively well established and consistent across different countries over more than a decade. In the telecommunications sector, we found that the quantification and valuation of reliability is much less prevalent, and the analytical frameworks used are more diverse and comparatively under-developed. Synergies did not find a suitable valuation study that would permit estimates of the value of reliability to be transferred to the Australian telecommunications context.
Benefit transfer approach for time forgone
Recognising the likely transferability of studies of customer wait times in a travel context, Synergies developed an approach to applying valuations and loadings developed for the Australian Transport Assessment and Planning (ATAP) Guidelines for use in a telecommunications setting. The benefit transfer approach adapted by Synergies suggested a range of values of time forgone (depending on the extent of aggravating factors) ranging from $13.67 per hour to $22.56 per hour in 2018 dollars.
Synergies identified a strong basis for ACCAN to use a benefit transfer approach to estimate the value of time foregone for Australian telecommunications consumers. Synergies concluded that primary research would likely be required to produce robust estimates of the value of reliability for telecommunications services. Synergies concluded that such research would benefit from precedents established in the electricity sector regarding how to define service attributes and what valuation techniques to apply.