customer service and complaints handling practices

CUSTOMER SERVICE AND COMPLAINTS HANDLING PRACTICES OF THE INTERNET INDUSTRY IN AUSTRALIA: AN INSTITUTIONAL PERSPECTIVE

Karthik Vilapakkam Nagarajan

A thesis submitted in fulfilment of the requirements for the degree of Doctor of Philosophy School of Business The University of Western Sydney 2014

© Karthik Vilapakkam Nagarajan 2014

STATEMENT OF AUTHENTICATION

The work presented in this thesis is, to the best of my knowledge and belief, original except as acknowledged in the text. I hereby declare that I have not submitted this material, either in full or in part, for a degree at this or any other institution.

(Karthik Vilapakkam Nagarajan)

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DEDICATION This thesis is dedicated to the loving memory of my beloved father, Nagarajan, and my grandmother, Kamalammal Pattabiraman. Thank you for your unconditional love, encouragement and support. I also dedicate this thesis to my mother, Bharathy, who continues to inspire me on a daily basis. Without your efforts and contribution my success in both personal and professional life would not be possible. Thank you for your continuous love and motivation.

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ACKNOWLEDGEMENTS I thank Lord Jesus Christ, Saint Mary MacKillop, Lord Ganesha and Our Lady of the Rosary of Fatima for their numerous blessings that helped me in so many ways during my doctoral study. I would like to express my sincere thanks and gratitude to my three supervisors, Professor George Lafferty, Doctor Tim Rankine and Doctor Qiuyan Fan, whose research guidance, feedback and encouragement were critical to the successful completion of this work. My heartfelt thanks for your uplifting moral support that assisted me in overcoming many challenges I faced during my doctoral journey. I am thankful to the participants of this study who devoted time and shared their experiences. To my academic colleagues and fellow researchers who devoted their generous time and support I would like to extend my thanks for your interest in this research project and your valuable feedback. Thanks are due, too, to numerous anonymous reviewers who provided feedback on my conference and journal papers. Special thanks go to Professor Margaret Vickers for her feedback during my UWS research symposium presentations. Professional editor, Mr Peter Moore, provided copyediting and proofreading services, according to the guidelines laid out in the university-endorsed national guidelines, ‘The editing of research theses by professional editors’. Thanks to my parents, Nagarajan and Bharathy, and my sister, Srivalli, for the neverending encouragement and unwavering confidence they showed in my research abilities. Finally, I thank the University of Western Sydney for providing the best resources and support during my doctoral study.

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ABSTRACT Rapid technological changes and strong rates of service growth in the Internet industry call for development of responsive and sustainable consumer protection policies that deliver desirable outcomes to Internet customers. Internet Service Providers (ISPs) in Australia are faced with numerous challenges in meeting customer service expectations. Careful critique and examination of academic literature identified customer service (CS) and complaints handling (CH) as the top two Internet service issues discussed in the context of poor performance of ISPs. The ability of the co-regulatory Telecommunications Consumer Protection (TCP) code to deal with emerging and new CS issues is important for ensuring consistent CS performance. Although ISPs operate as a part of a complex interdependent social, economic and political network, little research has been carried out on the institutional pressures that operate in the ISP industry and their influence on the CS/CH practices of very large ISPs (vLISPs). Studying institutional pressures is important to understand how and why vLISPs respond to institutional pressures, and to identify central actors who influence the CS/CH practices of vLISPs and inform future CS policy formulations. This PhD study examines the institutional influences on the CS and CH practices of the vLISPs in Australia using neo-institutional theory. Qualitative research using semi-structured interviews with senior executives from vLISP stakeholder organizations was conducted. The data was analyzed using thematic analysis and ideas from grounded theory. The study found that the CS and CH practices of vLISPs are institutionally derived practices. The institutional pressures in the form of regulatory pressures (imposed through the regulator’s enforcement actions and inquiry recommendations), normative pressures (evidenced through the industry association’s effort to focus on development of standardized CS practices), mimetic pressures (under-performing ISPs mimicking practices of successful ISP’s CS practices) and customer pressures (customers voicing their concerns to the regulator and the consumer association) had a potent conforming influence on the CS/CH practices of the top four vLISPs. The intensification and interplay between these institutional pressures led to an increased degree of inter-organizational collaboration between the top four vLISPs and external stakeholders that created interorganizational linkages that did not exist before.

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The frequent and fateful interactions between the institutional actors of the vLISP industry resulted in significant changes to that industry’s CS/CH practices. The deep interactions, embedded collaboration and information exchange between the institutional actors of the vLISP industry have led to the emergence of Organizational Fields. It is argued in this thesis that there is potential for Emerging Organizational Fields to mature over time and inform future CS/CH practices. This thesis brings bodies of literature together and makes a contribution to the organizational studies literature by highlighting the importance of understanding the institutional influences on vLISP industry practices and identifying potential avenues for further research.

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TABLE OF CONTENTS STATEMENT OF AUTHENTICATION ............................................................ II DEDICATION… ................................................................................................. III ACKNOWLEDGEMENTS ................................................................................... IV ABSTRACT………….............................................................................................. V TABLE OF CONTENTS .................................................................................... VII LIST OF TABLES .............................................................................................. XIV LIST OF FIGURES ..............................................................................................XV LIST OF ACRONYMS/ABBREVIATIONS ..................................................... XVI GLOSSARY……............................................................................................... XVIII RESEARCH PUBLICATIONS AND PRESENTATIONS........................... XXIII CHAPTER 1

INTRODUCTION ....................................................................... 1

1.1

Purpose and context........................................................................................................ 1

1.2

Background to the research ........................................................................................... 2

1.3

Introduction to service quality ....................................................................................... 4

1.4

Customer service and complaints handling practices of Internet Service Providers in Australia ...................................................................................................... 4

1.5

The top two Internet service issues in Australia ......................................................... 5

1.6

The top four very large Internet Service Providers in Australia .............................. 7

1.7

Gaps in current literature on customer service and complaints handling practices of Internet industry ......................................................................................... 8

1.8

Research objectives ....................................................................................................... 10 vii

1.9

Research questions ........................................................................................................ 10

1.10

Introduction to theoretical framework ....................................................................... 11

1.11

Research motivation ...................................................................................................... 12

1.12

The value of this research............................................................................................. 13

1.13

Layout of the thesis ....................................................................................................... 13

CHAPTER 2

LITERATURE REVIEW ............................................................16

2.0

Chapter overview ........................................................................................................... 16

2.1

A review of the Internet industry in Australia: Background and Context ............ 16

2.2

Literature review of customer service and complaints handling in the Internet industry ............................................................................................................................ 23

2.3

The institutional environment of very large Internet Service Providers .............. 39

2.4

Relevance of institutional perspectives in understanding customer service and complaints handling practices of the Internet industry ........................................... 40

2.5

Theoretical framework: Neo-institutional theory ..................................................... 41

2.6

Justification for institutional theory approach over other theoretical approaches43

2.7

Introduction to neo-institutional theory concepts relevant to this research ....... 45 2.7.1 Institutional pressures.......................................................................................... 45 2.7.1.1 Study of institutional pressures: Information Technology industry specific studies ............................................................................................. 47 2.7.1.2 Study of institutional pressures: Other industries ................................... 49 2.7.1.3 Understanding strategic responses to institutional pressures ............... 51

2.8

Organizational Fields .................................................................................................... 52

2.9

Introduction to collaboration and Organizational Fields ........................................ 55

2.10

Institutional Entrepreneurs and Organizational Fields ............................................ 56

2.11

Institutionalization of practices ................................................................................... 57 2.11.1 Processes of institutionalization of practices ................................................. 60

2.12

Isomorphism, decoupling and diffusion .................................................................... 62

2.13

Summary of gaps in the literature and this study’s approach.................................. 63

2.14

Research questions ........................................................................................................ 65

2.15

Conclusion ...................................................................................................................... 66

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CHAPTER 3

RESEARCH DESIGN: METHODOLOGY AND METHODS 67

3.0

Chapter overview ........................................................................................................... 67

3.1

Research design considerations ................................................................................... 68 3.1.1 Research paradigm ............................................................................................... 68

3.2

Research methodology .................................................................................................. 70

3.3

Justification for choice of qualitative approach ....................................................... 71

3.4 3.5

Selection of a qualitative approach.............................................................................. 72 Past studies that used qualitative approaches to understand institutional influences.. ...................................................................................................................... 77 3.5.1 The use of existing theory ................................................................................... 79

3.6

Data collection method ................................................................................................ 80 3.6.1 Strategies used in this research to address weaknesses in the interview design and implementation………………………………………. ........... 82

3.7

Research procedures ..................................................................................................... 84 3.7.1 Selection and exclusion criteria for participants............................................... 85 3.7.2 Recruitment procedures ..................................................................................... 88 3.7.3 Sampling techniques and size for this study ..................................................... 89 3.7.4 Profile of the participants .................................................................................... 92 3.7.5 Interview implementation details ....................................................................... 96

3.8

Data analysis ................................................................................................................... 97 3.8.1 Discussion of thematic analysis .......................................................................... 99

3.9

Application of data analysis techniques.................................................................... 104 3.9.1 First level coding process .................................................................................. 105 3.9.2 Second level coding process ............................................................................. 106 3.9.3 Third level coding process ................................................................................ 107 3.9.4 Emergence of themes ........................................................................................ 107

3.10

Trustworthiness of this research ............................................................................... 108 3.10.1 Credibility .......................................................................................................... 109 3.10.2 Dependability.................................................................................................... 109 3.10.3 Confirmability ................................................................................................... 110 3.10.4 Transferability and applicability ..................................................................... 110 3.10.5 Triangulation..................................................................................................... 111

3.11

Ethical considerations ................................................................................................. 112

3.12

Summary ...................................................................................................................... 114

CHAPTER 4 QUALITATIVE DATA ANALYSIS .............................................. 115 4.0

Chapter overview ......................................................................................................... 115 ix

4.1

Major categories and themes that emerged from data analysis............................. 116

4.2

Major category 1: Customer service related perspectives ...................................... 123

4.3

Major category 2: Complaints handling related perspectives ................................ 128 4.3.1 Attention to complaints handling performance ............................................. 128 4.3.2 Key areas of concern.......................................................................................... 129 4.3.3 Complaints data and reporting ......................................................................... 130 4.3.4 Areas for improvement...................................................................................... 132

4.4

Major category 3: Insights into TCP Code development and review processes134

4.5

Major category 4: Regulatory compliance with the customer service and complaints handling practices stated in the TCP code ......................................... 137

4.6

Major category 5: Stakeholder interactions for discussion of customer service, complaints handling issues and challenges ................................................ 144

4.7

Major category 6: Key agencies and their role in influencing customer service and complaints handling practices of the vLISP industry .................................... 151

4.8

Major category 7: External stakeholder pressures in the Internet Service Provider industry and their influence on customer service and complaints handling practices of vLISPs ..................................................................................... 153 4.8.1 Pressure 1: Ombudsman’s Connect.Resolve campaign ................................ 156 4.8.2 Pressure 2: ACMA’s Reconnecting the Customer (RTC) inquiry .............. 158 4.8.3 Pressure 3: Response to regulatory pressures: ACMA inquiry recommendations in the revised TCP Code ................................................. 161 4.8.4 Pressure 4: Customer and competition pressures to prioritise customer service within vLISP organizations................................................................. 161

4.9

Discussion of key themes ........................................................................................... 162

4.10

Key findings from data analysis................................................................................. 166 4.10.1 Micro-level findings ......................................................................................... 167

4.11

Conclusion .................................................................................................................... 169

CHAPTER 5 INSTITUTIONAL PRESSURES AND THEIR ROLE IN INFLUENCING THE CUSTOMER SERVICE AND COMPLAINTS HANDLING PRACTICES OF VERY LARGE ISPS .......................................... 170 5.0

Chapter overview ......................................................................................................... 170

5.1

Factors influencing the customer service and complaints handling performance in very large ISPs .................................................................................. 172

5.2

Institutional pressures and their role on influencing the customer service and complaints handling practices of the vLISP industry ............................................. 174 x

5.2.1 The role of regulatory pressures on customer service and complaints handling practices of the vLISP industry ........................................................ 178 5.2.2 The role of normative pressures on customer service and complaints handling practices of the vLISP industry ........................................................ 179 5.2.3 The role of customer pressures on customer service and complaints handling practices of the vLISP industry ........................................................ 180 5.2.4 The role of mimetic pressures on customer service and complaints handling practices of the vLISP industry ........................................................ 181 5.2.5 Interplay between the institutional pressures ................................................. 182 5.3

Response to institutional pressures by regulatory managers of the top four vLISPs……. ................................................................................................................. 185

5.4

The role of institutional pressures in influencing improvements to customer service and complaints handling practices: An example scenario ....................... 191 5.4.1 The problem ....................................................................................................... 191 5.4.2 Comparison of the old and the revised TCP Code in relation to consumer sales, service and contracts ............................................................. 194 5.4.3 Preliminary evidence from a very large national ISP..................................... 195

5.5

Conclusion .................................................................................................................... 197

CHAPTER 6 EMERGING ORGANIZATIONAL FIELDS IN THE AUSTRALIAN VERY LARGE ISP INDUSTRY ................................................ 199 6.0


6.1

Definition of Organizational Field............................................................................ 200

6.2

Chronology of events in relation to the poor customer service and complaints handling performance of the top four very large ISPs ..................... 201

6.3

Disparate organizations coming together to address customer service and complaints handling issues of the Internet industry.............................................. 204

6.4

Collective rationality among the top four very large ISPs in dealing with customer service and complaints handling issues ................................................... 205

6.5

The role of field configuring events in bringing institutional actors together ... 206

6.6

Emerging Organizational Fields in the very large ISP industry ............................ 213

6.7

Relationship between customer service/complaints handling practices, CS/CH and Emerging Organizational Fields ......................................................... 228

6.8

Conclusion .................................................................................................................... 229

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CHAPTER 7

DEVELOPMENT OF EMERGING ORGANIZATIONAL

FIELDS AND ITS IMPLICATION FOR FUTURE CUSTOMER SERVICE AND COMPLAINTS HANDLING PRACTICES .............................................. 231 7.0


7.1

Influential role of central actors in fuelling Organizational Field development.233

7.2

Ongoing commitment of regulatory managers of the top four very large ISPs in fuelling Organizational Field development ........................................................ 234

7.3

Legitimacy of organizational action by very large ISPs ........................................ 237

7.4

The role of institutional entrepreneurs in shaping Emerging Organizational Fields……. ................................................................................................................... 239

7.5

Development of Emerging Organizational Fields to inform future customer service and complaints handling practices ............................................................... 241

7.6

Longitudinal study of Emerging Organizational Fields identified in this research….. ................................................................................................................... 243

7.7

Conclusion .................................................................................................................... 248

CHAPTER 8 CONCLUSION ............................................................................. 249 8.0

Research overview and summary of findings .......................................................... 249

8.1

Achievement of the research objectives................................................................... 255

8.2

Contribution to body of knowledge ......................................................................... 257 8.2.1 Contribution to the literature on Internet industry customer service and complaints handling practices .................................................................. 257 8.2.2 Contribution to literature on institutional pressures, strategic responses to institutional pressures and organizational behaviour ............................. 258 8.2.3 Contribution to Emerging Organizational Fields literature ......................... 259 8.2.4 Methodological contribution to understanding institutional influences on technology based service industries .......................................................... 260

8.3

Limitations of this research ........................................................................................ 261

8.4

Future research opportunities .................................................................................... 262 8.4.1 Longitudinal study of the Emerging Organizational Fields of the very large ISP Industry .............................................................................................. 262 8.4.2 Institutional pressures and decoupling ........................................................... 263 8.4.3 Institutionalization of customer service practices ......................................... 263

8.5

Implications and conclusion ..................................................................................... 264

References... ............................................................................................................................... 267 xii

Appendices ................................................................................................................................. 285

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LIST OF TABLES TABLE 2.1 CONSOLIDATION OF INTERNET STUDIES FINDINGS IN RELATION TO DESIRABLE ISP SERVICE CHARACTERISTICS....................................................................................................31 TABLE 2.2 APPLICATION OF INSTITUTIONAL THEORY IN IT AND TELECOMMUNICATIONS ....43 TABLE 2.3 CARRIERS OF INSTITUTIONAL ELEMENTS ........................................................................59 TABLE 3.1 PHILOSOPHICAL VIEWS TAKEN BY THIS RESEARCH .......................................................70 TABLE 3.2 QUALITATIVE RESEARCH CHARACTERISTICS AND THEIR APPLICABILITY FOR THIS STUDY ................................................................................................................................................73 TABLE 3.3 SOME INTERNATIONAL INSTITUTIONAL THEORY STUDIES USING QUALITATIVE RESEARCH .........................................................................................................................................79 TABLE 3.4 COMPARISON OF TOP FOUR ISPS VERSUS OTHER ISPS BASED ON MARKET AND SERVICE CHARACTERISTICS ...........................................................................................................84 TABLE 3.5 FACTORS AFFECTING THE SAMPLE SIZE ...........................................................................92 TABLE 3.6 PROFILE OF ORGANIZATIONS INTERVIEWED IN THE STUDY .......................................93 TABLE 3.7 PROFILE OF PARTICIPANTS INTERVIEWED IN THE STUDY ............................................95 TABLE 3.8 DATA ANALYSIS METHODS USED IN QUALITATIVE RESEARCH ....................................97 TABLE 3.9 ADVANTAGES OF THEMATIC ANALYSIS ..........................................................................98 TABLE 3.10 FIFTEEN POINT CHECKLIST CRITERIA FOR GOOD THEMATIC ANALYSIS .............. 102 TABLE 3.11 SAMPLE CODING PROCESS FOR FIRST LEVEL CODING .............................................. 106 TABLE 3.12 SAMPLE CODING PROCESS FOR SECOND LEVEL CODING......................................... 107 TABLE 4.1 DETAILED MAPPING OF MAJOR, MINOR AND SUB-CATEGORIES ............................... 119 TABLE 5.1 LIST OF CUSTOMER SERVICE EXCELLENCE AWARDS WON BY [O8] ........................ 181 TABLE 5.2 RESPONSE TO INSTITUTIONAL PRESSURES BY THE TOP FOUR VLISPS ................... 186 TABLE 5.3 KEY CHANGES IN THE REVISED TCP CODE ................................................................ 188 TABLE 5.4 COMPLAINTS DATA ON CONSUMER SALES, SERVICE AND CONTRACTS ................. 192 TABLE 5.5 COMPLAINTS DATA ON CUSTOMER SERVICE INVOLVING CONSUMER SALES, SERVICE AND CONTRACTS ........................................................................................................ 192 TABLE 5.6 COMPLAINTS DATA ON COMPLAINTS HANDLING INVOLVING CONSUMER SALES, SERVICE AND CONTRACTS ........................................................................................................ 193 TABLE 6.1 DEFINING CHARACTERISTICS OF FCES ......................................................................... 207 TABLE 6.2 STRENGTH OF REPRESENTATION AND STRATEGIC IMPORTANCE OF ORGANIZATIONS THAT THE CENTRAL ACTORS REPRESENT ............................................... 209 TABLE 6.3 LEVELS IN INSTITUTIONAL ANALYSIS............................................................................ 214 TABLE 6.4 FREQUENCY OF INTERACTIONS AMONG VLISP INDUSTRY STAKEHOLDERS IN 2010/11 .......................................................................................................................................... 215 TABLE 6.5 CHANGES TO INTERACTION PATTERNS/CONSULTATION OF VLISP INDUSTRY STAKEHOLDERS ON CS/CH PRACTICES .................................................................................. 217 TABLE 6.6 CS/CH COLLABORATION IN THE VLISP INDUSTRY ................................................... 220 TABLE 7.1 LONGITUDINAL STUDIES CONDUCTED IN THE PAST ON DEVELOPMENT AND STRUCTURATION OF ORGANIZATIONAL FIELDS ................................................................... 245 TABLE 7.2 OPPORTUNITIES TO STUDY THE DEVELOPMENT OF EMERGING ORGANIZATIONAL FIELDS AND ITS IMPLICATION ON FUTURE CS/CH PRACTICES ......................................... 247

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LIST OF FIGURES FIGURE 3.1 RESEARCH DESIGN - METHODOLOGICAL MAP ............................................................83 FIGURE 3.2 CODING PROCESS USED FOR DATA ANALYSIS IN THIS STUDY ..................................... 105 FIGURE 4.1 CENTRAL ACTORS IN THE VLISP INDUSTRY INVOLVED IN TCP CODE DEVELOPMENT ..................................................................................................................... 134 FIGURE 5.1 CENTRAL ACTORS IN THE VLISP INDUSTRY WHO EXERTED PRESSURE ON THE TOP FOUR VLISPS ......................................................................................................................... 177 FIGURE 5.2 INTERPLAY BETWEEN PRESSURES IN THE AUSTRALIAN VLISP INDUSTRY .................. 183 FIGURE 5.3 DIAGRAMMATIC REPRESENTATION OF CHANGE FROM THE OLD TCP TO THE NEW TCP CODE ........................................................................................................................... 184 FIGURE 5.4 EXTERNAL INFLUENCES ON CS/CH PRACTICES OF VLISPS ....................................... 190 FIGURE 6.1 FIELD-CONFIGURING EVENTS IN THE VLISP INDUSTRY ........................................... 212 FIGURE 6. 2 EMERGING ORGANIZATION FIELD 1 IN THE AUSTRALIAN VLISP INDUSTRY ........... 226 FIGURE 6.3 EMERGING ORGANIZATION FIELD 2 IN THE AUSTRALIAN VLISP INDUSTRY ........... 226

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LIST OF ACRONYMS/ABBREVIATIONS

ABC

Australian Broadcasting Corporation

ABS

Australian Bureau of Statistics

ACA

Australian Communications Authority

ACCAN

Australian Communications Consumer Action Network

ACCC

Australian Competition and Consumer Commission

ACIF

Australian Communications Industry Forum

ACMA

Australian Communications and Media Authority

ADR

Alternative Dispute Resolution

ADSL

Asymmetric Digital Subscriber Line

ATUG

Australian Telecommunications User Group

AUSTEL

Australian Telecommunications Authority

CA

Communications Alliance

CC

Communications Compliance

CEO

Chief Executive Officer

CH

Complaints Handling

CS/CH

Customer Service and Complaints Handling

CS

Customer Service

CSIA

Customer Service Institute of Australia

CSG

Customer Service Guarantee

CSP

Carriage Service Provider

DBCDE

Department of Broadband, Communications and Digital Economy

DSL

Digital Subscriber Line

EU

European Union

FSQ

Functional Service Quality

IPTV

Internet Protocol Television

ISO

International Standard Organization

ISP

Internet Service Provider

IS

Information Systems

ISec

Information Security

IT

Information Technology

Mbps

Mega bits per second xvi

MB

Mega Byte

NBN

National Broadband Network

NIE

New Institutional Economics

OIE

Old Institutional Economics

OTC

Overseas Telecommunications Commission

RTC

Reconnecting the Customer

SIO

Services in Operation

SPAN

Service Provider Action Network

SQ

Service Quality

TCE

Transaction Cost Economics

TCP

Telecommunication Consumer Protection

TSQ

Technical Service Quality

TIO

Telecommunications Industry Ombudsman

vLISP

Very Large Internet Service Provider

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GLOSSARY Some terms commonly used in this thesis are explained in this Section. Alternative Dispute Resolution: Any means of settling disputes outside of the courtroom (TIO 2012). Asymmetric Digital Subscriber Line (ADSL): This is a type of digital subscriber line broadband technology (DSL) that allows data to be sent over existing copper telephone lines. It is asymmetrical because the download and upload speeds are not the same. Australian Communications and Media Authority (ACMA): This is the government agency

responsible

for

the

regulation

of

broadcasting,

radio

communications,

telecommunication consumer protection and online content (ACMA 2012). Australian Competition and Consumer Commission (ACCC): The government body responsible for regulating competition policy and enforcing the Trade Practices Act 1974 (ACCC 2012). Communications Alliance: This is an industry-owned company, resourced and operated by the ISP industry to implement and manage industry co-regulation within Australia (Communications Alliance 2013). Complaints Handling: The manner in which complaints are handled by ISPs. A complaint is defined as ‘An expression of dissatisfaction related to an organization’s products, services or the complaints handling process itself’ (ACMA 2012). Consumer Association: An association that promotes consumer interests and represents residential and small business Internet consumers in Australia. Consumer: Any individual or household that uses goods and services generated within the economy (ACCAN 2012).

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Co-regulation: A system in which the code is developed by the peak industry association in consultation with other industry stakeholders. The code is registered with the regulator for it to come into effect. Customer Service: This refers to ‘provision of service to customers before, during and after a purchase’ (ACCAN 2012). Decoupling: A new practice adopted for the purpose of legitimation, but not fully implemented. This leads to discrepancy between formal practices, policies and procedures and actual behaviour in implementing them (Boxenbaum & Jonsson 2008). Digital Subscriber Line (DSL): This is a broadband technology that allows highspeed transmission of data (audio, video and text) using standard telephone lines. External stakeholders: Stakeholders in the Australian very large Internet Service Provider industry who are involved in developing, reviewing and revising the Telecommunications Consumer Protection code. External pressures: Pressures from external stakeholders to which very large ISPs are subjected. External stakeholder pressures: Stakeholders who exert pressures on very large Internet Service Providers in relation to customer service and complaints handling practices. Fiber-to-the-Node (FTTN): This is a technology where the Fiber optic cable gets rolled out from an Internet Service Provider to a cabinet in the street known as node. From the node to the customer premises existing copper connection is used (NBN 2013). Fiber-to-the-Premises (FTTP): This is a technology where Fiber optic cable runs directly from an ISP to the customer premises (NBN 2013). Functional Service Quality (FSQ) Practices: Practices in the vLISP industry that relate to customer service and complaints handling.

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Functional Service Quality: ‘[T]he manner in which services are delivered to customers’ (Parasuraman, Zeithaml & Berry 1988). Government authorities: Actors in the regulator and government department responsible for broadband who involved in developing, reviewing and revising Telecommunications Consumer Protection code. They are primarily responsible for code compliance monitoring and enforcement. Institutional Environment (also referred to as external environment): The systems of formal laws, regulation, and procedures, and informal conventions such as customs, and norms, that mould organizational behaviour (Scott 2001). Institutional Forces (also referred to as Institutional pressures): Formal and informal pressures exerted on vLISP organizations by external stakeholders. The pressures include Regulatory pressures, Normative pressures, Mimetic pressures and Customer pressures. Internet Service Provider: A company that provides access to Internet and Internet-based services. Institutional influences: External stakeholders in the Internet industry who influence the development, adoption and implementation of industry practices through institutional pressures they exert on Internet Service Provider organizations. Isomorphism: In sociology, an isomorphism is a similarity of the processes or structure of one organization to those of another, be it the result of imitation or independent development under similar constraints. There are three main types of isomorphism: normative, coercive and mimetic (DiMaggio & Powell 1983). Member: An ISP that is a member of the Telecommunications Industry Ombudsman scheme (TIO 2012). National Broadband Network (NBN): This is the first wholesale-only, open access communication network that is currently being rolled out by the Australian Government to

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deliver higher Internet speeds. The plan is to provide every house, school and workplace in Australia with access to the NBN (NBN 2013). Reputation: ‘[A] generalized expectation about a firm’s future behaviour or performance-based on collective perceptions (either direct or, more often, vicarious) of past behaviour or performance’ (Deephouse & Suchman 2008). Service Quality: This refers to the technical and functional service quality areas of ISPs involving telecommunications consumer protection code (TIO 2012). Service

Quality

Practices:

Practices

within

ISP

industry

that

use

the

telecommunications consumer protection codes to determine areas relating to technical and functional service quality (TIO 2012). Social Norm: ‘The type of behaviour that a person ought to adopt in a particular situation’ (Saunders, Lewis & Thornhill 2003). Stakeholder: Persons or groups that have interests in a corporation and its activities (Clarkson 1995). Telecommunications Consumer Protection (TCP) Code: A co-regulatory consumer protection code that helps consumers to know their rights and to allow providers to use their own systems and procedures to comply with the code rather than having to use prescribed methods of compliance. TCP holds details on customer information on pricing, terms and conditions, credit management, billing, customer transfer, complaints handling and contracts (Communications Alliance 2013). Technical Service Quality: Areas that pertain to Internet Service Provider network operations (network infrastructure, peering arrangement between Internet Service Providers and network performance metrics).

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Telecommunications Industry Ombudsman Annual Report: 2006/07: Complaints data relating to ISPs for the period 1 July 2006-30 June 2007;; 2007/08: Complaints data for the period 1 July 2007- 30 June 2008;; 2008/09: Complaints data for the period 1 July 2008-30 June 2009;; 2009/10: Complaints data for the period 1 July 2009-30 June 2010 (TIO 2012). Very large Internet Service Provider (vLISP): An ISP that has more than 100,000 subscribers in Australia (ABS 2013). Wireless Technology: A wireless ISP infrastructure technology that uses radio waves to transmit information without using wiring. One of the key benefits of this technology is that it provides increased mobility. 2G: This second generation mobile technology uses digital techniques in providing voice communications and delivers a low transmission rate for data (ACMA 2011) 3G: This third generation mobile technology supports voice, data and IP based video services (ACMA 2011) 4G: This fourth generation mobile technology supports enhanced broadband mobile services such as voice, video and data over an IP internetwork (ACMA 2011)

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RESEARCH PUBLICATIONS AND PRESENTATIONS Refereed Journal paper Vilapakkam Nagarajan, Karthik (2014), ‘A Study of Internet Service Provider Industry Stakeholder Collaboration in Australia: An Institutional Perspective’, Journal of Information, Communication and Ethics in Society, vol.12, no.3, pp. 245-267.

Refereed conference papers Vilapakkam Nagarajan, Karthik (2013a), ‘How and Why Technology Based Service Organizations Act Together: Emerging Organization Fields in the Australian Internet Service Provider Industry’, Proceedings of the 27th Australia and New Zealand Academy of Management (ANZAM 2013) Conference, December 4-6, 2013, Hobart, Australia, pp. 1-19. ISBN: 978-09875968-1-9 Vilapakkam Nagarajan, Karthik (2013b), ‘A study of Australian Internet Service Provider Industry Stakeholder Collaboration: Implications for Functional Service Quality Practices’, Proceedings of the International Conference on Internet Technologies and Society (ITS 2013), 29 November - 1 December, 2013, Kuala lumpur, Malaysia, pp. 15-24. ISBN: 978-972-8939-98-4 Vilapakkam Nagarajan, Karthik (2013c), ‘Functional Service Quality Practices of Australian Internet Service Providers: An Institutional Perspective’, Proceedings of the International Conference on Internet Studies (NETs 2013), September 7-8, 2013, Hong Kong, China (Best Paper Award). ISSN: 2224-1949 Vilapakkam Nagarajan, Karthik (2013d), ‘Do External Stakeholder Pressures Influence Customer Service and Complaints Handling Practices in the Australian Internet Service Provider Industry?’, Proceedings of the News and Media Research Centre (NMRC 2013) Conference, November 18-19, 2013, Canberra, Australia, pp. 45-59. ISBN: 978-1-74088386-3

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Vilapakkam Nagarajan, Karthik (2013e), ‘Understanding strategic responses to institutional pressures: The case of the Internet industry in Australia’, Proceedings of the 6th International Symposium on Business and Management (ICBM 2013), August 19-22, 2013, Bangkok, Thailand, pp. 1-29. ISBN: 978-0-9864590-4-9 Vilapakkam Nagarajan, Karthik (2013f), ‘Functional Service Quality: Why it matters: The case of Australian Internet Industry’, Proceedings of the International Conference on Marketing Studies (ICMS 2013), September 7-8, 2013, Hong Kong, China. ISSN: 22241957 Vilapakkam Nagarajan, Karthik (2012a), ‘Towards understanding how institutional forces influence the functional service quality practices of Australian very large Internet Service Provider industry’, Proceedings of the 26th Australia and New Zealand Academy of Management (ANZAM 2012) Conference, December 5-7, 2012, Perth, Australia, pp. 1-19. ISBN: 978-0-9874158-1-3 Vilapakkam Nagarajan, Karthik (2012b), ‘Institutional Pressures in Australian Internet Industry and its influence on Functional Service Quality Practices of very large Internet Service Providers’, Proceedings of the International Conference on Internet Technologies and Society (ITS 2012), November 28-30, 2012, Perth, Australia, pp.43-52. ISBN: 978-972-8939-77-9 Vilapakkam Nagarajan, Karthik (2006), ‘Relationship between customer experiences and the quality of services provided by their ISPs’, Proceedings of the University of Western Sydney College of Business Research Symposium, November 7-8, Parramatta Campus, Sydney, Australia, pp. 1-10. ISBN: 1-74108-147- 5

Research symposium presentations Vilapakkam Nagarajan, Karthik (2013), ‘Functional Service Quality Practices of Australian Internet Service Providers: An Institutional Perspective’, The University of Western Sydney 2013 Research Symposium, July 4-5, 2013, Parramatta Campus, Sydney, Australia.

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Vilapakkam Nagarajan, Karthik (2011), ‘The Role of Institutional Forces on the Functional Service Quality (FSQ) Practices of Australian Internet Service Providers (ISPs)’, The University of Western Sydney 2011 Research Symposium, November 7-8, 2011, Parramatta Campus, Sydney, Australia. Vilapakkam Nagarajan, Karthik (2008), ‘Institutional constraints that affect the service quality provided to Internet customers’,The University of Western Sydney 2008 Research Symposium, November 3-4, 2008, Kingswood Campus, Sydney, Australia.

Attendance at consumer association conferences and Internet forums Attendance at Australian Communications Consumer Action Network (ACCAN) 2012 National Conference, September 2012, Sydney, Australia. Attendance at Consumer Telecommunications Network (CTN 2008) Conference, April 2008, Sydney, Australia Attendance at Consumer Telecommunications Network (CTN 2007) Conference, May 2007, Sydney, Australia

Attendance at a forum organized by the Internet Society of Australia on ‘Content, Convergence, Carriage and Regulation in the Australian Telecommunications Industry’, May 2005, Sydney, Australia.

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CHAPTER 1

INTRODUCTION

I have striven not to laugh at human actions, not to weep at them, nor to hate them, but to understand them. -

1.1

Benedict Spinoza, Rationalist Philosopher

Purpose and context

How to develop responsive and sustainable consumer protection policies that deliver good quality service outcomes to Internet customers has been the subject of extensive deliberation by observers of the Internet Service Provider (ISP) industry in Australia. Careful critique and examination of the academic literature identified the recurring themes of poor customer service (CS) and complaints handling (CH) performance by very large ISPs (vLISPs). It has become customary for the senior management of ISP organizations to be very vocal in public speeches, industry conference presentations and media releases that good customer service is good business. If this is the case, Why do customer service solutions of vLISPs in Australia not correspond to the best interests of customers? Why do vLISPs fail to adopt customer service practices that go beyond regulatory compliance? Adopting the lens of neo-institutional theory, this thesis examines the institutional influences on the customer service and complaints handling practices of the top four vLISPs in Australia. Data obtained in this study suggest that the institutional environment of the top four vLISPs in Australia have a potent conforming influence on their customer service and complaints handling practices. The institutional pressures from salient stakeholders had a profound impact on the development, adoption and implementation of customer service/complaints handling practices and subsequent customer service/complaints handling performance in vLISPs. 1

By adopting a neo-institutional lens, this study provides a rigorous theoretical offering and empirical contribution to the existing body of knowledge. The study findings inform future policy directions on consumer protection in the Internet industry in Australia. The findings from this qualitative research study provide a solid platform to pursue three main future research objectives: (i) a longitudinal study of Emerging Organizational Fields from their ‘embryonic’ to ‘mature’ state to understand how institutional work actors engage in and creation of ‘institutions’;; (ii) a quantitative study to understand the institutional pressure that is most effective in spreading a new customer service practice in vLISPs;; and (iii) understanding the level of institutionalization of new customer service practices at the inter-organizational and intra-organizational levels. Pursuing such research objectives enables alignment of customer service expectations of stakeholders and CS/CH practices of the top four vLISPs. The research outcomes will provide evidence to the Internet industry, consumer groups and government authorities that should encourage collaboration and work towards development of responsive and sustainable consumer protection policies in a fast changing telecommunications landscape.

1.2

Background to the research

The Internet has become an essential service for both residential and business customers in Australia (ABS 2013). Rapid growth in Internet technologies over the past five years combined with complexity of products and services has introduced both technical and functional service challenges for ISPs (Havyatt 2010a;; Havyatt 2010b;; Wood 2010;; Gerrand 2011;; Alderson 2011). The ISPs in Australia are categorized according to subscriber numbers. For example, very large ISPs typically have more than 100,000 subscribers followed by large ISPs which have between 10,001-100,000 customers (ABS 2013). There were 12.3 million Internet subscribers in Australia and ninety eight per cent of Internet connections were broadband connections at the end of June 2013. The number of Internet subscribers is expected to grow in the future (ABS 2013).

2

In an era of technological advancement, where Internet customers rely on their ISPs to deliver good quality service solutions, adopting customer service practices that meet customer expectations is becoming an absolute necessity for all ISPs (Kelso 2008;; Havyatt 2010a;; Alderson 2011;; Gerrand 2011). Goggin and Milne (2009, p.47.12) state that ‘in setting policy and regulation, governments are coping with rapid, manifold technological and economic change’. The proliferation of Internet technologies along with complexity in products and services is redefining the expectations of customer service and necessitating development of appropriate consumer protection policies and regulatory frameworks that guarantee delivery of services that meet customer expectations. A key challenge for ISPs is to manage customer expectations and perceptions in relation to customer service and complaints handling (Sengara, Humphreys, Given, McCutcheon & Milne 2009;; Wood 2010;; Havyatt 2010a;; Alderson 2011;; TIO 2012). Authoritative sources of evidence from the Australian Government, academic literature and Internet industry research reports have shown that the customer service and complaints handling practices of the Internet industry in Australia have failed to achieve desirable outcomes for consumers (Havyatt 2010a;; Wood 2010;; Alderson 2011;; Gerrand 2011;; ACMA 2011;; TIO 2012). How to improve the customer service and complaints handling practices of the industry has been widely debated amongst ISPs and external stakeholders of the telecommunications industry (the regulator, the industry ombudsman, the consumer association, the ISP industry association and government authorities). Technology-based organizations such as ISPs strive not only for technical efficiency but also for social legitimacy of their practices (Orlikowski & Barley 2001). Internet Service Providers operate in complex, interdependent, social, economic and political networks and are subjected to institutional influences (Orlikowski & Barley 2001;; Low 2010). While there is in the extant Internet literature a focus on customer experience, customer satisfaction and complaints performance data (for example, Sanchez-Franco, Ramos & Velicia 2009;; Perez & Flannery 2009;; Havyatt 2010a) little exists on the institutional forces that operate in the ISP industry and their influence on the customer service and complaints handling practices of ISPs in Australia. Several authors emphasize the importance of using an institutional lens to understand the effectiveness of industry practices and how those practices are shaped by the institutional forces (for example, 3

DiMaggio & Powell 1991;; Oliver 1991;; Gunningham & Rees 1997;; Scott 2001;; Low 2010). This understanding is crucial to inform development and revision of industry practices. Further, it can assist government authorities in the framing and formulation of appropriate consumer protection policies and frameworks. The main aim of this study is to understand the role of institutional forces in influencing the customer service and complaints handling practices of the top four very large Internet Service Providers in Australia.

1.3

Introduction to service quality

The two main types of service quality in the ISP industry are technical service quality (TSQ) and functional service quality (FSQ) (Gronroos 1984;; Parasuraman, Zeithaml & Berry 1988;; Cronin & Taylor 1992). Technical service quality relates to areas involving ISP network and system performance. Functional service quality, on the other hand, relates to areas outside an ISP network such as customer service, complaints handling and contracts (Chakrapani 1998;; Havyatt 2010a;; ACMA 2012;; TIO 2012). Functional service quality refers to ‘the manner in which services are delivered to customers’ (Parasuraman, Zeithaml & Berry 1988). Customer Service and Complaints Handling are discussed under the topic of functional service quality in the service quality literature. Customer Service and Complaints Handling are the two main aspects of FSQ that are of interest to this thesis.

1.4

Customer service and complaints handling practices of Internet Service Providers in Australia

For the purposes of this research, Customer service refers to ‘provision of service to customers before, during and after a purchase’ (ACCAN 2012). Complaints handling refers to the manner in which complaints are handled by ISPs. A complaint is defined as ‘an expression of dissatisfaction related to an organization’s products, services or the complaints handling process itself’ (ACMA 2012).

4

In Australia, customer service and complaints handling practices of ISPs involve adopting and implementing the terms and conditions stated in a co-regulatory code known as the Telecommunications Consumer Protection (TCP) Code. Von der Heidt and Charles (2009) define co-regulation as ‘a system in which some of the responsibilities for regulatory development, implementation and/or enforcement are shared between industry groupings and governments’. The TCP Code provides details on customer information on pricing, terms and conditions, credit management, billing, customer transfer, complaints handling and contracts. The co-regulatory code makes it easier for consumers to know their rights and to allow providers to use their own systems and procedures to comply with the code (Communications Alliance 2013). The code is developed by the peak industry association, Communications Alliance (CA), in consultation with key stakeholders in the ISP industry. The key stakeholders in the ISP industry involved in TCP Code development are: the regulator (Australian Communications and Media Authority), the industry ombudsman (Telecommunications

Industry

Ombudsman),

the

consumer

association

(Australian

Communications Consumer Action Network), the ISP Industry association (Communications Alliance), the Government department for broadband (Department of Communications) and the top four vLISPs. Once the code is developed, it is registered with the regulator and comes into effect. The old TCP Code (TCP Code 2007) was revised in 2010/11 and the revised TCP Code (TCP Code 2012) came into effect on 1 September, 2012 (Communications Alliance 2013).

1.5

The top two Internet service issues in Australia

The findings from the literature (for example, Havyatt 2010a;; Wood 2010;; Gerrand 2011;; Alderson 2011;; ACMA 2012;; TIO 2012) revealed customer service and complaints handling as the top two Internet service issues for ISPs. Customer service and complaints handling have been central issues because of the ongoing poor CS/CH performance of ISPs (2008-2011) (for example, Havyatt 2010a;; Wood 2010;; Gerrand 2011;; Alderson 2011;; ACMA 2011;; TIO 2012). The consumer association ACCAN (2012) states ‘there’s no other industry that has failed customers so comprehensively over such a long period of time’. The complaints data published by Telecommunications Industry Ombudsman (TIO) over the period 2008-2011 reported a number of systemic issues involving customer service and complaints handling (TIO 2012). 5

The systemic customer service issues identified (TIO 2012) are: (i) inability of ISPs to deal with a huge influx of calls;; (ii) incorrect information at point of sale;; (iii) excessive waiting time;; (iv) misleading claims;; (v) lack of follow-up action by providers;; (vi) customer frustration in being shifted to various departments when they seek assistance;; and (vii) lack of customer understanding of services they have purchased. The systemic complaints handling issues discussed in the industry ombudsman annual complaints reports (TIO 2012) are: (i) failure to recognise a complaint;; (ii) failure to inform customers about alternative dispute resolution avenues such as the TIO;; (iii) failure to action undertakings;; (iv) failure to direct customers to the right area of the business to resolve complaints;; and (v) failure to resolve complaints in a swift manner. An inquiry into the ongoing poor customer service and complaints handling performance of the Internet industry was launched by the regulator, the Australian Communications and Media Authority (ACMA), in 2010 (ACMA 2011). This inquiry found that the vLISPs failed to meet customer expectations in relation to customer sevice and complaints handling. Other findings were: (i) the lack of strong enforcement, monitoring and compliance measures in the old TCP Code leading to ISPs regularly breaching the code and not dealing with systemic customer service and complaints handling issues;; and (ii) the lack of penalties in the old TCP Code leading to providers not prioritizing customer service within their organization. As a result, the providers were not motivated to review their customer service and complaints handling practices to improve their customer service and complaints handling performance (ACMA 2011). Samuel (2009) describes the implication of poor CS/CH performance on Australian consumers and society at large. He states: ‘The risk is, if this continues, the industry’s reputation with consumers may be irretrievably damaged. The provision of Internet services is so important to society and the Australian economy, consumers should be able to trust their providers, receive high quality customer service and be accurately informed about products and services’ (Samuel 2009). This observation underlines how paramount customer service is for the Internet industry and its consumers.

6

1.6

The top four very large Internet Service Providers in Australia

This thesis focuses on the top four vLISPs providing Internet services to residential customers in Australia. There are reasons for this focus. Firstly, the top four vLISPs have high visibility in the market place (collectively they have more than eighty per cent of the residential Internet subscriber base). Secondly, they collaborate with external stakeholders on Internet consumer protection policy formulation. Thirdly, these top four vLISPs are subjected to increased scrutiny in both public and the political sphere when they fail to deliver on their customer service promises. Finally, they are represented on the boards of external stakeholder organizations and are members of the ISP industry association. The top four vLISPs in Australia include: (i) A national ISP and a large telecommunications carrier which has a long history and involvement in the telecommunications industry. This ISP provides a full range of services to consumers (fixed, wireless and value-added services). Through their history and status as the universal service provider, they are required to deliver all of those services to every consumer in Australia. They have a presence in every geographical area in Australia;; (ii) A national ISP which commenced its operations in the early 1990s. It has its own fixed, mobile and satellite networks. This ISP provides a range of communications services including mobile, national and long distance services, Internet services, telephony services and Internet television. It is the second largest provider of telecommunications services in Australia;; (iii) A national ISP based in Western Australia providing services such as mobile voice, mobile broadband, fixed voice and fixed broadband. They commenced operations in early 1990s. They rolled out their own infrastructure in order to provide much higher Internet speeds to customers than other very large ISPs and introduced things like Naked DSL and the Voice over Internet Protocol. They have received numerous

7

customer service excellence awards and have a reputation for customer service in the industry;; and (iv) A national ISP which is an American owned company and part of a global group with operations formerly in Europe, South America, Canada and the USA. They provide multiple telecommunication services in Australia. This ISP was one of the first to get a licence to compete with the top two ISPs. They developed their own broadband network and installed equipment in exchanges (ADSL enabled exchanges). As a result, they were able to provide their own broadband services as well as voice services.

1.7

Gaps in current literature on customer service and complaints handling practices of Internet industry

A number of authors have studied the importance of delivering consistent functional service performance for the business survival of ISPs (for example, Maxham & Netemeyer 2002;; Spiller, Vlasic & Yetton 2007;; Perez & Flannery 2009;; SanchezFranco, Ramos & Velicia 2009;; Havyatt 2010a). These studies found functional service performance of ISPs was central to retaining existing customers, increasing positive word-of-mouth effects and acquiring new customers. Previous research has found that an institutional perspective can provide a valuable theoretical framework within which to evaluate the effectiveness of industry practices (for example, DiMaggio & Powell 1983;; Gunningham & Rees 1997;; Scott 2001;; Hoffman 2001). The top four vLISPs interact with external stakeholders and collaborate with them on developing/reviewing/revising customer service and complaints handling practices. They are subject to external stakeholder pressures within their institutional environment. Institutional environment relates to systems of formal laws, regulation and informal conventions such as norms that mould organizational behaviour (Scott 2001). The top four vLISPs in Australia build ongoing relationships with the external stakeholders to seek legitimacy of their customer service and complaints handling practices and influence development of these practices. Previous studies on organizational practices in the Information Technology, Telecommunications, Services industry (for example, Bjorck 2004;; Major & Hopper 2005: Hu & Huang 2006;; Lee,

8

Ginn & Naylor 2009) and other industries (for example, Delmas & Toffel 2004;; Okhmatovskiy & David 2012;; Lewis, Walls & Dowell 2013) have shown that: (i) organizational practices are influenced by both institutional and organizational factors;; and (ii) external constituents have a role to play in influencing co-regulatory industry practices. Havyatt (2010a) describes the nature of the discourse in relation to the Internet industry’s poor reputation for customer service as lacking in deep analysis. In the literature there is limited evidence of institutional perceptions in relation to the customer service and complaints handling practices of vLISPs in Australia. That is, little is known about the perceptions and attitudes of central actors in external agencies and the top four vLISPs towards CS/CH practices and the key agencies that influence those practices. Previous studies have largely neglected the personal viewpoints of vLISP industry stakeholders in understanding how and why vLISPs respond to external stakeholder pressures and how pressures drive actors’ actions and confer meaning on such actions. Such perspectives are essential to: (i) enrich and supplement knowledge about the role of external stakeholder pressures in influencing the customer service and complaints handling practices of the vLISP industry;; (ii) identify central actors who influence the customer service and complaints handling practices of the top four vLISPs;; (iii) examine the joint roles and actions of the top four vLISPs to understand how and why they respond to external stakeholder pressures;; and (iv) understand the vLISP industry’s responses to competing pressures for technology, efficiency and legitimacy (DiMaggio & Powell 1991;; Hoffman 1999;; Low, Johnston & Wang 2007). Studying the institutional effects is fundamental to informing future customer service policy formulation and developing customer-oriented CS/CH practices that will deliver desired customer service outcomes (Horsley & Gerrand 2011). Customer service will play an important role in future Internet services such as the NBN (National Broadband Network) (NBN 2013) which is currently being rolled out by the Australian Government (LNP 2014). A future NBN environment introduces several customer service challenges for the providers because of the mix of technologies that will be used to deliver NBN services, and because of the convergence in and multitude of services provided over the NBN platform for a variety of industries such as health, education and retail. Understanding these emerging challenges for customer service and 9

overcoming them has implications for both the customer service reputation of the industry and the business survival of ISPs (ACCAN 2012).

1.8

Research objectives

This thesis has five main research objectives. These are: Research objective 1: To identify and describe the role of the consumer association, regulator, government authorities, Telecommunications industry ombudsman and ISP industry association in influencing the CS/CH practices of vLISPs and the pressures to which vLISPs are subjected. Research objective 2: To understand the regulatory managers’ perceptions and attitudes with respect to CS/CH practices, institutional pressures that exist in the vLISP industry and the pressures that influence the CS/CH practices of the industry.

Research objective 3: To understand who exerts the institutional pressures on vLISPs, what these pressures are, by what means the pressures are exerted and how vLISPs respond to such pressures. Research objective 4: To understand how the existing CS/CH practices of vLISPs are influenced by institutional pressures. Research objective 5: To understand why the institutional actors of the vLISP industry came together and what close collaboration between the actors tells us about their role in influencing the CS/CH practices of the vLISP industry.

1.9

Research questions

The main research question is: How do institutional forces influence the customer service and complaints handling practices of very large Internet Service Providers in Australia? There are also several sub-questions:

10

x

Sub-question 1: What are the perceptions and attitudes of key institutional actors in external agencies (the regulator, the ombudsman, the government department for broadband, the ISP industry association and the consumer association) on the CS/CH practices of vLISPs in Australia?

x

Sub-question 2: What is the role of external stakeholder pressures in influencing the CS/CH practices of vLISPs?

x

Sub-question 3: What are the perceptions and attitudes of regulatory managers in vLISPs on CS/CH practices and the key institutional pressures that influence those in the vLISP industry?

x

Sub-question 4: What is the level of interaction of individual stakeholders with one another in relation to CS/CH practices?

x

Sub-question 5: What role do such interactions play in influencing the CS/CH practices of the vLISP Industry?

x

Sub-question 6: What institutional pressures influence the CS/CH practices of the vLISPs in Australia?

x

Sub-question 7: What led to collaboration on CS/CH practices between the institutional actors in the very large ISP industry?

x

Sub-question 8: What do the collaborative efforts of institutional actors in the very large ISP industry inform us about their role in influencing the industry’s CS/CH practices?

1.10

Introduction to theoretical framework

This research is informed by neo-institutional theory (Meyer & Rowan, 1977;; DiMaggio & Powell 1983;; 1991;; Scott 2001). The theory posits that organizations not only strive for technical efficiency, but also for social legitimacy of their practices (DiMaggio & Powell 1983). Oliver (1997 p.699) states that ‘unlike economic and strategic frameworks, which 11

examine the extent to which firm behaviour is rational and economically justified, institutional theorists emphasize the extent to which firm behaviour is compliant, habitual, unreflective and socially defined’. Organizations and the individuals who populate them are suspended in a web of values, norms, rules, beliefs and taken-for-granted assumptions which specify the forms and procedures an organization of a particular type should adopt if it is to be seen as a legitimate organization and as a member in good standing of its class (Meyer & Rowan 1977;; DiMaggio & Powell 1991;; Barley & Tolbert 1997;; Scott 2001). The actors, whether individual or collective, are firmly embedded in institutional environments. In such environments, institutionalized rules are based on society’s cultural foundations and determine the relation between actors and their actions (DiMaggio & Powell 1983;; Tolbert & Zucker 1983;; Hwang & Colyvas 2011). Further, actors in an organization can be constrained by institutional arrangements and salient stakeholder pressures that impact on their choices and constrain their possible courses of action (DiMaggio & Powell 1983;; Scott 2001). Neo-institutional theory provides a coherent framework for studying institutional influences on vLISP industry practices. Detailed literature on neo-institutional theory and justification for choosing this theory are discussed in Chapter 2 (Section 2.6).

1.11

Research motivation

The motivation for this research came from my research experience while undertaking a Master’s by Research degree at University of Wollongong. My Master’s research thesis focused on the application of modelling and simulation towards understanding and managing service quality data for Internet Service Providers in Australia. After completing my Master’s research, I had ongoing conversations with the consumer association, Internet societies and telecommunication researchers on ISP industry developments, including Quality of Service (QOS) focused on technical aspects and Service Quality (SQ) focused on functional aspects. My initial reading and literature review suggested that ISPs tended to focus more on technology, products and services as opposed to the human aspects involved in service provisioning. This raised several questions in my mind: What drives behaviour in ISP organizations? Why does ISP behaviour deviate from formal rules? Why do ISPs pay insufficient attention to customer concerns? Why are some service quality practices institutionalized while others are not? Through a series of meetings with management academics at the University of 12

Western Sydney, an important research gap (institutional influences on ISP industry practices) was identified.

1.12

The value of this research

The following groups should benefit from this research. ISP managers and ISP industry association: This research study will lead to the development of a rich description of vLISP industry stakeholder perceptions and attitudes towards CS/CH practices, using an institutional lens. The study findings provide valuable insight into the institutional forces that influence the adoption of CS/CH practices within vLISP organizations. The research findings will encourage vLISP organizations to have ongoing collaboration with the industry stakeholders to develop and incorporate functional service quality practices with a view to improving customer service and complaints handling performance. Complaints authority: The findings will be valuable for the complaints authority to understand what institutional forces drive the changes required to enhance service improvements in the areas where vLISPs currently under-perform. Regulator and government authorities: The regulator and government authorities will gain better understanding of the pressures the top four vLISPs are exposed to, their response to the pressures and organizational actions. They will also gain insight in to what institutional factors motivate the top four vLISPs to improve their levels of service to their customers in areas relating to customer service and complaints handling. Consumer association: The findings will assist the consumer association to gain an understanding of the role of external stakeholder pressures on vLISP organizational CS/CH practices and the type of pressures to which vLISP managers respond.

1.13

Layout of the thesis

Chapter 1 set the scene for this research by introducing the research topic and discussed in brief the research problem, key stakeholders in the ISP industry and the rationale for the focus of this research on the CS/CH practices of the vLISP industry. It presented 13

the research objectives along with the research question, sub-questions and the research approach adopted in this study. The value of this research and its expected benefits were also presented. Chapter 2 provides an overview of the ISP industry in Australia and discusses in detail the key stakeholders involved in developing the customer service and complaints handling practices of the ISP industry. It discusses major customer service and complaints handling issues in the vLISP industry. An overview of existing research on customer service and complaints handling aspects of vLISPs is provided. This is followed by problem description and analysis. The value of an institutional lens in examining the effectiveness of industry practices in a co-regulatory environment is emphasized. A detailed discussion on neo-institutional theory and related concepts (institutional pressures, Organizational Field, and institutionalization of practices) is provided. A summary of key gaps in the literature, the justification for the focus of this research and approach taken, is presented. Chapter 3 provides a comparative analysis of research methodologies before choosing the best methodology to serve the purposes of this research. A justification for why a qualitative research approach is employed is provided. A Section is devoted to discussion of previous institutional research studies that have used similar qualitative exploratory approaches. The Chapter discusses the research methods and procedures used in this thesis along with the sampling and data analysis steps it uses. Finally, a summary of the methodological approach taken in the thesis is provided. Chapter 4 focuses on the results of data analysis and the discussion of findings grounded in data collected from the study participants. Direct quotations from the study participants are used to discuss their perceptions and attitudes towards the customer service and complaint handling issues faced by the vLISP industry, their role in the development and revision of CS/CH practices and stakeholder interactions on CS/CH practices. The key agencies that influence CS/CH practices and the external stakeholder pressures that influence the development/revision of CS/CH practices of the vLISP industry are also examined. Eight major categories and five key themes that emerged following the data analysis are provided. Detailed discussion of major categories 1-7 and

14

themes 1-5 is presented in this Chapter. Major category 8 is integrated with analysis in Chapter 7 due to its relevance to future Internet services. Chapter 5 uses a neo-institutional framework to examine critically the institutional pressures that operate in the vLISP industry and the role they have played in influencing the development and review of CS/CH practices. It discusses the strategic responses to institutional pressures by the top four vLISPs. The role of these pressures in bringing salient stakeholders together to revise CS/CH practices with the objective of improving the CS/CH performance of the vLISP industry is discussed. An analysis of the intensification of these pressures and how it has resulted in increased collaboration, interaction and cooperation between the top four vLISPs and other ISP industry stakeholders is presented. Chapter 6 critically examines the micro-and macro-effects of collaborations between the top four vLISPs and external stakeholders. The broader implications of the collaboration on customer service and complaints handling practices of the vLISP industry are discussed. The discussion identifies two Emerging Organizational Fields in the vLISP industry in Australia and discusses the Organizational Field characteristics in detail. Chapter 7 discusses the intensification of collaboration and its role in fuelling further development of Emerging Organizational Fields. In particular, the discussion focuses on three main characteristics at the Field level that will continue fuelling Organizational Field development. It justifies the need to conduct a longitudinal study of the Emerging Organizational Fields over the next five to ten years and argues that such studies can assist in Australian Government consumer protection policy formulations and directions for the provision of future Internet services in Australia. Chapter 8 presents conclusion drawn from the results of this research. It revisits the research question, sub-questions and answers them. The Chapter goes on to highlight the contributions of this research, its limitations and provide suggestions for future research.

15

CHAPTER 2

LITERATURE REVIEW

Technology is dominated by two types of people: those who understand what they do not manage and those who manage what they do not understand. -

Archibald Putt, Author of Putt’s Law and the Successful Technocrat: How to Win in the Information Age.

2.0

Chapter overview

This Chapter describes the literature relevant to the research problem discussed in Chapter 1. It provides first a review of the Internet industry in Australia and identifies the key stakeholders involved in developing customer service and complaints handling practices of the ISP industry. It then discusses major CS/CH issues in the Australian vLISP industry. An overview of existing research on CS/CH expectations and performance of vLISPs is provided. This is followed by the problem description and analysis. The importance of an institutional perspective in providing a valuable theoretical framework within which to evaluate the effectiveness of co-regulatory industry practices is discussed. A detailed literature review on neo-institutional theory and related concepts (for example, institutional pressures, Organizational Field, institutionalization of practices) is provided to understand and analyse the role of institutional perspectives in the vLISP industry. This is followed by a summary of key gaps in the literature, in justification for the focus of this research, and the approach taken is discussed. Finally, the research objectives and questions are presented along with a conclusion.

2.1

A review of Internet industry in Australia: Background and

Context The Commonwealth Government assumed responsibility for telecommunication services in Australia upon her federation in 1901. Until 1991, the telecommunication services were primarily provided by various publicly-owned monopoly organizations

16

(Commonwealth of Australia 2000). One of the major developments prior to deregulation in 1997 was the government’s announcement in 1988 about the restructuring of the regulatory environment for the telecommunications industry and the operations of the government-owned carrier (Commonwealth of Australia 2000;; Havyatt 2010a;; 2010b). A major reform was implemented through the Telecommunications Act 1989 which resulted in the retention of three monopolies, Telecom, OTC (Overseas Telecommunications Commission) and AUSSAT and the introduction of competition through provision of value added network services and pricing control arrangements. The Australian Telecommunications Authority (AUSTEL) was established in July 1989 as an independent regulator assuming responsibility for technical regulation, penalizing unfair carrier practices in competition and protecting consumers’ interests (Havyatt 2010a;; 2010b). In 1990, the Commonwealth Government announced reforms to the structure and ownership of the telecommunication networks. A general carrier duopoly was introduced to foster healthy competition. As a part of the reform, a second carrier was given enough time to allow itself to establish its presence in the marketplace. The main goal of doing this was to introduce sustainable network competition and minimize infrastructure duplication wherever possible (Commonwealth of Australia 2000;; Havyatt 2010b). Open competition in telecommunications started on 1 July, 1997 when the market deregulated and a new era of open competition arrived under the Telecommunications Act 1997. As a part of the regulatory process, the ACCC (Australian Competition and Consumer Commission) assumed responsibility for the competition and economic regulation (ACCC 2012) of telecommunications, ACA (Australian Communications Authority) assumed responsibility for administering the technical and consumer issues relating to telecommunications and ACIF (Australian Communications Industry Forum) was established to act as the peak body to facilitate and manage telecommunication consumer protection through industry codes of practice (Commonwealth of Australia 2000). ACA is now known as ACMA (Australian Communications and Media Authority) after merger with the ABA (Australian Broadcasting Authority) in late 2000. ACIF is now known as the Communications Alliance after the merger of ACIF and SPAN (Service Provider Action Network) in 2006 (Communications Alliance 2013). The 17

Telecommunications Act 1997 and Telecommunications (Consumer Protection and Service Standards) Act 1999 strengthened the industry in regard to consumer safeguards and customer service guarantee performance standards. I will now examine the industry structure, competition, market characteristics and types of telecommunication services provided to customers. Industry structure: The telecommunications industry in Australia comprises of carriers, content service providers, carriage service providers, resellers and suppliers of customer devices. The carriage service providers who are also licensed carriers, provide fixed-line, mobile and Internet services to customers (ACMA 2011). The ACMA (2012) defines a carrier as ‘a holder of carrier licence and the owner of a network unit that is used to supply carriage services to the public’. A carriage service provider is ‘a supplier of a listed carriage service to the public using a network unit owned by one or more carriers’ (ACMA 2012). ISPs in Australia are categorized according to subscriber numbers. There were forty five medium ISPs (1001-10,000 subscribers), eighteen large ISPs (10,001-100,000 subscribers) and eight vLISPs (100,001 or greater subscribers)) operating in Australia at the end of June 2014 (ABS 2014). A striking feature of the Internet industry in Australia is that while there are many providers in the market, the vast majority of Internet customers obtain Internet services from the top four vLISPs. The top four vLISPs offer a full range of communication services which include fixed-line, Internet and mobile services. The smaller players offer services (Internet, fixed-line or mobile) to niche markets (for example, small businesses) in a particular geographical location (for example, in New South Wales). Another noticeable feature of the industry is that the top four vLISPs who are also carriers supply wholesale services to retail service providers in Australia. This is achieved through access arrangements where a retail service provider is able to purchase a wholesale service from a carrier. A key challenge for retail service provider is that they are unable to fix customer service issues directly due to lack of control over network infrastructure. Instead they need to rely on wholesale provider to fix customer service issues. This has implications for customer service especially if the wholesale provider fails to resolve customer service issues in a timely way (ACMA 2012;; ACCAN 2012;; TIO 2012).

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Industry growth: According to IBIS World’s ‘ISPs in Australia: Market Research Report’ released in September 2013, the ISP industry is one of the fastest growing industries in the technology sector and is expected to generate $5.8 billion in revenue through the provision of Internet services to consumers, business and government (IBIS World 2013). The main bundled services offered by the vLISPs are: (i) naked DSL (one high-speed ADSL2+ broadband line that allows customer to avoid phone rental);; (ii) ADSL broadband (ADSL2+ broadband with speeds up to 24Mbps (Megabits per second) using ADSL enabled telephone exchanges);; (iii) Content services – IPTV (Internet Protocol Television) and premium content;; and (iv) mobile broadband (mobile Internet using wireless broadband technology) (ACMA 2012;; ACCAN 2012). Subscriber numbers for different telecommunication services: There were an estimated nine million retail and resale fixed-line telephone services in operation in Australia at the end of June 2014. In terms of the mobile services, there were over thirty one million mobile voice and data services in operation (SIO) in Australia at the end of June 2014. SIO is the number of services provided by a company at a particular time. The term covers fixed line, mobile and Internet services. This figure includes voice and data services available over 2G, 3G, 4G networks and mobile wireless Internet services provided through USB modems, data cards and dongles. As of June 2014 the three key players with market share in mobile services include Telstra (fifty two per cent), Optus (thirty one per cent) and Virgin (seventeen per cent) (ACMA Communications Report 2014). There were more than twelve million Internet subscribers in Australia at the end of June 2014 (ABS 2014). Australian customers accessed the Internet using technologies such as ADSL, Fibre, mobile wireless, cable, dial-up and satellite. Customers also accessed the Internet using their mobile handsets. There were more than twenty million subscribers who accessed the Internet using their mobile handsets at the end of June 2014 (ACMA Communications Report 2014). The major players who had significant market share in fixed broadband for 2014 included Optus which had a market share of 16.2 percent, Telstra 46.8 percent and iiNet around 15 per cent (ACMA Communications Report 2014). Such growth in the Internet subscriber numbers can be attributed to customer demand for faster and more reliable network technologies. This in turn has led to proliferation of technologies in the Internet market. Some of the key benefits for customers due to 19

this proliferation of Internet technologies in the market include: (i) bundled service choices available to customers;; (ii) convenience;; (iii) increased accessibility;; (iv) affordable broadband service plans;; and (v) availability of Internet technologies that allow faster downloads and enable use of high bandwidth sensitive applications (ACCAN 2012). Convergence in services: The proliferations of new technologies in the Internet market and the demand for high-bandwidth sensitive applications have led to a convergence among services. Convergence is an important aspect for broadband networks as it offers a transmission platform for delivery of a wide range of services such as VOIP, video on demand and necessitated ISPs to effectively design, market and operate new service solutions. Enabling service provisioning in such an environment requires ISPs to have an ongoing relationship with a wide range of actors within and outside the Internet industry. They include network product suppliers, Internet developers, web designers, web hosting solutions, content providers, application service providers, network integrators, business consultants and information systems integrators (ACMA 2012;; ACCAN 2012) The convergence and increased uptake of broadband services combined with a variety of Internet service choices for customers brings both opportunities and challenges for vLISPs. One of the key difficulties for vLISP organizations created by convergence is the pressure it puts on maintaining customer loyalty and acquiring new customers. The vLISPs need to have in place customer service strategies that can assist with both retaining the existing customer base and attracting new customers (Ng, David & Dagger 2011;; TIO 2012). These strategies need to go beyond short-term product offerings alone (Krios 2005) in an extremely competitive ISP market. Competition: In Australia, the competition regulator ACCC is responsible for developing competition policy and regulates the industry in areas involving advertising and competition. In the past the competition regulator played a key role in investigating anti-competitive behaviour by large players and now the ACCC helps create a level playing field that promotes competition and provides choices to customers. The key competing strategies used by ISPs in Australia are based on price, value added services and service performance. The competition in the industry occurs among various ISPs

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providing similar services and between ISPs owning different infrastructure types (wireless, NBN and copper network). Infrastructure competition is key to the survival of ISPs as it allows ISPs to develop their unique selling proposition strategy to target niche markets and attract customers (ACCC 2012;; ACMA 2012). This is critical as effective competition not only provides service choices to customers but also results in reduced prices for telecommunications services and superior service quality. For example, the ACCC 2012-2013 annual report (ACCC Annual Report 2013) highlighted that there have been dramatic price reductions in telecommunications services as consumers were paying fifty two per cent less for mobile services and forty seven per cent less for fixed voice services than in 1997-1998. Additionally competition led to significant investment in infrastructure improvement and service innovation. It allows providers to compete through service quality differentiation as opposed to only infrastructure differentiation (Havyatt 2010). Interconnection arrangements in delivery of services: In Australia, peering arrangements between ISPs exists to provide Internet services to customers. Peering partnerships among ISPs can be private or public. In public peering, Internet exchange points are used to connect two (or) more ISP networks through which data packets flow from one ISP network to another. In this scenario, peering arrangements play a key factor in access to inter-networks. Within this context, bilateral peering arrangements (BLPA) involve two ISPs agreeing to provide access to each other’s customer routes for free. Here, even though peering provides advantages in terms of cost and performance for ISPs, access to the entire Internet through peering partnerships is not usually possible. The choice of who to peer with is the key factor that helps ISPs to lower costs, maximize network service performance and generate more revenues. To get complete access to the global Internet routes, transit arrangements are made where large ISPs provide small ISPs access to global Internet routing tables (ACMA 2011;; ACCAN 2012;; TIO 2012). In private peering two ISPs connect directly to each other rather than using public peering points such as internet exchange points. This helps ISPs improve their network reliability (cutting down the number of hops, packet forwarding and packet loss) and plays an important role in providing high bandwidth intensive services. This allows ISPs to control routing and guarantee quality of service to their business customers. These guarantees cannot be provided in situations where traffic passes through public network access points as they are highly congested with network traffic 21

(Havyatt 2010;; ACMA 2012). The peering arrangements create technical issues that have implication for services accessible to customer. These include satisfaction of customers with services provided and measurement of network service performance parameters such as complaints, network reliability, customer service and network speed. Mergers and Acquisitions in the Internet market: A key market characteristic of the Internet industry is ISPs increasing their subscriber base through mergers and acquisitions. In the past, vLISPs such as iiNet were successfully able to acquire many small and medium size ISPs thereby increasing their market share for fixed broadband. Acquisition offers the ISPs an immediate position in the market with skills, market share and economies of scale of operation. Mergers and acquisitions also introduce a number of technical and functional service challenges to ISPs as they need to migrate customers from their competitors’ network, integrate different network systems and continue to maintain the service level provided to customers (ACMA 2011;; ACCAN 2012;; TIO 2012). The key factors that affect the business and service performance of ISPs in such an environment include: (i) stability of Internet connection;; (ii) technical network performance (peering arrangements, speed, reliability and availability of network);; (iii) competition and pricing arrangements;; (iv) provision of value added services (for example, spam control and webmail services);; (v) customer service reputation (resolving customer service issues in a timely manner);; and (vi) network security (security polices and firewall infrastructure). National Broadband Network (NBN): The Australian Government is currently rolling out the National Broadband Network (NBN) through a combination of technologies such as FTTN (Fiber-to-the-node), FTTP (Fiber-to-the-premises), Fixed Wireless and Satellite (NBN 2013). The DBCDE (2009) report on broadband for digital Australia details the impact of NBN on the digital economy. Digital Economy is ‘the global network of economic and social activities that are enabled by the information and communications technologies, such as the Internet, mobile and sensor networks’ (DBCDE 2009). In a digital economy, broadband is crucial for industry competitiveness, economic growth and jobs (Fan 2007). Agyapong (2011) emphasizes that ‘all social, economic, political, cultural, trade and commercial activities are undertaken using telecommunications. The nature of a country’s telecommunication industry affects its pace of commercial and domestic activities.’ Therefore,

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telecommunications network infrastructure and service provisioning are crucial to generating revenues and economic growth in a digital economy. DBCDE (2009) report also highlighted a number of interesting trends in relation to the economic value of a high-speed broadband network. This report provides information about the ability of Fiber technology to provide faster speeds and greater network reliability. This is important as more and more people are using broadband for high bandwidth sensitive applications such as video streaming. The report stated that ISPs in Australia would be able to deliver speeds up to 100Mbps through the NBN network. Thus, Fiber deployment will provide improvements to the functionalities of online services. The high bandwidth available through the NBN will benefit a number of sectors such as health, education, transport, logistics, banking and retail (DBCDE 2009). To put it in perspective, high bandwidth guarantees of 100Mbps would make downloads faster. For example, to download a 350 MB file in an 8Mbps link will take 5 minutes and 50 seconds;; the same file downloaded on a 100Mbps will take only 28 seconds. Although these developments are heavily technical in nature, such developments have huge implications for ISPs, the services they provide, and their ability to retain customers, attract new customers and deliver desirable customer service outcomes (DBCDE 2009;; Havyatt 2010a;; TIO 2012;; ACMA 2012;; ACCAN 2012).

2.2

Literature review of customer service and complaints handling in the Internet industry

In this section, I review the customer service and complaints handling literature. Firstly, I define what functional service quality is and discuss the technical and functional service characteristics of ISPs. Secondly, I discuss the CS/CH practices of ISPs in Australia, the stakeholders involved in developing the CS/CH practices of the Internet industry and the justification for this study’s focus on the top four vLISPs. Thirdly, I critically examine relevant literature on CS/CH using Australian and international studies that have investigated CS/CH aspects of the Internet industry. Finally, I provide a chronological analysis of the poor CS/CH performance of the vLISPs in Australia and identify the key CS/CH issues that confront the vLISP industry. An initial literature review on CS/CH practices was published in Vilapakkam Nagarajan (2006). 1

1

Vilapakkam Nagarajan, Karthik (2006), ‘Relationship between customer experiences and the quality of services provided by their ISPs’, Proceedings of UWS College of Business Research Symposium, November 7-8, Parramatta Campus, Sydney, Australia, pp. 1-10.

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Parasuraman et al. (1988) define functional service quality (FSQ) as ‘the manner in which services are delivered to customers’. According to Parasuraman et al. (1988) the service quality perceived by customers in a service encounter involves: (i) technical quality inputs by the provider and the contact personnel (What is delivered?);; and (ii) functional quality inputs by the provider and the contact personnel (How it is delivered?). For the purposes of this research, Customer Service (CS) refers to the ‘provision of service to customers before, during and after a purchase’ (ACCAN 2012). Complaints Handling (CH) refers to the manner in which complaints are handled by ISPs. Complaint is defined as ‘an expression of dissatisfaction related to an organization’s products, services or the complaints handling process itself’ (ACMA 2012). The regulation trend in Australia can be classified into three main types. They are: technical regulation (focusing on how networks should be used), competition regulation (promoting fair competition) and co-regulatory regime (developing consumer protection codes). Section 112 and 113 of the Telecommunications Act 1997 (Cth) (the Act) states that the codes that deal with certain aspects of the industry (such as the consumer codes) be developed by the peak industry association in consultation with the other stakeholders of the Internet industry (Communications Alliance 2013). Consumer protection in the Internet industry is based on a form of co-regulation. The CS/CH practices of ISPs must comply with the Telecommunications Consumer Protection (TCP) Code (Communications Alliance 2013). The TCP Code is a co-regulatory code that provides guidelines on areas such as customer information on pricing, terms and conditions, credit management, billing, customer transfer, complaints handling and contracts. Von der Heidt and Charles (2009) define co-regulation as ‘a system in which some of the responsibilities for regulatory development, implementation and/or enforcement are shared between industry groupings and governments’. The co-regulatory TCP Code makes it easier for consumers to know their rights. It allows providers to use their own systems and procedures to comply with the code rather than having to use the prescribed methods of compliance. Further, von der Heidt and Charles state that coregulation provides benefits as ‘it helps overcome chronic challenges associated with regulation such as problems of rigidity with an overabundance of prescriptive rules by government and reduction in

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procedures and outcomes that tend to accompany self-regulation by industry’ (von der Heidt & Charles 2009). Co-regulation also allows providers to be masters of their own destiny rather than allow a third party player to regulate industry practices. Several stakeholders were involved in the development of the TCP Code. Clarkson (1995) defines stakeholder as ‘persons or groups that have, or claim, ownership, rights, or interests in a corporation and its activities, past, present, or future’. The key stakeholders involved in the TCP Code’s development, review and revision of the CS/CH practices are: (Communications Alliance 2013) x

The Government department for broadband (Department of Communications);;

x

The regulator (Australian Communications and Media Authority (ACMA));;

x

The complaints authority (Telecommunications Industry Ombudsman (TIO));;

x

The consumer association (Australian Communications Consumer Action Network (ACCAN));;

x

The top four very large ISPs;; and

x

The ISP industry association (Communications Alliance (CA)).

Communications Alliance is owned, resourced and operated by the ISP industry to implement and manage industry co-regulation within Australia. Once the TCP Code is registered with the regulator it comes into effect. The old TCP Code (TCP Code 2007) was revised in 2010/11 (Communications Alliance 2013). The revised TCP Code was registered with the telecommunications regulator and came into effect on September 1, 2012. Throughout this thesis, the old TCP Code refers to TCP Code 2007 and the revised TCP Code refers to TCP Code 2012. This study focused on the CS/CH practices of the top four vLISPs of Internet-based services for residential customers. In Australia, seventy eight per cent of all Internet subscribers were residential subscribers with the remaining twenty two per cent being business and government subscribers at the end of June 2013 (ABS 2013). During the same period, business and government subscribers decreased by eight per cent since the end of December 2012 while the residential subscriber base increased by five per cent (ABS 2013). Hence, the study focuses on residential customers. The customer service and complaints handling issues for mobile and landline services were excluded from this 25

study because of (i) differences in the technology platforms and the manner in which mobile, landline and Internet services are delivered to customers;; (ii) differences in stakeholders and their levels of involvement;; and (iii) variations in growth of services rate (Wood 2010;; Gerrand 2011;; ACMA 2012). Finally, it was important to manage the scope of this research and the application of the study’s findings. There are reasons for the focus on the top four vLISPs (ABC 2009;; Smart Company 2011;; IHS 2012). Firstly, vLISPs (instead of large ISPs or other categories of ISPs) were chosen because the top four collectively have more than eighty per cent of the residential Internet subscriber base in Australia (Communications Alliance 2013). Secondly, the top four vLISPs are actively involved in development/review/revision of the TCP Code and have an obligation under the regulatory arrangement to contribute to the code development process. Thirdly, the top four vLISPs are board members of various external stakeholder agencies and have frequent interaction with those agencies to address CS/CH issues. Fourthly, the top four vLISPs are part of government broadband policy formulation committees and have been consulted in the past on regulatory arrangements, competition policies and broadband policies. Fifthly, the CS/CH performance of the top four vLISPs has drawn the attention of the media and has been discussed in consumer research reports, industry ombudsman reports and a regulator’s inquiry report. Finally, the high ‘visibility’ of the top four vLISPs in the market place meant their customer service practices are increasingly under scrutiny by the external stakeholders (DiMaggio & Powell 1983;; Scott 2001). Service quality in the ISP industry is assessed by comparing customer expectations and customer perceptions of ISP services. Customer expectations are typically what customers expect from their ISPs (for example, ISP customer service staff will make a sincere effort to resolve customer problems). Customer perception is the actual service they received or experienced from their ISP (for example, that ISP support service staff showed sincere interest in solving customer problems when they were reported) (Gronroos 1984). The customer perception of the quality of service provided by their ISP is influenced by both the technical factors within ISP network (such as speed, reliability, availability of the network) and the functional factors outside the ISP network (such as customer service, complaints handling, contract, customer advice and responsiveness). For example, if an ISP customer complains about a technical problem

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and the ISP fails to resolve the problem to the satisfaction of the customer, the complaint about a problem soon becomes a complaint about the company. In Australia, the vLISPs have call centres in major cities with some vLISPs also having call centres operating from overseas locations due to Australia’s high cost base. They employ hundreds of call centre staff to provide support services to their customers. For example, iiNet has call centres in Sydney, Melbourne, Brisbane, Canberra, Adelaide, Perth, Hobart and overseas call centres in Auckland and Cape Town (iiNet 2015). In the Australian ISP industry, CS/CH issues are among the most commonly discussed types of Internet service issues (Havyatt 2010a;; Gerrand 2011;; Alderson 2011). The key dimensions for CS/CH in the ISP industry include: (i) ‘responsiveness’ (ISP staff respond to customer queries swiftly);; (ii) ‘empathy’ (ISP staff are sufficiently knowledgeable to solve customer problems);; (iii) ‘courtesy’ (ISP staff understand customer needs and provide service accordingly);; (iv) ‘reliability’ (ISP provides prompt and appropriate services);; and (v) ‘assurance’ (ISP provides services to customers as promised) (Parasuraman et al. 1988;; Havyatt 2010a). The CS/CH notation is used in this thesis to refer to customer service and complaints handling. The importance of delivering customer service performance that meets specific customer service needs has been reported in previous studies (Spiller, Vlasic & Yetton 2007;; Esghi, Haughton & Topi 2007;; Havyatt 2010a;; 2010b;; Wood 2010;; Alderson 2011). These studies showed that customer service is an important aspect of business survival (which includes retaining existing customers, enhancing corporate image, increasing positive word-of-mouth effects and acquiring new customers). Agyapong (2011) argues that ‘business success depends on a firm’s understanding and meeting customers’ needs and demands’. Lovelock and Wirtz (2007) showed that in the services industry fierce competition forces organizations to move beyond competing based on cost to competing based on superior service that exceeds customer requirements. I will now discuss findings from previous studies in Australian and international contexts that investigated the following aspects of CS/CH in the Internet industry: customer expectations and perceptions, factors that customers consider while choosing an ISP, the key dimensions of service quality that influence customer perceptions of ISP

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service quality, customer switching behaviour and the impact of service failure and recovery on customer satisfaction. The functional service quality in the cellular telecommunication industry in South Africa was studied by van der Wal, Pampallis and Bond (2002). They measured customer perception and expectation of service quality using the SERVQUAL model (Parasuraman et al. 1988). Their findings demonstrated that among a number of service quality dimensions that influenced the customer perceptions of ISP service quality, three dimensions had a major influence – Responsiveness, Empathy and Assurance. Such a finding confirms a common understanding that the customer perception of ISP service quality is influenced by both ISP network performance and ISP functional service performance (CS/CH performance). Madden, Savage and Neal (1999) reviewed the subscriber churn in the Australian ISP industry. Their study developed a model which relates the probability of subscriber churn to various service attributes and subscriber characteristics. A major finding that emerged from this study was that the churn probability was positively associated with monthly ISP expenditure. Additionally, subscribers preferred ISPs who offer flat rate pricing. Hence, the pricing model used by ISPs (in addition to customer service, speed and reliability of the ISP network) is one of the key factors customers consider in both choosing and leaving an ISP. Maxham and Netemeyer (2002) conducted two field studies in the USA that captured customer perceptions of complaints handling over time. They developed a model of the effects of perceived justice on customer satisfaction and intent following a service failure and a recovery attempt. Perceived justice is a perception generated through customer interactions with firm representatives, procedures a firm uses to handle complaints and outcomes of the service recovery. Following service failure and recovery, it was noted that customers paid attention to how their complaints have been redressed compared to general customer service interactions they had with their provider. Chiou (2003) developed a model of the antecedents of customer loyalty towards ISPs in a Taiwanese context. The concept of expected technology change (giving consideration to future technologies) was used to study the formation of ISP loyalty intention. The study found that perceived value (customer perception of the benefit of the new

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technology) was important in generating overall customer satisfaction and loyalty intention towards an ISP. Such findings indicate the importance of ISPs paying attention to customer expectations in changing technological contexts. Kim, Jeong, Park, Park, Kim and Kim (2007) studied the impact of network service performance on customer satisfaction and loyalty in Korea. They argued that to survive in a competitive ISP market, ISPs need to continue to improve their service performance. The study finding showed that high levels of service performance improved customer satisfaction and loyalty. Such findings demonstrate why ISPs must address both the quality of service issues (technical) and the service quality issues (CS/CH) to keep satisfied customers loyal and prevent customers from switching providers. Spiller, Vlasic and Yetton (2007) examined the post adoption behaviour of users of ISPs in Australia. Their study showed that the needs of the service continuers and the discontinuers were different and that the customers, who discontinue, generally do so in the first six months of signing up to a service. Such a finding has potential business implications for all ISPs. In order to avoid customer exodus, ISPs need not only to strive to maintain their service levels for both the new and existing customers but also to keep all customers informed of the new service deals. Esghi, Haughton and Topi (2007) identified the determinants of customer loyalty in the wireless telecommunication industry in the USA. Their study investigated the determinants of propensity to switch wireless service providers. The main finding was that instead of ‘locking in’ customers through restrictive contracts, the providers are better off improving customer satisfaction (for example, listening to their customer concerns and providing a speedy response) in order to minimize customer defection. Further, Esghi et al. (2007) argue that focusing on customer satisfaction would be a better option than locking customers into a contract (assuming that the customers will not switch providers because of high switching costs). Sanchez-Franco, Ramos and Velicia (2009) studied the success of a relationship between an ISP and its customers measured by the concept of loyalty in a Spanish context. A relationship (trust and commitment) model using gender as a moderator in the relationship was developed. The study revealed that gender played a significant moderating role in relationships. The influence of trust on commitment was significantly stronger for females than males. The influence of commitment on loyalty was 29

significantly stronger for females than males. The effects of satisfaction on commitment were significantly stronger for males. The effects of trust on loyalty were significantly stronger for males. ISPs need to take note of such findings and develop service strategies to assist in good relationship management with both male and female customers. Perez and Flannery (2009) studied the relationship between service failures and customer churn in the telecommunications industry in the US. They found that customers who used multiple services offered by their ISPs (voice, video, Internet) and experienced service failures were more inclined to cancel all services with their provider than other groups of customers. Given that many Australian ISP customers use bundled services offered by their ISPs, it is essential for the ISPs to have an effective service recovery policy following service failures and provide appropriate compensation. In sum, a common message that arises from these studies is that ISPs need to take customer service and complaints handling seriously, as ISP customer perception of service quality is also influenced by factors outside the ISP network operations. Table 2.1 provides a summary of key observations from the Internet studies literature in relation to desirable service provider culture characteristics, after sales service characteristics, customer service characteristics, Internet access availability, customer switching behaviour and business performance indicators.

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Table 2.1 Consolidation of Internet studies findings in relation to desirable ISP service characteristics (Havyatt 2010a;; Wood 2010;; ACMA 2011) Internet Studies area Service provider culture characteristics

After sales service characteristics

Customer service characteristics

Internet access availability

Customer switching behaviour Good business performance indicators

Desirable service provider characteristics The service provider operates with an acute sense of socio-cultural awareness. The service provider meets or exceeds its obligation adopting a ‘beyond compliance’ approach. The service provider exhibits ‘best practice’ by being open and transparent in its operations, by taking accountability for its actions, its products and services, its commitments and by being credible and acting with integrity. The service provider staff is aware of what they need to know to deliver on the values discussed above. The service provider invests in quality of service and the reliability of products and services. The service provider delivers when and what they say they will, with simple instructions on how to use the product. The service provider is proactive in managing quality and prompt to repair faults. The service provider takes responsibility for their actions. The service provider bills are easy to understand. Customer agreements are easy to understand and fair. When dealing with customers directly, the provider is culturally aware and appropriate in its conduct. Customer service is a company priority. The service provider is accessible to customers through ease of being able to reach trained courteous staff who listen to and hear customers’ needs. The service provider is respectful in its service to the customer. At all times, the service provider keeps customers fully informed, of the providers’ company policies, of the developments in products and services, and in the progress of any individual transaction between the provider and the customer. Connectivity options for new customers, speed of services (such as download time), technical help desk and assistance, pricing policies, minimum/ no downtime, nationwide access, free access/deals, service outages, reward for long-term memberships, connection dropouts, reliability, security and informing customers of new services policies. Better pricing, good customer service, speed of services (such as download time), Internet access availability, reward for long-term membership, connection drop outs, reliability, security, informing customers of new policies, minimum/ no downtime, connectivity options for new customers. Customer loyalty and retention, customer satisfaction for services, good service quality vision, technical edge, financial strength, effective marketing and promotion and appropriate strategic alliances.

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I will now discuss the literature on the poor CS/CH performance of the Internet industry in Australia. The past decade has seen renewed emphasis on customer service and complaints handling performance of ISPs. Rapid increase in the growth of services and the complexity of products has made it increasingly difficult for ISPs to deliver consistent customer service performance (ACCAN 2012). A growing body of literature highlights the poor CS/CH performance of the Internet industry in Australia over the period 2008-2011 (for example, Havyatt 2010a;; Wood 2010;; Gerrand 2011;; Alderson 2011;; ACMA 2011;; TIO 2012). The key customer service issues are: (i) incorrect information at point of sale;; (ii) excessive waiting times;; (iii) misleading claims;; (iv) lack of follow-up action by providers;; and (v) customer frustration with being shifted to various departments when they seek assistance. The key complaints handling issues are: (i) failure to recognise a complaint;; (ii) failure to inform customers about alternative dispute resolution schemes such as the TIO;; (iii) failure to direct customers to the right area of the business to resolve complaints;; (iv) failure to resolve complaints in a swift manner;; and (v) failure to action undertakings (TIO 2012). An authoritative source of information on CS/CH complaints can be found in the TIO annual complaints data (reports complaints recorded between the 1st of July of one year to the 30th of June the following year). In the period 2006/2007 to 2009/2010, the TIO annual complaints report contained a number of indications that the industry was falling seriously short in its obligations to its customers (consideration was given to the proportion of complaints against the number of subscribers during the complaints analysis). The total number of customer service complaints rose dramatically from 27,048 complaints in 2006/2007 to 91,601 (a 238 per cent increase). The annual reports for the period 2006/07 to 2009/10 showed a steady increase in complaints in the customer service category ‘Incorrect/inadequate service’ followed by ‘Failure to action request’. The total number of complaints about complaints handling increased dramatically between 2006/07 and 2009/10 with 25,274 complaints recorded in 2006/07 and 71,489 complaints recorded in 2009/10 (an increase of 182 per cent). The top two complaints handling categories were: ‘Failure to action undertakings’ followed by ‘Failure to acknowledge a written complaint’ (TIO 2012;; ACMA 2012;; ACCAN 2012). These statistics highlight the failure of the vLISPs studied in this research to deal with the customer service and complaints handling issues particularly given that they account for more than eighty per cent of the residential Internet subscriber base. 32

In the light of the poor CS/CH performance of the Internet industry, there were serious concerns about the inability of the industry to meet customer CS/CH expectations (Havyatt 2010a;; Gerrand 2011;; Alderson 2011;; TIO 2012). This led to: (i) Ministerial intervention (the real threat of tighter regulation);; (ii) industry ombudsman campaigns (the Connect.Resolve campaign) in 2009 and 2010, targeting the top ten vLISPs in Australia, aimed at reducing the volume of recorded Internet service complaints;; (iii) the high media profile of the problem (television and radio programs discussing complaint numbers in the Internet industry);; and (iv) the regulator’s RTC (Reconnecting the Customer) inquiry into CS/CH practices (an 18-month investigation) (ACMA 2011;; ACCAN 2012;; TIO 2012). These events acted as ‘Trigger Events’ (Meyer, Gaba & Colwell 2005;; Lampel & Meyer 2008;; Garud 2008) that drew the attention of all stakeholders and played a pivotal role in addressing the CS/CH issues during the TCP Code review in 2010/11. Previous studies on customer service have highlighted the importance of consistent customer service performance for ISPs (for example, Kelso 2008;; Goggin & Milne 2009;; Havyatt 2010a;; Alderson 2011). If a customer perceives that their ISP is not listening to their concerns or providing a speedy response to their complaints and demonstrates poor commitment to customer service, customers tend to complain about their ISP to a third party dispute resolution provider such as the TIO. If such a trend continues with an ISP and a majority of its customers are frustrated about the inability of their ISP to deal with CS/CH issues, it leads to a considerable increase in complaints recorded against that ISP. Such increases in complaint statistics can damage the service reputation of the ISP. When that occurs, it is difficult for ISPs to attract new customers especially given the competitive nature of the ISP market (ACMA 2011;; ACCAN 2012;; TIO 2012). I will now provide a chronological analysis of the poor CS/CH performance of the top four vLISPs who are the key players involved in development/review/revision of CS/CH practices stated in the TCP Code. The poor CS/CH performance of the top four vLISPs in Australia has been an ongoing issue since 2008. Research conducted by Roy Morgan Research (2008) about customer satisfaction with the vLISPs found that satisfaction was at its lowest level. The survey 33

included Australians aged 14 plus who had an Internet connection at home. The sample size (between October 2007-September 2008) was 13,307. The research reported the proportion of customers whose expectations were exceeded or mostly met by their ISP in the last 12 months. The ISPs studied included [O6], [O7], [O8] and [O9] (organization profile details are provided in Chapter 3, Section 3.7.4). The failure of the larger players in the industry to meet customer expectations on CS/CH was a key finding of this study. Australia’s largest ISP [O7] experienced a drop in meeting customer expectations from 64.8 per cent in September 2008 compared to 70.2 per cent in 2006. Similarly, the second largest vLISP [O9] fell in satisfaction ratings to 64.3 per cent in September 2008 compared to 71.6 per cent in 2006 (Roy Morgan Research 2008). The TIO annual report for 2008 quoted the industry performance over the last few years as ‘The proportion of complaints about customer serviced related matters has remained unacceptably high and, in the TIO’s view, the industry still has much work to do in this area’ (TIO 2012). The annual report highlighted a 32.3 per cent increase in Internet service related issues compared to the previous year (TIO 2012). The issues were classified as billing, faults, contract, complaints handling, provisioning, credit management and customer transfer. The functional service issues constituted an overall 47.6 per cent with CS (22 per cent), contract (13.6 per cent) and CH (12 per cent). Billing systems, faults, customer transfer, provisioning and credit management are classified as technical service issues as they pertain to vLISP network operations (TIO 2012). In January 2009, the TIO with the support of the consumer association and the regulator launched the Connect.Resolve campaign. This was launched in response to a huge increase in Internet service complaints recorded with the industry ombudsman (TIO 2012). Wood (2010) describes the industry’s failure in relation to CS/CH performance, the urgency of the problem and for the Connect.Resolve campaign: ‘the need for the Connect.Resolve campaign to address rising complaints numbers and customer service issues in the telecommunications sector conducted by the TIO in 2009 was itself an indictment of the way in which members had been dealing with customers. It also reflected poorly on the regulatory system for the telecommunications sector. Most of the telecommunications industry has recognised over the past three years that improved customer service is not only necessary from a reputational viewpoint, but also that it is the essential base for customer loyalty and retention’ (Wood 2010). The Connect.Resolve

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program was created to encourage the ten largest ISPs to improve their customer service practices. There were ongoing issues with CS/CH in the year 2010 and 2011. The TIO Talks (2012) reported the top seven issues related to complaints between July 2010 to December 2010. They were customer service, complaints handling, billing, faults, contracts, credit management and provisioning. Within this period, the combined proportion of customer service and complaints handling was 42 per cent, a significant proportion of the overall proportion of the complaints. The TIO 2010 annual report (TIO 2012) showed an increase in customer service issues for problems that occurred after contact between the customer and the provider was established. Year 2010 saw an increase in the incorrect advice being provided to customers by their ISPs. There was an increase by 41.45 per cent for Internet services. A regulator inquiry over 18 months into the CS/CH practices of the industry was launched in 2010 in response to ongoing poor CS/CH performance of the vLISPs. In its press release in February 2011, the consumer association, ACCAN, called on the regulator to impose penalties on ISP companies with a track record of poor customer service performance. Such a call was made following an increase in complaints statistics released by TIO for the period July-December 2010. The ACCAN media release stated: ‘There’s no other industry that has failed customers so comprehensively over such long period of time’ (ACCAN 2012). This highlighted the failure of the vLISPs in meeting customer expectations and delivering desirable customer service outcomes for customers. In his ABC (Australian Broadcasting Corporation) Radio interview (ABC Radio 2011) on May 4, 2011, the Chief Executive Officer of the ISP industry association described the urgency in improving the CS/CH practices (at a time when the TIO had received 60,000 complaints in the first 3 months of the year 2011) (TIO 2012): ‘The numbers point to the urgency of us implementing the new revised industry code, which we believe will take us towards a real step change and improvement in customer service levels and customer satisfaction levels across the industry’ (Communications Alliance 2013). Such huge increases in complaint numbers have direct implications for the customer service reputation of the industry.

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The regulator’s RTC Inquiry Report stated that ‘All of the evidence available to the ACMA’s inquiry indicates that consumer complaint levels in the Australian telecommunication industry are far too high and that poor customer care (both directly and indirectly) drives many consumers to complain. Poor performance in these areas imposes real and significant costs on consumers. It also imposes unnecessary costs on industry’ (ACMA 2011). Such concerns highlight the social and economic costs of poor CS/CH performance for both customers and the industry as a whole. Further, ACMA’s inquiry findings provided a comprehensive review of the customer service experiences of Internet customers. The inquiry reported: ‘The inquiry has found that consumers are most dissatisfied about the level of customer service provided when a customer attempts to contact their service provider to make an enquiry or complaint and how that enquiry or complaint is resolved’ (ACMA 2011). Compelling evidence of customer dissatisfaction with vLISP CS/CH practices was evident and continued to emerge from such reports. The TIO May 2011 report (TIO 2012) highlighted the vLISPs increased focus on the technical aspects of services as opposed to customer service and complaints handling: ‘Australia’s Internet industry has long had a reputation for having low levels of customer service … with major ISPs … receiving large numbers of complaints each year. With the entire industry receiving a nearly one third increase over the previous quarter it would seem the majority of ISPs are not focusing on the issue. Whether customers are complaining about billing problems … or the quality of service, Australian ISPs consistently have looked at improving download limits, increasing off-peak usage periods, adding free phone calls and other product benefits, as opposed to this glaring imperfection in the industry’ (TIO 2012). Evidence of the industry’s prioritisation of technical service quality over functional service issues is brought out in such reports pointing to a systemic failure of the industry to prioritise its focus on customer service. A growing body of evidence indicating failure of the industry in relation to CS/CH forced the industry to consider seriously the effectiveness of the regulatory processes that existed at the time. There was a heated debate in the industry about making substantial changes to the TCP Code 2007 to deal with the systemic CS/CH issues. The old TCP Code had several shortcomings: (i) the old TCP Code had areas within the code that did not address the minimum standards of customer service;; (ii) it lacked clear compliance and enforcements measures;; (iii) the absence of penalties in the code for non-compliance led to multiple code breaches;; and (iv) the code did not address the

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need for ‘action’ rather than the creation of a ‘process’. The old TCP Code placed a number of obligations upon ISPs to have processes in place for consumer protection. However, there was no obligation for the providers to actually comply with those processes. This led to discrepancy between formal CS/CH processes and the actual CS/CH processes that were adopted by many vLISPs in Australia (Havyatt 2010b;; ACMA 2011). TCP Code categories and the most common clauses in the code breaches are provided in Appendix G. Some vLISPs superficially conformed to the code (ceremonial conformity) to seek legitimacy of their customer service practices. Such poor CS/CH attitudes impacted the industry’s CS/CH performance and the CS/CH outcomes for customers (ACMA 2011). Gunningham and Rees (1997) argue that industry practices that are developed through co-regulatory arrangements can be applied sparingly and inconsistently if there is no commitment from the industry players and there is no meaningful system of compliance. The discussion and analysis provided above parallels this perspective. On the whole, the evidence from the authoritative sources discussed in this Section revealed that the larger players failed to meet customer expectations in areas such as customer service and complaints handling. Additionally, the lack of strong enforcement, monitoring and compliance measures in the old TCP Code led to some vLISPs breaching the code, not dealing with systemic customer service issues and being able to get away with poor CS/CH performance as there were no penalties associated with their non-compliance. For these reasons the regulatory arrangements that existed at the time did not drive the desired behaviour in the industry. This led to providers not incorporating CS/CH practices with a view to improve CS/CH performance and achieve the desirable CS/CH outcomes for customers. ISP industry pioneers such as Havyatt (2010a) highlight the need for more research on the CS/CH practices of vLISPs: ‘the industry’s reputation for poor customer service has been much commented on but little analyzed’ (Havyatt 2010a). Such gaps in analysis call for more systematic research on CS/CH practices of the vLISP industry. The discussion so far highlighted that customer service and complaints handling are the top two Internet service issues for customers and stakeholders such as the regulator, government authorities, the consumer association and the industry ombudsman (ACMA 2011;; ACCAN 2012;; TIO 2012). Poor CS/CH performance has several socio-economic 37

implications for consumer protection, customer exodus, ISP industry reputation and business survival (Alderson 2011). This has serious effects for the whole nation, particularly given that the Internet has become an important communication medium for both individuals and businesses (ABS 2013). In the lifetime of a customer’s belonging to a vLISP, the service itself will not be permanently tied to the technical or functional services (Wood 2010). Instead, both services might be demanded by customers based on the circumstances that surround their service needs. Very Large ISPs have to consistently work towards developing CS solutions to tackle emerging and new CS issues (TIO 2014). The TIO 2013-14 Annual Report (TIO 2014) indicates that the ‘New Complaints’ about Internet services decreased by 0.9 per cent compared to the previous period 2012-13 ( there were 31,148 complaints recorded in 2013-2014 compared to 31, 431 complaints recorded in 2012-13). ‘New Complaints’ refer to disputes ISP customers bring to TIO’s attention for the first time after they have been unable to resolve it with their ISP. For example, Telstra had Total New Complaints for all services of 58,009 in 2013-14 compared to 57, 298 in 2012-13. This represents a change of 1.2 per cent. This increase in complaint numbers is relatively less as Telstra services in operation increased by almost one million during 2013-14 (TIO 2014). Optus had significant drop in complaint numbers in 2013-14. They received 14,144 Total New Complaints in 2013-14 compared to 26, 629 in 2012-13. This represents a reduction of 46.9 per cent. iiNet received 3051 Total New Complaints in 2013-14 compared to 2298 in 2012-13 representing a change of 32.7 per cent. While this shows increase in complaint numbers they have significantly outperformed other vLISPs when it comes to CS performance as they have received numerous CS excellence awards. iPrimus received 1072 Total New Complaints in 2013-14 compared to 924 in 2012-13 representing a change of 16 per cent. Such increases in complaint numbers are relatively modest when we consider the proportion of complaints against the number of subscribers (TIO 2014). Previous Sections detailed why improved CS/CH performance is crucial for the top four vLISPs to attract new customers and retain their existing customers in a competitive market place. Customer service has increasing importance for future Internet services such as the NBN (NBN 2013). The vLISPs have to deal with several challenges because of the complexity that arises due to the different technologies

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(Wireless, Fiber-to-the-node and Satellite) used to deliver NBN services, the convergence in services and the multitude of services provided over the NBN platform (including health, education and retail). Overcoming these challenges has implications for: (i) sustaining service reputation;; (ii) retaining existing customers and attracting new customers;; and (iii) staying and winning the competition (Darling 2007;; Martin 2010;; ACMA 2012).

2.3

The institutional environment of very large Internet Service Providers

A review of the organizational studies literature helped to understand the institutional environment of the vLISP organizations (for example, DiMaggio & Powell 1983;; Scott 2001;; Lawrence & Suddaby 2006;; Low, Johnston & Wang 2007;; Low 2010). Institutional environment relates to the systems of formal laws, regulation and informal conventions such as norms that mould organizational behaviour (Scott 2001). The top four vLISPs studied have ongoing interactions with key institutional stakeholders of the vLISP industry. These stakeholders include the regulator, the industry ombudsman, the consumer association, the ISP industry association and the government department for broadband. There is a need for the top four vLISPs to build ongoing relationships with the external stakeholders in order to seek legitimacy of their practices and influence the CS/CH practices. Previous studies (DiMaggio & Powell 1983;; Oliver 1991;; Suchman 1995;; Scott 2001;; Low 2010) showed that both technical factors (striving for technical efficiency) and institutional factors (striving for social legitimacy) influence organizational actions. Other studies (DiMaggio & Powell 1991;; Delmas & Toffel 2004;; Hu, Hart & Cooke 2006;; Marquis, Glynn & Davis 2007) have shown that organizational practices are influenced by pressures from external stakeholders. In the vLISP industry, CS/CH practices are derived through interactions and collaborations between the external stakeholders. Actors from various stakeholder agencies evaluate the legitimacy of one another’s actions and relate organizational action with broader normative and social structures (DiMaggio & Powell 1983). The factors that bring about change within the vLISP industry are not purely efficiency driven because the external environment also plays a role in bringing changes to the vLISP policies and practices (Meyer & Rowan 1977;; Oliver 1991;; Suchman 1995;; Aldrich 1999;; 39

Low 2010). As a result, institutional perspectives become relevant to studying vLISP industry practices.

2.4

Relevance of institutional perspectives in understanding customer service and complaints handling practices of the Internet industry

Gunningham and Rees (1997) call for an institutional perspective to understand the effectiveness of the industry co-regulatory practices and the role central actors play in shaping the industry’s practices. Given the poor CS/CH performance of the top four vLISPs, it is important to study and understand the factors that influence the industry’s CS/CH practices. In particular, institutional perspectives are valuable to understand the institutional forces that operate in the Internet industry and their influence on its CS/CH practices. According to Gunningham and Rees (1997), ‘External factors are equally important in determining the fate of a particular self-regulatory initiative’. They go on further to say: ‘There is a substantial gap between the self-interest of an industry or an individual enterprise and that of the public. The gap is most commonly caused by negative externalities … where a large gap does indeed exist, then it would be naïve to rely upon the individual enterprise or industry association taking steps voluntarily in the public interest unless there is some external pressure to do so’ (Gunningham & Rees 1997). This is an area that has not been studied holistically in the vLISP industry using multi-stakeholder perspectives. Such a gap necessitates the need for systematic academic research that analyses multi-stakeholder perspectives on CS/CH practices and examines the institutional influences on those practices (DiMaggio & Powell 1991;; Gunningham & Rees 1997;; Scott 2001;; Low 2010). An evidence-based inclusive approach (all stakeholder perspectives) towards understanding and developing the CS/CH practices is essential to deliver desirable customer service outcomes (Horsley & Gerrand 2011). Such an approach has the potential to: (i) inform development of appropriate CS/CH practices based on a shared understanding of all stakeholders;; (ii) develop a good understanding of how CS/CH practices of the Internet industry in Australia are shaped by the external stakeholders in a co-regulatory environment;; and (iii) provide opportunities to go beyond the

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assessment of and commenting on CS/CH practices or performance and critically analyse the institutional factors and the external stakeholder pressures that influence the CS/CH practices of the vLISP industry. The next Section justifies the use of neo-institutional theory as a theoretical framework for this study. It provides a detailed description of the theory and related concepts that will be explored following data analysis in Chapters 4, 5, 6 and 7.

2.5

Theoretical framework: Neo-institutional theory

The concept of institutional arguments was first introduced and expanded by early institutionalists (Selznick 1957;; Lawrence & Lorsch 1967;; Thompson 1967;; Meyer & Rowan 1977;; Zucker 1983). Early institutional theory introduced the notion of reality as a social construction (resulting from interactions) (Meyer & Rowan 1977). In contrast to economic theory, institutional theory explains ‘why organizations do not need to be efficient in order to be successful’ (Cousins & Robey 2005). There are many variants of institutional approaches. The Old Institutional Economics (OIE) focuses on ‘the institutions that shape the actions and thoughts of individual human agents’ within an organization (Scapens 2006). The New Institutional Economics (NIE) comes from many different strands of theory such as agency theory, game theory and transaction cost theory. The primary unit of analysis in Transaction Cost Economics (TCE) is the transaction and its associated costs (Williamson 1981;; 1998;; Zhao 2011). NIE focuses on ‘the structures used to govern economic transactions’ (Scapens 2006). NIE uses economic rationality and market assumptions to examine organizational governance (Scapens 2006;; Zhao 2011). In the organizational context, the two distinct models of organizational actors (involving social analysis) are the rational actor model (which assumes the individual to be a rational decision maker based on cost benefit analysis) and the institutional model (which assumes that individual decisions are based on prevailing social norms, and not on any reflection based on personal interest (Tolbert & Zucker 1996;; Zhao 2011)). Neo-institutional theory (also known as new institutional theory) focuses on institutional factors (social and cultural) that shape organizational actions and practices. This theory focuses on legitimacy, Organizational Fields and the centrality of classification, scheme, scripts and routines compared to older institutional theory that focuses on the issues of influence, coalitions, power and competing values. Further, 41

neo-institutional theory focuses more on cognitive aspects of institutions compared to the older theory’s emphasis on the role of habit (DiMaggio & Powell 1991;; Zhao 2011). Scott (2001) reasons that ‘organizations are not only productive systems, but they are also social and cultural systems’. The main thrust of neo-institutional theory is that organizational practices are influenced by the external environment in which they operate and the organizational choices are constrained and influenced by social behaviours, values and norms in their external environment (DiMaggio & Powell 1983;; Muriel & Suzanne 2009). In the vLISP context, vLISP organizations constantly aim to maintain and increase their legitimacy among their external stakeholders. They do so by responding to pressures that arise from their institutional environments (DiMaggio & Powell 1983). Neo-institutional theory stresses that ‘many dynamics in the organizational environment stem not from technological or material imperatives, but rather from cultural norms, symbols, beliefs, and rituals’ (Suchman 1995). Social and cultural demands of the environment require organizations to play certain roles in society and maintain certain outward appearances. Social demand rewards organizations for conforming to society’s rules, norms, values, routines and beliefs. They establish the authoritative guidelines for the social behaviour (Scott 2001). Neo-institutional theory, as opposed to macro organizational behaviour theories such as transaction cost economics, argues that the behaviour of organizations is driven by the need for organizational legitimacy instead of mere technical efficiency (Mizruchi & Fein 1999;; Mignerat & Rivard 2005;; Mizruchi, Stearns & Marquis 2006;; Fernandez-Alles & Valle-Cabrera 2006). Social legitimacy is central to neo-institutional theory as organizations not only depend upon knowledge, equipment and capital but also their acceptance by the society in which they operate (Scott 2001;; Cousins & Robey 2005). Legitimacy is important for organizations as ‘it creates the perception of credibility, persistence and meaningfulness within the environment’ (Williams, Lueg, Taylor & Cook 2009). The vLISPs gain legitimacy when they can demonstrate to their external stakeholders that they are conforming to regulatory processes, institutional norms and cognitive meanings within the institutional environment in which they operate (Low 2010). Justification for the use of neo-institutional theory as the theoretical approach in this study is provided in Section 2.6.

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Several authors have used institutional theory as a theoretical framework to study the institutional dynamics in the Information Technology (IT) and Telecommunications industries. Table 2.2 lists examples of such studies. A central message revealed by these studies is that the organizations have to build ongoing relationships with external stakeholders and seek legitimacy in order to influence policies that suit their collective interests, avoid increased scrutiny and avoid excessive regulation.

2.6

Justification for institutional theory approach over other theoretical approaches

Several theoretical frameworks such as legitimacy theory, stakeholder theory and neo-institutional theory were considered for this research. After careful consideration neo-institutional theory was chosen as the appropriate theoretical framework. In this Section a brief explanation of theories considered and their suitability for this research is provided. Table 2.2 Application of institutional theory in IT and Telecommunications References King, Gurbaxani, Kraemer, McFarlan, Raman and Yap (1994) Avgerou (2000)

Ang and Cummings (1997), Silva and Figueroa, (2002), Tan and Fichman (2002) Silva and Backhouse (2003)

Swanson and Ramiller (2004)

Gopal, Mukhopadhyay and Krishnan (2005) Hu and Huang (2006)

Study focus/ details Studied the role of institutional interventions in accelerating IT innovation in IT companies. The study revealed that government regulations had significant influence on organizational behaviour. Used institutional theory to understand the relationship between information systems development and organizational transformation using a case study of the Mexican oil company Pemex. Within this study context, normative pressures influenced IT innovation development and implementation. Studied IT adoption in various organizations. The studies revealed the legitimation strategies (Example: Acquiescence through compliance) used by organizations when they come under pressure from external constituents. In particular, compliance with stakeholder expectations on IT innovation increased when there were strong coercive pressures from the state. Studied the role of power in the institutionalization of Information Systems through a longitudinal in-depth case study. The study found that once technology is institutionalized within an organization, it is seen as legitimate by both the people within the organization and those outside. Studied innovative behaviour in IT organizations (in the USA). The study found that coercive, mimetic and normative pressures led to mindless innovation with IT (instead of exploring new IT innovation, the organization joined the bandwagon of prior adopters and adopted because others were doing it). This occurred to acquire legitimacy among the external constituents. Studied the impact of institutional forces on the software metrics program in the USA. They studied the influence of both external and internal institutional forces on the assimilation of software metrics programs in software organizations. Used institutional theory to study the rise and fall of competitive local exchange carriers in the USA. The institutional forces led to companies adopting similar business models promoted by their institutional environment resulting in destructive competition.

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Low (2010)

Hirst (2010)

Studied institutional isomorphism in the Chinese Telecommunications market. In a case study of Nokia China, it was found that incremental conformity to regulatory processes, institutional norms and cognitive meanings within the environment were important characteristics in studying institutional isomorphism. Such studies confirm that neo-institutional theory can offer a valuable framework for analyzing organizational responses to external stakeholder demands and the legitimation strategies they use to achieve organizational legitimacy. Studied intra-organizational processes of institutionalization involving knowledge management practices in Australia. The study developed a framework to understand how practices emerge and become entrenched within an organization.

According to Legitimacy theory (Tinker & Niemark 1987;; Patten 1991;; Mathews, 1993;; Lindblom 1994;; Suchman 1995;; Deegan 2002;; Zhao 2011), organizations operate within the norms of their respective societies (according to implicit and explicit expectations that society has about how an organization should conduct its operations). This theory assists researchers in explaining why organizations undertake certain organizational actions. It argues that organizations seeking to be perceived as being legitimate need to ensure that the organizational practices are perceived as being credible and legitimate by the society. Legitimacy theory introduces the notion of social contract between organizations and society (virtual contract that exists only in the perceptions of those with an interest in it as opposed to a physical contract). However, the theory has a limitation to its explanatory power. This is because it focuses on society at large and does not consider the expectations of powerful stakeholders and their influences on the industry practices (Zhao 2011). Such a limitation does not support the purpose of this research which is largely focused on understanding the role of external stakeholders and their influences on the CS/CH practices of the vLISP industry.

Stakeholder theory (Freeman & Reed 1983;; Buhr 2002;; Unerman & Bennett 2004;; Eesley & Lenox 2006;; Deegan & Unerman 2011) focuses on how an organization interacts with various stakeholder groups. Stakeholder theory focuses on the relationship between organizations and specific groups of people who have a direct interest in its operation (Freeman & Reed 1983). Legitimacy theory, on the other hand, focuses on an organization’s interaction with society as a whole and pertains to the actions by an organization to seek legitimacy (gain/maintain/repair legitimacy) to meet societal expectations (Zhao 2011). Stakeholder theory recognises that different stakeholders have different views as to the way an organization should operate and behave. Hence, the theory acknowledges the existence of various social contracts with different stakeholders. This is in contrast to legitimacy theory that emphasizes one social 44

contract with society as a whole (Zhao 2011). The key limitation of stakeholder theory is its inability to study how institutional factors and external stakeholder pressures influence organizational action.

Neo-institutional theory (Meyer & Rowan 1977;; DiMaggio & Powell 1991;; Oliver 1991;; Hoffman 1999;; Scott 2001) assists researchers to understand the role of institutional factors and external pressures in influencing organizational practices. Neoinstitutional theory provides a complimentary perspective to both stakeholder theory and legitimacy theory (Deegan & Unerman 2006;; Zhao 2011). Legitimacy theory focuses on why organizations adopt certain practices. Neo-institutional theory on the other hand not only focuses on why organizations adopt certain practices, but also focuses on and explains: (i) why certain organizational actions become more common in a particular institutional context;; (ii) how and why organizations respond to external stakeholder pressures;; (iii) why organizations seek legitimacy of their practices;; and (iv) provides a solid platform to conduct longitudinal study of institutional changes and the institutionalization of practices within organizations (DiMaggio & Powell 1983;; Tolbert & Zucker 1983;; Zhao 2011). Other relevant theories such as rational actor theory, network theory, resource-based theory and social network theory were also considered and rejected because they did not support the key objectives of this research.

2.7

Introduction to neo-institutional theory concepts relevant to this research 2.7.1 Institutional pressures

Neo-institutional theory argues that organizations are socially rewarded by legitimacy, resources and survival based on their acceptance of institutional pressures (Meyer & Rowan 1977). Hoffman (1999) argues that the external environment creates pressure for organizations to accept ‘institutionalized rules, norms, and beliefs that describe reality for the organization, explaining what is and what is not, what can be acted upon and what cannot’ (Hoffman 1999). Organizations gain social support of stakeholders by succumbing to these institutional pressures. 45

DiMaggio and Powell (1983) identify three key institutional pressures that operate in any industry. They are regulatory, normative and mimetic pressures. The authors define regulatory pressures as ‘pressures exerted on organizations by other organizations upon which they are dependent and by cultural expectations in the society within which organizations function, such pressures may be felt as force, as persuasion or as invitations to join in collusion’ (DiMaggio & Powell 1983). In the vLISP industry, regulatory pressures stem primarily from the regulator and the government department for broadband. The attitude and behaviour of vLISP regulatory managers towards CS/CH practices in an organizational setting can be influenced by the rules and regulations of the agencies that have control over their organization. In discussing mimetic pressures, DiMaggio and Powell (1983) state that ‘when goals are ambiguous or when the environment creates symbolic uncertainty, organizations may model themselves on other organizations’ (DiMaggio & Powell 1983). Mimetic pressures stem from ISP competitors that excel in customer service. As a result, organizations that face uncertainty in dealing with their CS/CH issues tend to mimic practices adopted by the market leader, hoping to achieve a similar success. The attitude and behaviour of vLISP regulatory managers towards CS/CH practices in an organizational setting can be influenced by managers in other organizations who are perceived to be successful. Normative pressures urge ISP organizations to conform to societal norms and values and stems primarily through professionalization (the collective struggle of members of a profession to define the conditions and the way work should be organized (Scott, 2001;; Zhao, 2011)). The attitudes and behaviours of vLISP managers towards CS/CH practices in an organizational setting can be influenced by those of their peers in their professional networks. Further, customer pressure also plays an important role in influencing industry practices (ACMA 2012). Customer Pressure is defined as ‘force, persuasions or invitations that are applied both implicitly and explicitly by Customers to which firms must respond’ (Williams et al. 2009). Previous studies on Information Systems, Information Security, Telecommunications and Service Management (for example, Bjorck 2004;; Major & Hopper 2005;; Hu & Huang 2006;; Lee, Ginn & Naylor 2009) examined how institutional pressures impact 46

managerial actions and shape individual and collective organizational responses to the institutional pressures. These studies revealed that external constituents have a role to play in influencing an industry’s co-regulatory practices. Rowley (1997) states that ‘an organization must acquiesce to external pressures, since its survival is contingent on its compliance with expectations from Institutional constituents, such as the state, and professional and interest groups.’ Organizations accede to external stakeholder demands to seek legitimacy of their practices. Some previous research on institutional pressures across various industries also exists. I will now discuss those studies. 2.7.1.1 Study of institutional pressures: Information Technology industry specific studies Bjorck (2004) investigated why formal security structures and actual security behaviour differed on information security (ISec) practices. His work shed light on why many organizations create and maintain formal security policies without implementing them fully. It also revealed that the organizations had ISec policy documents because the institutional forces they were exposed to led to organizations developing policy documents that conform to ‘the prevailing ideas of what information security policy should ideally entail’ (Bjorck 2004). A study by Major and Hopper (2005) of Portuguese telecommunication firm Marconi found that institutional pressures played a significant role in the profound changes that occurred in the company’s accounting system. Several constituents pressured the company to adopt a prescribed management accounting system. They include the regulator, European Union (EU), its parent company and industry consultancies. The regulatory pressures pressed the EU telecommunications operators to adopt similar management accounting practices. Major and Hopper concluded that such an adoption occurred in order to allow the Marconi company to gain social legitimacy for the way its interconnection prices were calculated. It was also necessary to prove to its constituents that it was a modern and legitimate organization. Major and Hopper’s study highlights that the factors that motivate telecommunication companies to change their practices are not purely driven by the efficiency demands and that institutional pressure influenced changes to the practices. For example, the changes to Marconi’s accounting 47

practices through the adoption of the management accounting system popularised by its main constituents prevented the business from having its conduct questioned by the regulator. This is indicative of the organizational response to pressures from external constituents (Major & Hopper 2005). Gopal, Mukhopadhyay and Krishnan (2005) examined the impact of institutional pressures on the software metrics program. They studied the influence of both external and internal institutional forces on the assimilation of software metrics programs in software organizations. Their findings showed that external constituents such as customers and competitors, and internal staff such as managers, directly influenced the extent to which organizations changed their internal work practices in software quality testing and metrics programs. Hu and Huang (2006) studied the rise and fall of competitive local exchange carriers in the USA. They found that the institutional forces in the carrier industry led to many competitive local exchange carriers adopting similar business models leading to saturation of the market resulting in destructive competition. The study also emphasized that structural and behavioural changes in technology-based organizations are not purely driven by the need for efficiency, but more because of the desire to gain organizational legitimacy. Hu, Hart and Cooke (2006) studied the role of institutional forces on Organizational Information Security (ISec) practices in the USA. It was found that the introduction of the Sarbanes-Oxley Act changed management attitudes towards taking ISec policies seriously. The study found that compliance with regulation was the main driver for change. In the service industry context, Lee et al. (2009) examined the role of environmental factors on service innovativeness in the not-for-profit industry. Their study revealed that regulatory forces stifled service innovation. Nurdin, Stockdale and Scheepers (2012) found that institutional forces played a role in adopting and implementing e-government systems to improve administration and service performance in an Indonesian context. All these studies support the notion that technology-based organizations when exposed to institutional pressures adopt practices promoted by their institutional environment to seek legitimacy and influence practices that suit their collective interests.

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2.7.1.2 Study of institutional pressures: Other industries Several authors have studied the response of organizations to institutional pressures from the external constituents in non-IT industries (for example, Leblebici, Salancik, Copay & King 1991;; DiMaggio & Powell 1991;; Scott 2001;; Delmas & Toffel 2004). Some examples of such studies are discussed below. Schneiberg and Bartley (2001) studied the self-regulatory practices in the US fire insurance industry. They argued that there is a need to have strong enforcement mechanisms for self-regulation to work. It was found that the self-regulation that occurred through an industry association developing its own standards had problems with enforcement and monitoring. This led to mounting pressure from consumer groups and political circles to regulate the industry, as there were instances of price fixing, unfair claims and over rate discrimination. This eventually led to state intervention and an insurance regulation passed by a state government. This study highlights that external pressures can substantially influence the shaping of industry practices. Martin and Sayrak (2003) studied pressures in the US pulp industry. They found that stakeholder pressures (consumer groups) led to pulp mills adopting practices that assisted with the production of environmentally friendly paper products such as toilet tissue. The new practices introduced the use of unbleached pulp into products instead of bleached pulp. This study highlights the role of consumer advocates in pressuring industry to adopt environmentally friendly practices. The dominance of regulatory pressure over other pressures is evident in previous studies (Major & Hopper 2005;; Hu et al. 2006;; Krell, Matook & Rohde 2009). Krell et al. (2009) argues that regulatory pressures usually tend to affect firms more strongly than other institutional pressures. This is because: (i) the regulatory environment in most industries constantly changes due to ongoing changes in the political environment. Usually, a particular change in government regulation affects a number of organizations at the same time;; and (ii) government departments are powerful agencies that are able to impose negative sanctions on non-complying organizations.

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Some studies have highlighted the role of organizational culture and attitudes in providing a response to pressures from external constituents. For example, Lewis, Walls and Dowell’s (2013) study on the strategic response to institutional pressures on environmental information disclosure identified that Chief Executive Officer (CEO) characteristics (such as educational background such as legal or business administration degree and tenure) influenced the likelihood of acquiescence to pressures to disclose environmental information. Okhmatovskiy and David (2012) found that when organizations are faced with externally imposed standards (in this study, a government sponsored non-mandatory corporate governance code), they sometimes develop alternative standards for the same practices (their own internal corporate governance code). Such a response shifted the attention of stakeholders away from non-compliance with original standards to adherence to the alternative standards. The adoption of these internal codes was driven by the visibility of the firm’s corporate governance practices and by mimetic pressures. The study revealed that the organizational response to institutional pressures took a ceremonial form as opposed to a substantive form. In the environmental industry several studies (for example, Sheldon 1997;; Charlesworth 1998;; Rondinelli & Berry 2000;; Delmas & Toffel 2004) identified the reasons why organizations adopt more environmentally responsible attitudes. It was revealed that the external pressures from stakeholders such as the government, customers and competitors had positive influences on environmental practices. In sum, the studies discussed above support the argument that when there are strong institutional pressures, organizations aim towards acquiring legitimacy among their external stakeholders. In particular, large organizations are more susceptible to institutional pressures because of their high visibility in the market place (Goodstein 1994;; Ingram & Simons 1995;; Clemens & Douglas 2005). These studies are of relevance when studying the Internet industry as the industry works closely with the external stakeholders on the CS/CH policy formulation (TCP Code), subsequent registration and implementation of the TCP Code. A sample of evidence of pressure through the industry ombudsman’s Connect.Resolve campaign in the vLISP industry is provided in APPENDIX E.

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2.7.1.3 Understanding strategic responses to institutional pressures In studying responses to institutional pressures, Oliver (1991) provides a framework to understand the factors that drive organizations in selecting a particular response to institutional pressures. These institutional factors are: x

Cause (Why these pressures are exerted?);;

x

Constituents (Who was exerting them?);;

x

Content (What these pressures are?);;

x

Control (By what means they were exerted?);; and

x

Context (Where they occurred?).

Organizations conform to institutional pressures and develop appropriate strategies to respond to the pressures with the aim of seeking legitimacy. The legitimacy strategies used by organizations include Acquiescence, Compromise, Avoidance, Defiance and Manipulation (Oliver 1991). Acquiescence is a passive strategy where firms agree to the institutional pressures. The other four strategies represent active responses to institutional pressures. These strategies are used by organizations to maintain, gain or repair their legitimacy (Oliver 1991). Acquiescence is an organization’s conscious intent to conform to self-serving reasons. This is achieved through imitation and compliance. Compromise is used to promote organizational interest using pacifying and bargaining tactics. Avoidance is used to prevent the need to conform to any external pressure using tactics such as dismissing and attacking. Manipulation involves tactics of controlling an institutional pressure. Defiance involves assaulting the sources of the institutional pressures. The tactics used are dismissing and attacking (Oliver 1991;; Clemens & Douglas 2005). Organizations use more than one strategic tactic in responding to their institutional pressures (Oliver 1991). In the vLISP industry context, very little is known about the role of institutional pressures in influencing the CS/CH practices of the vLISP industry. An institutional perspective allows for critical examination of the interconnectedness of CS/CH practices of vLISP organizations and their institutional contexts (that is, an examination

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of multi-stakeholder perspectives on the role of institutional pressures in influencing the CS/CH practices of the top four vLISPs).

2.8

Organizational Fields

A central concept related to institutional theory is Organizational Fields. Scott (2001) defines Organizational Fields as ‘a collection of varying types of organizations, their suppliers, customers, and regulators that are formed around a common issue’ (Scott 2001). Neo-institutional theory argues that organizations within an institutional environment share certain characteristics with others. These communities of organizations ‘engage in common activities and are subject to similar reputational and regulatory pressures’ (Owen-Smith & Powell 2008). The institutional environment comprises organizations and Organizational Fields. Scott (2001) argues that ‘the application of institutional arguments to organizations occur, in my view, most appropriately neither at the level of entire society nor at the level of the individual organization but at the level of the Organizational Field’ (Scott 2001). The key characteristics of an Organizational Field (Barley 1986;; Phillips, Lawrence & Hardy 2000;; Mazza & Pedersen 2004;; Colyvas & Powell 2006;; Rankine 2008;; Khestri 2009) are: (i) a Field is a dynamic system where members enter and exit the Field;; (ii) the members have competing interests and disparate purposes;; (iii) changes in interaction patterns occur among members as Field transformation occurs;; (iv) a Field comprises a diverse range of stakeholders (for example, the regulator, consumers, the ISP industry association and the government department for broadband) who negotiate over issues of interpretation;; (v) the dialogue, rhetoric

and

content among

Field

members influence

the

diffusion

and

institutionalization of a practice;; and (vi) the members differ in terms of their ‘Power’ and influence in shaping the Field level activities. For example, dominant members with greater authority and discursive legitimacy play an influential role in shaping Field’s structures and practices (Phillips et al. 2000;; Kshetri 2009). There are various theoretical perspectives on Organizational Fields (Machado-da-Silva, Guarido Filho & Rossoni 2006). They are: 1) Field as the totality of relevant actors: A set of organizations sharing systems of common meanings and interacting frequently among themselves more than with actors outside the Field, constituting a recognised area of institutional life (DiMaggio & Powell 1991);;

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2) Field as center of dialogue and discussion (Hoffman 1999): Organizations that participate in a common debate surrounding specific issues and are concerned with production and reproduction of practices related to the focal issue;; 3) Field as arena for power and conflict: This perspective focuses on the role of power as a central element in the formation of Organizational Fields. Changes in Organizational Field occur when power arrangements are modified and dominant actors of the Field work towards new structures and practices;; 4) Field as a functionally specific arena: Scott (2001) introduced the notion of functional Organizational Field as a set of ‘similar and dissimilar interdependent organizations operating in a functionally specific arena together with their exchange partners, funding sources and regulators’ (Scott 2001);; 5) Field as an institutional sphere of disputed interests: According to Fligstein (2001), construction of Organizational Field ‘ is a cultural phenomenon that involves pre-existing social practices, rules embedded in power relations between groups and cognitive structures which function as cultural frames’ (Fligstein 2001). Fligstein focuses on strategic action and introduces the concept of social skills instead of attributing importance to scripts and social norms;; and 6) Field as a structured network of relationships: In this perspective ‘the organizations and other social actors are not involved only in exchange relationships but are positioned in a relational structure or network that configures their actions and delimits their possibilities’ (Scott 1995). The two key theoretical perspectives on Organizational Fields that are relevant to this research are: (i) Field as totality of relevant actors;; and (ii) Field as center of dialogue and discussion. Both these perspectives provide a good platform to examine the issue-based coming together of the institutional actors in the vLISP industry. Zietsma and Winn (2005) suggest that an issue-based coming together is more suitable for analysis of Emerging Organizational Fields (which are dynamic in nature and experience flux). The Field acts as a common channel for dialogue and discussion on the focal issue and brings together various Field constituents with disparate purposes. The Organizational Field is formed by organizations intensively involved in the debate on the focal issue and are concerned with the production and reproduction of a specific set of practices related to the focal issue. These practices then become a part of the institutional arrangement. The institutional actors who share the same Organizational Field adopt similar practices (DiMaggio & Powell 1983;; Oakes, Townley & Cooper 1998;; Maguire, Hardy & Lawrence 2004;; Phillips, Lawrence & Hardy 2004). 53

DiMaggio and Powell (1991) use the term ‘structuration’ to describe the origin and shaping of the Organizational Field. The four elements of the Field structuration process include: (i) an increase in the extent of interaction among organizations in the Field (that is, actors from diverse organizations interact with each other frequently and fatefully);; (ii) the emergence of sharply defined inter-organizational structures of domination and pattern of coalition (that is, a monopoly organization has the capacity to enforce its practices on other organizations);; (iii) an increase in the information load with which organizations in a Field must contend (for example, information flow occurs between organizations in the same Field as they acknowledge that they are participants in the same debate and have to work together to improve the reputation of the industry);; and (iv) development of a mutual awareness among participants of organizations that they are involved in a common enterprise (for example, developing mutual awareness regarding a collective action among organizations to address issues of collective rationality) (DiMaggio & Powell 1991). These criteria are further analyzed in the context of the vLISP industry in Chapter 6. DiMaggio and Powell (1991) argue that once disparate organizations doing similar business activities and in the same line of business are structured in forming an actual Field, powerful external forces emerge that make them increasingly similar to one another. They state that new organizations may join the Field and organizations’ practices tend to change. However, the organizational actors belonging to such an Organizational Field and making rational decisions construct an environment around themselves that constrains their ability to change further in later years. Thus, after a certain point in the structuration of Organizational Field, the aggregate effect of individual change is to minimize the level of diversity in the Field (Goran 1990;; DiMaggio & Powell 1991). DiMaggio and Powell (1983) state that individuals do not choose freely among customs, social norms and legal procedures. According to them, actors within the Organizational Field ‘associate certain actions within certain situations by rules, appropriateness absorbed through socialization … or acquiescence to convention’ (DiMaggio & Powell 1983). In the vLISP context, vLISP managers face choices all the time when dealing with CS/CH issues, although they seek guidance from the experiences of other vLISP regulatory managers

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in comparable situations and by reference to standards of obligation within their Field (DiMaggio & Powell 1983). Scott (2001) found that institutional arrangements constrain individual behaviour by making some choices unviable and precluding particular courses of action. Previous studies (Anand & Watson 2004;; Oliver & Montgomery 2008;; Garud 2008;; Lampel & Meyer 2008;; Hardy & Maguire 2010) on emergence of Organizational Fields identified events that triggered processes that drive the Field evolution. These events are called as Field Configuring Events (FCEs). FCEs are ‘temporary social organizations such as tradeshows, professional gatherings, technology contests, and business ceremonies that encapsulate and shape the development of professions, technologies, markets and industries’ (Lampel & Meyer 2008). For example, FCEs such as industry forums, working groups/committees provide unique social space for institutional actors from diverse organizations to: (i) assemble and explore central issues;; (ii) build collective understanding of problem;; (iii) mobilise collection action on problems;; and (iv) work collaboratively towards establishing an Organizational Field (Meyer, Gaba & Colwell 2005). How these concepts pan out in the vLISP industry is analyzed in Chapters 6 and 7.

2.9

Introduction to collaboration and Organizational Fields

Previous studies have highlighted the role of collaboration in the development of Organizational Fields (Gray 1989;; DiMaggio & Powell 1991;; Hardy & Phillips 1998;; Lawrence, Phillips & Hardy 1999;; Lawrence, Hardy & Phillips 2002;; Wooten & Hoffman 2008). Collaboration is defined as ‘a co-operative relationship among organizations that relies on neither market nor hierarchical mechanisms of control’ (Phillips et al. 2000). According to Phillips et al. (2000) inter-organizational collaboration involves ‘sets of negotiations that are demanded by the lack of predefined institutional roles that accompany market- and authority—based relationships’. Phillips et al. (2000) argue that collaboration ‘facilitates the emergence of inter-organizational networks, structures of domination and the production and reproduction of institutional rules and resources, all of which lead to the structuration of institutional Fields’ (Phillips et al. 2000). Participants need to be convinced to act even though there is no formal authority demanding their co-operation.

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Other studies have focused on what brought businesses, government agencies and other stakeholders together to act on pertinent issues (Emery & Trist 1965;; Trist 1983;; Weiss 1988;; Nathan & Mitroff 1991;; Pyke & Sengenberger 1992). These revealed that in turbulent environments where problems are characterized by complexity and uncertainty, it is beyond the scope of a single organization to resolve issues. Collaboration provides an opportunity to address mutual problems collectively, with organizations pooling their expertise and resources. Both conflict and co-operation are key elements in collaboration (Phillips et al. 2000). In some collaborative contexts, stakeholders collaborate voluntarily, have equal power and share common goals (Pfeffer & Salancik 1978;; Gray & Hay 1986;; Westley & Vrendenburg 1991;; Saksa, Jussila & Granlund 2006). In other contexts, ‘Power’ plays an important role in the collaborative process. Powerful actors advocate and establish approaches to problem solving and membership to privilege their own position. Hence, dynamics of power have a role in the collaboration. Hardy and Phillips (1998) identify three key forms of power in the collaborative context. They are formal authority (the right to make decisions), control of resources and discursive legitimacy (ability to speak legitimately for other organizations). These key aspects of collaboration are further explored during critical analysis of collaboration between the vLISP industry stakeholders in Chapters 6 (Section 6.3-6.6) and 7 (Section 7.1-7.5).

2.10 Institutional Entrepreneurs and Organizational Fields Several scholars (DiMaggio & Powell 1991;; Fligstein 1997;; 2001;; Garud, Jain & Kumaraswamy 2002;; Greenwood, Suddaby & Hinings 2002;; Maguire, Hardy & Lawrence 2004;; Dejean, Gond & Leca 2004) have highlighted the role of institutional entrepreneurs in Organizational Field emergence and Field development. The uncertainty in the institutional order and the lack of clear structure in Emerging Organizational Fields provides opportunities for strategic action by institutional entrepreneurs (DiMaggio & Powell 1983;; Fligstein 1997). Fligstein (1997) argues that institutional entrepreneurs possess specialized social skills that enable these actors to motivate cooperation of other actors providing them with common identities and meanings. He defines social skills as ‘the ability to motivate cooperation in other actors by providing those actors with common meanings and identities in which actions can be undertaken and

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justified’ (Fligstein 1997). Social skills of institutional entrepreneurs are important for Organizational Fields to come in to existence, as the actors must take other people’s interests into account. This helps to shape collective identity among a set of social groups and meet their interests. Institutional entrepreneurs read ‘the current level of organization in a Field and respond to it by taking the position of other actors in the Field’ (Fligstein 1997). The knowledge and tactics of these actors who possess the social skill helps them to produce stable Organizational Fields. For example, Fligstein’s (1997) work on the role of strategic actors in developing Organizational Field highlighted the case of the Organizational Field of the European Union (EU) and showed how an institutional entrepreneur helped reorganize the EU Field. In Emerging Organizational Fields, there are no dominant actors. Instead, groups have to unite internally and must find a stable set of arrangements for the Field to come into existence. The tactics used by institutional entrepreneurs to bring the groups together (Fligstein 1997) include: (i) framing action to include others which focuses on convincing actors who do not share similar interests that collective action will serve their interests;; (ii) maintaining goalessness to demonstrate that not personal gain but only collective gain is achieved;; (iii) aggregating interests where entrepreneurs bring a number of actors on board and hope others will follow;; and (iv) agenda setting where strategic actors set the agenda for other actors and convince multiple actors that such an agenda is in their interests.

2.11

Institutionalization of practices

Institutionalization refers to the ‘process by which a practice acquires legitimacy and achieves a taken-for-granted status’ (Kshetri 2009). Hirst (2010) defines organizational practice as ‘particular ways of conducting organizational functions that have evolved over time under the influence of an organization’s history, people, interests, and actions and that have become institutionalised in the organization’ (Hirst 2010). Examining the institutionalization of practices is critical to understand the extent of institutionalization of new CS/CH practices in the vLISP industry. For example, in the vLISP industry let us consider a new CS/CH practice in relation to ‘Telecommunications offers’. This practice relates to the ‘Consumer Sales, Service and Contracts’ Section of the revised TCP Code. This new practice states that all ISPs are required to provide a ‘Summary of offer’ of two A4 pages maximum that allows customers to make informed choices at the time of purchase of a service. 57

Further, understanding the processes of institutionalization provides valuable information about how the regulatory managers of the top four vLISPs institutionalize new CS/CH practices within their organization and what the impetus for diffusion of a new CS/CH practice is within a vLISP organization. The measure of institutionalization of associated behaviours will be the diffusion of particular structural arrangements and the institutionalization of certain practices (Cebon & Love 2003). Cebon and Love contend that the measure of institutionalization is not just diffusion of certain behaviours, but rather the diffusion of a particular cognitive structure. Institutionalization is reached when there is a stable reciprocal interaction between various actors, their actions and the actions of other actors (Selznick 1957;; Meyer & Rowan 1977;; Zucker 1983;; Covaleski & Dirsmith 1988). Institutionalization can be measured and conceptualized in two different ways. The neoinstitutional approach is associated with studying institutionalization through reproduction of behaviours over time (Tolbert & Zucker 1983). The other approach involves institutionalization as socially facilitated reproduction of cognition over time. Institutionalization can be expected as a power deriver for diffusion and thus broadly diffused practices are more likely to be institutionalized (Zucker 1983). The relationship between rate of diffusion and rate of institutionalization depends on the Organizational Field (Zucker 1983;; Tolbert & Zucker 1983;; Lawrence, Winn & Jennings 2001). If the institutionalization occurs at the level of the cognitive category, then managers have considerable discretion within the confines of that category over their choice of practices and the way they implement them (Zucker 1983). Cebon and Love (2003) found that as the level of institutionalization increases, the choices become more constrained. This is because various choices become more differentiated in the manager’s minds. More and more elements and aspects of the choice start to be takenfor-granted. Institutionalization studies (DiMaggio & Powell 1991;; Scott 2001;; Seo & Creed 2002) emphasise the importance of rules and routines that institutions are encoded in. Barley and Tolbert (1997) define institutions as ‘socially constructed templates for action, generated and maintained through ongoing interactions’ (Barley & Tolbert 1997). Within institutions, institutional logics are the cognitive maps, belief systems carried out but created by

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Organizational Field actors to guide and provide meaning to their actual activities. According to Leca and Naccache (2006) ‘institutions are rules of the game, institutional logics are the underlying principles of the game’ (Leca & Naccache 2006). Institutions are transmitted by being embedded in carriers of institutional elements which include symbolic systems, relational systems, routines and artefacts (Jepperson 1991;; Scott 2001). Table 2.3 explains these institutional carriers. Table 2.3 Carriers of institutional elements (Source: Bjorck 2004) Institutional carriers

Elements

Symbolic systems

Rules, Typifications and schema, Laws, Values and Expectations. Identities, Regimes, Authority systems, Governance systems. Protocols, standard operating procedures, jobs, roles and scripts. Objects complying with mandated specifications. Objects possessing symbolic value.

Relational systems Routines Artifacts

The rules and routines are enacted and reproduced through various actions undertaken by the individual actors. Once the rules and routines have been institutionalized they may become resistant to change (Tolbert & Zucker 1983). These institutional arrangements comprise the taken-for-granted assumption that a certain pattern of behaviour is the norm for the social group the actors belong to. Actors are constantly constrained by the existing institutional system and a key question is when and how do they actually decide to revise behavioural scripts (Tolbert & Zucker 1983). Actors will have to make a collective choice before they depart from established patterns of scripts. A revolutionary change creates significant disruption of established routines. Evolutionary change on the other hand does not involve conscious choice for change;; it is the process of change in routines in response to wider institutional changes (D’Aunno, Succi & Alexander 2000;; Van der Steen 2006;; Colyvas & Powell 2006;; Lawrence & Suddaby 2006;; Scapens 2006). In order to explain the process of change and the individuals’ role in it, it is essential to look at the role of human agency in the institutional context. Institutional change can occur from agency embedded in incompatible institutional arrangements (Scapens 2006). In this context, actors’ needs and interests are unmet, and as a result the actors

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are motivated to change existing institutional arrangements. The role of actors in creating/maintaining/disrupting institutions is provided in APPENDIX F. 2.11.1 Processes of institutionalization of practices The key processes of institutionalization at the inter-organizational level consist of three main stages: pre-institutionalization, semi-institutionalization and full-institutionalization (Hirst 2010). The actual patterns of events and relationships that help understand the processes of institutionalization involves an object first being recognised, then accepted by relatively few actors, and then widely diffused and accepted within the Organizational Field. The key institutionalization dimensions include characteristics for adopters, impetus for diffusion, theorisation activity, variance in implementation and structure failure rate. These are defined within the three processes of institutionalization (Tolbert & Zucker 1983;; Hirst 2010), which are: x

Habitualization: Actors produce symbolic structures in social interaction in pursuance of shared meanings;;

x

Objectification: Shared meanings become constructed ‘objective’ external to the actors;; and

x

Sedimentation: Objectified, socially constructed external world is to be rooted in the actors’ consciousness.

The extent of institutionalization of practices involves: (DiMaggio & Powell 1991). x

What practices it comprises;;

x

How they are carried out;;

x

How work should be organized around these practices;;

x

How power should be allocated when institutionalizing practices;; and

x

How to relate the practices to practices in other organizations

The intra-organizational dimensions of institutionalization identified by Hirst (2010) include adoption, implementation and entrenchment. Adoption is the process through which an individual progresses from first knowledge of a practice to a decision as to whether to adopt that practice or to consider it (Hirst 2010). During the initiation stage, the organization becomes aware of a practice and evaluates the practice. This then leads

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to adoption, where the new organizational structures relating to the practice are generated and the employee habits become defined and formalised. Hence, the adoption decision occurs during the initiation stage and the implementation stage involving practices. The implementation stage acts as a gateway between the decision to adopt a practice and its routine use within an organization. The key actors involved in using existing practices are targeted to gain their support and commitment to use the new practice. The activities in this stage involve training, rewriting of procedures and acquiring the technical resources/infrastructure to execute planned new structural changes (Hirst, 2010). The organization starts using the practice after this period. Entrenchment involves historical continuity and spreading of practices, leading to acceptance and legitimation within an Organizational Field. Then practices become taken-for-granted within the Organizational Field (behaviours become understandable, predictable and stable leading to a practice becoming entrenched) (Hirst 2010). Intra-organizational processes of institutionalization include theorisation activity, impetus for diffusion and the level of formalisation and internalisation (Rajagopalan & Yong 1995;; Holm 1995;; Brignall & Modell 2000;; Hirst 2010). x

In Theorisation activity organizational decision makers recognise ‘organizational failing’ and the need for a new practice. The new practice is seen as a solution, and a justification as to why the practice needs to be implemented.

x

Impetus for diffusion: Diffusion occurs after successful theorisation. In a diffusion context, the institutional pressures lead to diffusion and the institutionalization of structural arrangements. Normative pressures occur through professionalization, Coercive pressure occurs through legislation and Mimetic pressure occurs as a result of an imitation of practice adopted by the market leader.

x

Level of formalisation and internalisation: The formalisation process involves emergence and establishment of processes over time. These practices then become part of actor’s daily routines. It is through formalisation that clear procedures and processes are defined to carry out the organizational practices. Internalisation refers to the process where employees view the practice as important and valuable for their organization leading to the actor’s commitment to the practice. Internalisation is important as it defines the persistence and stability of a practice over time (Holm 1995;; Hirst 2010). 61

These institutionalization processes and concepts discussed in this Section are important for understanding the commitment of the institutional actors of the vLISP industry to adopt, implement and institutionalize new CS/CH practices with a view to improving the CS/CH performance.

2.12 Isomorphism, decoupling and diffusion DiMaggio and Powell (1983) introduce the notion of institutional isomorphism to explain the similarity between organizations (for example, similar organizational policies and practices). Isomorphism is defined as ‘a constraining process that forces one unit in a population to resemble other units that face the same set of environmental conditions’ (DiMaggio & Powell 1983). DiMaggio and Powell (1983) introduce the notion of coercive, normative and mimetic isomorphism to describe homogeneity in organizational practices and operational procedures once the Organizational Fields become well established. Organizations that belong to the same environment tend to take on similar forms as efficiency seeking organizations sought ‘fit’ with their environment (DiMaggio & Powell 1983). Organizations not only adapt to technical pressures, but also to institutional pressures (Boxenbaum & Jonsson 2008). When adaptations to institutional pressures contradict internal efficiency needs, organizations claim to adapt when in fact they decouple action from structure (Boxenbaum & Jonsson 2008). Decoupling occurs when a new practice is adopted for legitimacy purposes, but not fully implemented, as it is perceived to be in conflict with technical efficiency and organizational goals. This leads to discrepancy between formal practices, policies and procedures and the actual behaviour in implementing them (Boxenbaum & Jonsson 2008). Studies conducted in the past have identified institutional isomorphism as the cause of diffusion of practices (DiMaggio & Powell 1991;; Scott 2001;; Boxenbaum & Jonsson 2008). Boxenbaum and Jonsson (2008) state that gaining legitimacy without actually adapting relies critically on confidence and good faith that an organization does what it says it will. Organizations that decouple tend to avoid close inspection. When institutional pressures lead to decoupling, organizations do their best to avoid scrutiny. DiMaggio and Powell (1983) argue that decoupling allows the organizations to adhere to

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various institutional demands, while organizing its primary processes more efficiently than would be possible if it were to adhere to all institutional prescriptions. When studying institutional isomorphism, previous studies treated diffusion of a particular practice as an outcome variable of interest and that diffusion leads to isomorphism. Previous studies (DiMaggio & Powell 1983;; 1991;; Scott 2001;; Boxenbaum & Jonsson 2008) confirmed that legitimacy is the driving force behind diffusion;; however, diffusion may also occur without any legitimacy seeking behaviour. This highlights the fact that not all practices that diffuse will enhance organizational legitimacy. Boxenbaum and Jonsson (2008) argue that when establishing a causal relationship between institutionalization and diffusion, it is important not just to show an increase in the number of adopters as an indicator of institutionalization, but other factors such as collective beliefs and changing norms should also be associated with the adoption. In the ISP industry, the organizational behaviours and compliance in relation to the CS/CH practices of vLISPs did not come under increased scrutiny until recently (discussed in Section 2.6). Following this scrutiny a substantial gap between the espoused CS/CH practices of vLISP regulatory managers and the actual practices of the companies was evident (ACMA 2011;; Gerrand 2011;; ACMA 2012). Such gaps raise serious questions about the industry’s commitment to CS/CH performance improvements (that is, adopting a beyond compliance approach towards CS/CH practices).

2.13 Summary of gaps in the literature and this study’s approach Section 2.2 analyzed the CS/CH problems in the vLISP industry and justified why CS/CH performance is important for the reputation and the future of the top four vLISPs and their Internet customers. The problem area investigated generates and has generated heated debate within the vLISP industry over the past five years. It is clear that the problem had been discussed for a number of years before that. A major deficiency with much of the literature on the vLISP industry’s customer satisfaction is that it simply provides information about the overall satisfaction and dissatisfaction with providers and by no means assists the top four vLISPs and their external stakeholders in 63

improving quality of service provided to customers. A great deal of research done on vLISPs focuses on brand, brand values and customer experience and was undertaken by marketing departments. The majority of day-to-day decision-making is not informed by these results. Instead, they are made on the basis of an internalised value set of decision makers (regulatory managers) who are influenced by other similar vLISP organizations which confront similar issues (Havyatt 2010a;; 2010b;; TIO 2012). The literature review highlighted that in the public sphere there is little detailed research about institutional influences on CS/CH practices. Many previous investigations have not paid attention to examining the role of the institutional forces and their influence on CS/CH practices. Havyatt (2010c) in his submission to the TCP Code review calls for modern approaches to regulation on what is called as ‘institutionalism’. Institutionalism is more of a paradigm. Lincoln (1995) describes paradigm as ‘a worldview, a general perspective, a way of breaking down the complexity of the real world. As such, paradigms are deeply embedded in the socialisation of the adherents and practitioners, telling them what is important, what is legitimate, what is reasonable.’ A sociological perspective of institutionalism (Sociological Institutionalism) allows for an examination of central institutional actors who are involved in developing CS/CH practices for the vLISPs, the institutional context they are embedded in and its role in influencing industry practices. Systematic academic research using an institutional lens (neo-institutional theory) generates and enhances research knowledge about the role of institutional pressures in influencing the CS/CH practices of the vLISP industry. Institutional perspectives assist this research to: (i) identify central institutional actors who influence the CS/CH practices of the top four vLISPs;; (ii) understand the role of institutional pressures in influencing CS/CH practices of the vLISP industry;; (iii) understand how and why the top four vLISPs respond to institutional pressures;; (iv) understand the industry response to competing pressures for technology, efficiency and legitimacy (Low 2010);; (v) conduct institutional analysis at Organizational Field level, tying organizations together through collaboration on CS/CH practices;; and (vi) critically examine the micro and macro level CS/CH collaborations in the vLISP industry and the institutional effects of such collaborations (DiMaggio & Powell 1983;; Hoffman 1999;; 2001;; Lawrence et al. 2002).

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A key outcome of using an institutional perspective in this study is to generate evidence and knowledge that will enhance our understanding of the role of institutional forces in influencing CS/CH practices. Such an understanding will assist in facilitating progress towards the development of customer-oriented CS/CH practices that will contribute to a desirable customer service experience. This leads to the next Section where the research questions for this study are presented.

2.14 Research questions The main research question is: How do institutional forces influence the customer service and complaints handling practices of very large Internet Service Providers in Australia? To address this broad question, a series of sub-questions were examined: x

Sub-question 1: What are the perceptions and attitudes of key institutional actors in external agencies (the regulator, the ombudsman, the government department for broadband, the ISP industry association and the consumer association) on the CS/CH practices of vLISPs in Australia?

x

Sub-question 2: What is the role of external stakeholder pressures in influencing the CS/CH practices of vLISPs?

x

Sub-question 3: What are the perceptions and attitudes of regulatory managers in vLISPs on CS/CH practices and the key institutional pressures that influence those in the vLISP industry?

x

Sub-question 4: What is the level of interaction of individual stakeholders with one another in relation to CS/CH practices?

x

Sub-question 5: What role do such interactions play in influencing the CS/CH practices of the vLISP Industry?

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x

Sub-question 6: What institutional pressures influence the CS/CH practices of the vLISPs in Australia?

x

Sub-question 7: What led to collaboration on CS/CH practices between the institutional actors in the very large ISP industry?

x


2.15 Conclusion In this Chapter I discussed the major CS/CH issues reported in the academic literature. Careful critique and examination of the academic literature showed that there was ongoing poor CS/CH performance in the vLISP industry in the period 2008-2011. Findings from existing research related to the CS/CH in ISPs were discussed. The justification for an institutional perspective to study institutional influences on the CS/CH practices of the top four vLISPs was provided. The use of neo-institutional theory as a suitable theoretical framework to examine key institutional pressures that exist in the vLISP industry and how these pressures play a role in influencing the CS/CH practices of the vLISP industry was discussed. A detailed discussion of the fundamentals of neo-institutional theory and the perspectives of different institutional theorists was carried out. Finally, a summary of key gaps identified in the literature and the research questions for this study was presented. The research methodology and methods used in this research are explained in the next Chapter.

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CHAPTER 3

RESEARCH DESIGN: METHODOLOGY AND METHODS

People have long been concerned to come to grips with their environment and to understand the nature of phenomena it presents to their senses. The means by which they set out to achieve these ends may be classified into three broad categories: experience, reasoning and research. -

3.0

Cohen, Manion and Morrison (2000)

Chapter overview

The research design, methodology and methods used to answer the main research question are explained in this Chapter. How do institutional forces influence the customer service and complaints handling practices of very large Internet Service Providers in Australia? A comparative analysis of all research methodologies was undertaken before choosing the methodology that best serves the purpose of this research. The primary purpose of this research is to explore the personal viewpoints of vLISP industry stakeholders to gain an understanding of the role of institutional forces in influencing the industry’s CS/CH practices. Collection of detailed informant views and accounts of their perceptions/attitudes is central to gaining such an understanding. A justification for why a qualitative research approach is employed is provided. A Section is devoted to discussion of previous institutional research studies that have used a similar qualitative exploratory approach. The Chapter also discusses the research methods and procedures used in this study along with sampling and data analysis steps used in the study. Finally, the Chapter concludes by summarising the methodological approach taken by this research.

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3.1

Research design considerations

The research design process considered: (i) the research paradigms and assumptions that will be used in this research;; (ii) the exploration of research methodologies that are suitable for answering the research question and the sub-questions;; (iii) how the required information to answer the central research question was collected;; and (iv) the data analysis approaches used in this study to uncover meaningful findings that would assist in examining and understanding the institutional influences on the CS/CH practices of the vLISP industry. Discussion in Chapter 2 explained the social context (cultural norms and stakeholder expectations) of the vLISP industry and showed that decisions of the central actors are influenced by the institutional environment in which they operate. Both formal and informal rules are imposed through the cultural norms and values enacted through accepted ways of behaviour. To understand and describe institutional forces that influence CS/CH practices a detailed investigation approach that allows for the exploration of different institutional actor’s’ perspectives on the institutional forces that influence the CS/CH practices is essential. 3.1.1

Research paradigm

Denzin and Lincoln (2000) define research paradigm as ‘a basic set of beliefs that guide action’. Research paradigm refers to the philosophical assumptions about the world (ontology), how we can understand the world (epistemology) and the assumptions shared by researchers in a particular field (Maxwell 2005). Ontology is concerned with the nature of reality and the researcher asks the following questions: Is social reality external to individuals imposing it on their consciousness or is it the product of individual consciousness (Burnell & Morgan 1979;; Guba & Lincoln 1988;; 1989;; Guba & Lincoln 1994;; Cohen, Manion & Morrison 2000)? The objective view of ontology holds the position that social entities exist in a reality external to the social actors concerned with their existence (Zhao 2011). The subjective view of ontology holds the opposite position, namely, that social entities are part of a continual process of social phenomena that are created and shaped by the perceptions and actions of the social actors or individuals concerned with their existence (Marshall & Rossman 1999;; Zhao 2011). This

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research assumes the subjective position of ontology, acknowledging that individuals have an active role in the social construction of organizations and that each social actor’s perceptions and attitudes continuously influence and shape social phenomena such as organizational culture and practices. Epistemology is concerned with the bases of knowledge, with how it can be acquired and communicated to other human beings (Cohen et al. 2000). The questions asked in deciding an epistemological position are: Is it possible to identify and communicate knowledge in hard, real, tangible form or whether knowledge is softer, subjective, based on an actor’s or an individual’s experiences of a phenomenon? There are two epistemological positions – an objective view and a subjective view (Burrell & Morgan 1979). This research takes the epistemological position that the world is socially constructed and each individual’s knowledge and understanding of the world they observe is subjective and influenced by their prior experiences (Burrell & Morgan 1979;; Crotty 1998;; Neuman 2000;; Zhao 2011;; Bryman 2012). As a result, an interpretivistic position is assumed to acknowledge that the world is socially constructed by social actors and is being interpreted from their viewpoints. Further, there is an active role for the researcher in the entire research process. A Constructivist/Interpretative paradigm assumes a subjective view of both ontology and epistemology where researchers rely on the participants’ views of the situation and inductively develop a theory or pattern of meanings throughout the research process (Creswell 2007). This is the approach used in this study. Axiological assumptions describe the role of value or ethics in research. There is a sample bias because the smaller ISPs are not included in this study. This research is value-laden as what it seeks is valuable knowledge about the vLISP industry stakeholder perceptions and attitudes towards CS/CH practices of the industry and their experiences of the role of institutional forces in influencing the industry practices. Further, the goal of this research is not to make generalizations but to present findings in a specific context by staying as close as possible to the social world as the participants experienced it (Creswell 2007). A summary of the philosophical position taken by this study is presented in Table 3.1.

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Table 3.1 Philosophical views taken by this research (Creswell 2007) Philosophical views taken Ontological assumptions (nature of reality) Epistemological assumptions (the relationship between the researcher and what is being researched)

Position of this research Multiple perspectives exist about the topic (realities of individual ISP stakeholders, readers who are interpreting the study). Multiple statements represent diverse participant perspectives on the topic of the role of institutional forces on the CS/CH practices of the top four vLISPs. The data represents perspectives of central institutional actors involved in developing the CS/CH practices. I engaged with the participants during the research process to obtain a deeper and closer meaning to their responses.

Axiological assumptions (role of values)

Interpretive views are presented in the research. Bias is present in the sample. The research focuses on the top four vLISPs which are identified as main players in influencing the CS/CH practices of the industry and as a result the research is value-laden.

Rhetorical assumptions (language of research)

The focus is on the analysis of language and meanings. The use of direct quotes from the research participants based on their definitions as they evolved during the study instead of being defined by the researcher at the beginning of the research study.

Methodological approach

Use inductive logic and reasoning to develop rich detailed descriptions of stakeholder perceptions and attitudes drawn from the stakeholders’ responses.

3.2

Research methodology

It was evident from the initial analysis of methodologies that qualitative research approaches are best suited for answering the study’s research question. The focus is not on measures or accounts rather on in-depth insights of participants and their experiences of the role of institutional influences on the CS/CH practices of vLISPs. Quantitative approaches are not suited for this research because they tend to focus on an objective study with careful measurements and controlled research processes. However, the day-to-day interactions of organizational actors are influenced by their feelings, values, beliefs, past experiences and distinct perspectives (Atkinson & Silverman 1997;; Creswell 2007). Further, the research question for the study aims to explore ideas and insights rather than measure variables. As a result, illuminative responses were valuable over statistical measures of significance, frequency and sampling. Remshard and Flowers (2007) highlight the distinct perspective of qualitative research, which is to capture interactions, feelings and values of each person. Thus, I developed an initial and natural instinct to selecting methodological approach that is required for this research. However, in

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accordance with the research process a review of all the research methodological approaches and their fit with the research paradigms was undertaken.

3.3

Justification for choice of qualitative approach

The Constructivist/Interpretative research paradigm supports a subjectivist view as opposed to the objectivist view that is usually required for quantitative approaches (Crabtree & Miller 1999;; Francis, Johnston, Robertson, Glidewell, Entwistle, Eccles, & Grimshaw 2010). Further, it was decided that the quantitative approaches are not suitable because: x

This research does not wish to measure variables using scales or rating;;

x

Statistical significance and variance are irrelevant for answering the research question(s) under study;;

x

Probing of participant responses (not supported by a quantitative approach) is critical to generating rich description and understanding of the problem area;; and

x

Quantifying the relationship between variables or studying or measuring developmental changes is not the intention of this study.

One of the key benefits of qualitative research over quantitative is its flexibility. When a quantitative researcher conducts a survey/questionnaire, the researcher asks all participants the same questions in the same order. The responses are close-ended. While this helps the researcher to provide meaningful comparison of responses across participants, it requires the researcher to have a thorough understanding of the important questions to be asked, the best way to ask them and the response options to be provided (Burns 1989;; Kvale 1996). In a qualitative option, there is more flexibility as it allows greater adaptation of the interaction between the researcher and the participant. The open-ended questions are not worded in exactly the same way with each participant. With open-ended questions the participants are free to describe their experiences in their own words and their responses are more detailed than a simple ‘Yes’ or ‘No’ option. The researcher can probe with questions (Holloway 1997) immediately by listening to what the participants say and by asking them subsequent questions. Given the nature of the problem studied 71

in this research, this degree of flexibility is required to allow the participants to respond in their own words rather than requiring them to agree to fixed responses. As a result a quantitative approach is unsuitable for this research.

3.4

Selection of a qualitative approach

A qualitative approach that supports the exploration of the perceptions and attitudes of key vLISP stakeholders towards their CS/CH practices and the role of institutional forces in influencing the development/review/revision of the industry’s CS/CH practices is important for this study. This is because very little is known about the personal viewpoints of the central institutional actors and about which in-depth understanding is desired. Lincoln and Guba (1985) state that exploratory research is appropriate in the investigation of social phenomena where there are minimal a priori expectations in order to develop explanations of the phenomena. The qualitative approach provides new ways of looking at the topic. Although there is commentary from various sources about the poor performance of the vLISPs in relation to customer service, very little analysis of the problem area has been conducted. A qualitative approach enables a researcher to discover previously unnoticed possibilities and describe new relationships. It provides opportunities to: (i) understand and reveal relationships between the central institutional actors in order to make sense and meaning of the dynamics of the relationships and how they influence the CS/CH practices of the vLISP industry;; and (ii) describe new relationships that exist in the vLISP industry by focusing on the total experience of central institutional actors and not merely on parts of it. Table 3.2 below identifies the key features of the qualitative approach applicable to this research (Silverman 1993;; Gubrium 1993;; Shiner & Newburn 1997;; Bogdan & Biklen 2006;; Creswell 2007). There are many different approaches employed in qualitative studies depending on the nature of the inquiry (Creswell 2007). Qualitative approaches include phenomenology, grounded theory, ethnography, case study and narrative method. All these approaches acknowledge that the reality is based on individuals’ perceptions that vary from person to person and can change over time, that what we know has meaning only within a

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particular context and a single reality does not exist (Ashworth 1993;; Remshardt & Flowers 2007). Table 3.2 Qualitative research characteristics (Silverman 1993;; Mason 1996;; HesseBiber & Leavy 2006;; Creswell 2007) and their applicability for this study Characteristics

Applicability to this research

Researcher as the key instrument of data collection Data collected as words or pictures

Yes. All data collection was done by the researcher.

Outcomes as process rather than product

Yes. Research seeks to explore a topic and develop an understanding to provide rich descriptions/explanations. Yes. Inductive analysis of the data is carried out with attention paid to the context of participant responses.

Analysis of particulars

data

inductively,

attention

to

Focus on participants' perspectives, their meaning

Use of expressive language

Yes. The data is collected as words.

Yes. The research focuses on the perceptions/experiences of the participants and their meanings. Closer engagement with participants is required to ensure that their responses are interpreted correctly. Yes. The reporting of research and findings uses expressive language.

Persuasion of researcher by reason

Yes.

Scientific method approach – (inductive-bottomup) - Researcher generates new hypotheses and/or rich and detailed explanation from the data collected View of human behaviour – Behaviour is fluid, situational and personal

Yes. A rich and detailed explanation from the data is collected.

Research objective is description and exploration

This research is exploratory and descriptive in nature.

Data collected is qualitative in nature and includes in-depth interviews, open-ended questions

Yes.

Data analysis is a search for patterns, themes and holistic features

Yes. The data analysis involves searching for important statements and formation of themes.

Results present multiple particularistic findings

Yes. The research involves multiple perspectives from the research participants.

perspectives,

Final report will be a narrative report with contextual description and direct quotations from the research participants

Yes.

Yes. The research report uses contextual description and direct quotes from the research participants.

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Using the framework provided by Creswell (2007), a comparative study of various qualitative approaches (narrative, phenmomenology, grounded theory, ethnography and case study) was undertaken and the characteristics of each and their suitability for this research were reviewed. Narrative research explores stories of individuals and their lives and hence is unsuitable for understanding experiences about a particular phenomenon such as the CS/CH practices of the vLISP industry. According to Creswell (2007) ‘a phenomenological study describes the meaning of several individuals of their lived experiences of a concept or phenomenon … the basic purpose of phenomenology is to reduce individual experiences with a phenomenon to a description of the universal essence’ (Creswell 2007). A pure phenomenological study is oriented towards description rather than explanation and starts without preconceptions (Creswell 2007). Phenomenological methods are particularly effective at bringing to the fore the experiences of individuals from their own perspectives, and challenge structural or normative assumptions. In phenomenology, the object of study is to understand the essence of the phenomenon itself. The individual participants’ experience of the phenomenon provides meaning to it. A phenomenological research approach starts with the premise that there is no specific reality;; instead each person embraces his/her own reality (Boyd 2001). The aim here is to accurately describe human events and derive essential meanings. This is achieved by conducting in-depth interviews with the participants and engaging in extensive

dialogues

with

people

who

experienced

the

phenomenon.

The

phenomenological approach is not applicable to this study because this research does not strictly focus on customers’ lived experiences of CS/CH practices in vLISPs. Grounded theory aims to construct a theory when no theory exists to provide sufficient evidence to explain the research topic under investigation. Grounded theory uses an inductive methodology for the development of a conceptual theory that accounts for a pattern of behaviour which is relevant and problematic for the study subjects that are involved (Glaser 1992). Both formal theories and substantive theories can be developed using grounded theory approaches. The theory developed is grounded in data. There are several approaches to the development of grounded theory (Glaser 1992;; Strauss & Corbin 1998). Grounded theory is not suitable for this research because the intention is

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not to generate a theory. An existing neo-institutional theoretical framework will be used to analyse and examine the role of the institutional forces and their influence on the CS/CH practices of the vLISP industry. Ethnography is ‘a qualitative design in which the researcher describes and interprets the shared and learned patterns of values, behaviours, beliefs and language of a culture-sharing group’ (Creswell 2007). Ethnography has its origin in anthropological heritage while phenomenology branches from human science philosophy. The key difference between these two approaches depends on the nature of the ‘object’ studied. Ethnographic research focuses on description, analysis and interpretation of a cultural group. For example, the study of ethnic population to understand customs draws on those who live in that culture and understand its worldview. Ethnographic research typically uses observational techniques, interviews in natural settings, audio/video recording of both participants and non-participants that is used extensively to acquire data on real life settings (Cohen, Manion & Morrison 2000). Ethnography promotes a shift from data description to inference-making, explanation and suggestions of causation as well as generation of theories. Ethnography does not apply for practical purposes, as methods such as the observation of the top four vLISPs and stakeholder operations, interactions and processes is not possible in this study due to privacy, confidentiality and the difficulty in obtaining access to the four vLISPs’ premises. Case study approaches are also unsuitable for practical reasons. Multiple data sources are usually required for reliable case study research (Creswell 2007). Data collection methods such as observation, access to internal organizational documents and company records relating to the adoption and implementation of CS/CH practices are not possible. There are difficulties associated with obtaining permissions from commercial vLISP organizations, government authorities and other ISP industry stakeholder organizations due to issues concerning employee and employer privacy and confidentiality (Cohen et al. 2000) and competition. Historical research uses past data and facts to shed light on the past and help guide the present and future. This is achieved through written documents, including videos of those who witnessed events (Strauss & Corbin 1998;; Creswell 2007). This approach is

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also not suitable as the ISP industry is a new and emerging industry (beginning in the 1980’s) unlike longstanding industries such as manufacturing, museums or engineering. Sandelowski (2000) alerts qualitative researchers to exercise caution when selecting a certain approach. She states ‘the growth in qualitative … research has led to the introduction of a vast array of qualitative methodologies, resulting in … “methodological acrobatics”, meaning that researchers sometimes feel obliged to designate their work as phenomenology, grounded theory, ethnography or a narrative study when in fact it is not. This may result in “posturing” and does not make any methodological or theoretical contributions’ (Sandelowski 2000). Rather than forcing a methodology from the available approaches, which do not provide a perfect fit for this research, it was decided that a qualitative approach informed by ideas and techniques from thematic analysis and grounded theory would be appropriate. There are reasons for this. Thematic analysis was chosen because it supports the development of a thick description of the data set and discussion of similarities and differences across it (Braun et al. 2006). Such an approach has the potential to inform Internet industry policy development (Braun et al. 2006) because it assists with the understanding and illumination of issues (for example, institutional pressures in the vLISP industry) and enables the development of rich and elaborate description of a phenomenon from multiple vLISP industry stakeholder perspectives. The findings are to be grounded in data (that is, views of participants). By applying established coding processes used in grounded theory (discussed in detail in Sections 3.8 and 3.9), a systematic and transparent approach to categorization of data and generation of themes can be achieved. This in turn ensures the rigour and reliability of the findings of this research. For this research, one of the effects of a qualitative approach is that the experiences of individuals are not treated as objects that can be measured, numerically analyzed and provided with meanings. A humanistic approach through a qualitative mechanism will help the researcher approach close enough to the reality of experience and contribute towards a better understanding of the research topic investigated (Polkinghorne 1983;; Marshall & Rossman 1999). A sociological definition of experience describes it as something ‘that an individual can at a given time remember, organize and verbalise. Conscious experience includes inner feeling and thoughts as 76

well as overt behaviour of one’s self and others’ (Coxon 2007). In this research, I collected data from participants who influence CS/CH practices to develop a composite description of the experience of all individuals. The emphasis is on ‘what’ individuals experienced and ‘how’ they experienced it. According to Coxon (2007), personally felt experiences are events that fully encompass and have profound effects on the person. While conducting qualitative research that focuses on understanding individual experiences of people relative to the research topic, the relationship established with research participants is important. Maxwell (2005) highlights the unavoidable mutual influence of the research participants and the researcher on each other. This term is coined ‘reflexivity’. The relationship that exists with research participants can change and can also have profound effects on the researcher’s own state of mind, the quality of data collected, the research questions to be answered and the conclusions drawn. Maxwell highlighted that there are philosophical and ethical issues that decide the kind of relationship the researcher wants to establish with the participants. For example, when researchers use participatory action research, critical ethnography, or collaborative research, each of these modes of research involves different kind of relationship between the researcher and the participants and has implications for the research design. Systematic planning and self-reflection strategies were used during the research design and data collection process to be as coherent as possible to address reflexivity (Maxwell 2005).

3.5

Past studies that used qualitative approaches to understand institutional influences

In Chapter 2, I discussed the literature on neo-institutional theory, Organizational Field and institutionalization of practices within the Organizational Field. The core idea of neo-institutional theory (DiMaggio & Powell 1983) is that organizations (here, ISPs) operate in an institutional context where the organizational practices are influenced through social rules and that the social reality is defined by the institutional environment in which the organization operates. The social reality becomes the guideline for social behaviour and is created through norms, values and activities. The central institutional actors who influence CS/CH practices in the Australian vLISP industry were also discussed in Chapter 2. Interviewing such central institutional actors to understand their perspectives helps in understanding ISP organizational actions embedded in the 77

institutional context. Past institutional theory studies (for example, Lawrence, Hardy & Phillips 2002;; Aldrich & Cliff 2003;; Welter & Smallbone 2008;; Williams, Lueg, Taylor and Cook 2009;; Ahl & Nelson 2010;; Nurdin, Stockdale & Scheepers 2012) have used qualitative approaches to study the institutional effects of external pressures and their role in influencing organizational practices. Some examples of studies that employed neo-institutional theory as a theoretical framework and used qualitative approaches to investigate and explore the actors’ perspectives are discussed in Table 3.3. Suddaby (2010) discusses the methodological challenges for organizational research that uses institutional theory. He argues that largely quantitative organizational research tends to rely on simply counting an outcome of an institutional process and fails to investigate questions central to institutional theory such as the reasons and motivation for the development or adoption of a new practice. Suddaby encourages institutional theory studies to: (i) go beyond simply counting the outcomes of institutional processes and take an interest in individual actor perspectives;; and (ii) pay attention to the subjective ways in which actors experience institutions. According to Suddaby (2010), a methodological shift from positivism to interpretivism will assist in the construction of an ‘institutional story’ which has the potential to reveal interesting findings more than just the quantification of the outcomes of the institutional processes. The Constructivist/Interpretive research paradigm using the qualitative approach adopted in this study is entirely consistent with this recommendation.

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Table 3.3 Some international institutional theory studies using qualitative research Reference Lawrence, Hardy and Phillips (2002)

Study context (All studies used institutional theory as their theoretical framework) Studied the institutional effects of inter-organizational collaboration and the emergence of proto-institutions and their new practices, rules and technologies that transcend a particular collaborative relationship. Four-year study conducted in a small nongovernmental organization in Palestine.

Methodology /Method

Relevance to my research

Qualitative multi-case, comparative research design. Participants were from different organizational units in the same organization. The unit of analysis was collaboration rather than the organization. Qualitative research using case study. Participants were senior executives of ISec industry in the USA.

Studied the micro and macro effects of collaboration using an institutional theory framework.

Hu, Hart and Cooke (2006)

Studied the role of external influences on organizational information security (ISec) practices in the USA. Focused on how institutional forces shaped and motivated managers and employees at different levels and different ways.

Truscott (2007)

Used a neo-institutional approach to explore the corporate social responsibility (CSR) industries, current state of institutionalization through investigation of CSR practices, products and services, sources of institutional pressures and the strategic responses to these pressures. Used neo-institutional theory approach to exploring the drivers of supply chain security (SCS) practices in the USA.

Qualitative research using case studies. Participants were key actors from the Australian CSR industry.

Studied the influence of external institutional pressures and local egovernment adoption and implementation within an Indonesian local e-government context.

Interpretive case study approach to understand the external pressures. Participants were management and technical employees from an Indonesian local government organization.

Williams, Lueg, Taylor and Cook, (2009)

Nurdin, Stockdale and Scheepers (2012)

3.5.1

Qualitative research using in-depth interviews with the supply chain management professionals.

Study of institutional effects of collaboration and the emergence of Proto-Institutions. Investigated the role of institutional forces and the institutionalization of organizational behaviour in relation to organizational ISec practices. Study of institutional pressures and their role in influencing the industry/ organizational practices. Investigated sources of institutional pressures shaping CSR and the strategic responses to these pressures in relation to CSR practices. Study of institutional pressures and their influences on the industry/organizational practices. Investigated primary drivers, pressures (government, customers, competitors and society) of SCS practices. Study of institutional pressures and their influences on the industry/organizational practices. Investigated the role of institutional pressures and their influence on the e-government adoption and implementation to improve government administration and services performance. Study of institutional pressures and their influences on the organizational practices.

The use of existing theory

Maxwell (2005) outlines the advantages and disadvantages of using existing theory in qualitative research. The advantages are: x

it supports the organization of data;; 79

x

it assists with determining connections and relevance of information pieces with each other;;

x

it assists with illuminating what the researcher is seeing in the data;; and

x

it draws attention to particular events or phenomena and sheds light on relationships that might otherwise be ignored or misunderstood.

The disadvantages (Becker 1986;; Maxwell 2005) are: x

assumptions embedded in the existing theory can deform the framing of the research;; and

x

can make the researcher overlook important ways of conceptualizing the study or interpreting the implications of the research results.

Becker (1986) suggests that the researchers identify the ideological components of the established approach and test their research when the assumptions embedded in the existing theory are abandoned. To address this issue, I routinely inspected the data analysis and interpretation of results, and discussion of findings for all possible meanings and interpretations both with and without the assumptions of neoinstitutional theory. This approach ensured that my interpretations of the findings and major implications of the results discussed in the thesis are informed by neoinstitutional theory rather than driven by concepts and assumptions embedded in it.

3.6

Data collection method

This research used semi-structured interviews. This kind of interview provides several opportunities for both the interviewer and the interviewee to have detailed discussions on the research topic. It allows the interviewer to probe if the interviewee provides only a brief response to the questions. This will assist in obtaining further explanation and clarification of interviewees’ responses thereby adding significance and depth to the data obtained (Warren 2002;; Rapley 2004;; Rubin & Rubin 2005). Semi-structured interviews are appropriate for collection of information such as participant’s attitudes, perceptions and reflections on their experiences (Boyd 2001;; Groenewald 2003;; Creswell 2007;; Flick 2008). It provides interviewees with an opportunity to think aloud about the matters that they may not have previously thought about or considered (Hermanns 2004). These interviews are a favoured method of data collection in qualitative research (Marton & 80

Booth 1997;; Kvale & Brinkmann 2009). Overall, the flexibility offered by the semistructured interview as a data collection method enables collection of a rich and detailed set of data (Robson 1993). In relation to the development of the interview questions, Patton (2002) states ‘your interview questions should be judged not by whether they can be logically derived from your research question, but by whether they provide the data that will contribute to answering these questions’ (Patton 2002). This highlights the need for researchers, as best as they can, to anticipate how the interview questions will work in practice (Berg 1998). When interview questions were developed I ensured that they were related to the research topic of interest in a broad sense and open-ended (so other questions can emerge based on the interviewee’s responses). The questions were fine-tuned depending on the stakeholder being interviewed. Discussion with the supervisory panel resulted in amendments to the wordings of some questions to remove implied bias. Any duplication or repetitions or leading questions were removed. The final interview question set for the top four vLISPs and other ISP industry stakeholders is provided in APPENDIX C. These questions were submitted to the UWS Human Ethics Committee and were approved (APPENDIX D). An interview guide that included the list of questions to be explored and probes for following up key issues was developed prior to each interview (Burgess 1984;; Seidman 1991;; Denzin & Lincoln 2000;; Gubrium & Holstein 2002). Interview as a data collection method has some disadvantages. Conducting interviews can be expensive and time-consuming. It also requires experienced interviewers who are able to manage the interview process efficiently. Another challenge is to ensure that the participants do not distort information or provide selective perceptions to please the interviewer (Denzin & Lincoln 2000). Variations in the interview setting can also influence the interviewer’s ability to control the interview environment. This includes disruptions and other issues that inhibit the data collection process. For example, selecting a location that makes it easy to hear respondents speak is essential (Mouton & Marais 1990;; Frith & Kitzinger 1998;; Robson 2002). Other factors to consider are: (i) location that is easily accessible for respondents;; (ii) selection a non-threatening environment;; (iii) seating arrangements that promote involvement and interaction;; and (iv) stopping visitor interruptions to respondents who are interviewed in their offices.

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The participants for the interview were selected using specific selection criteria discussed in Section 3.7.1. Informed consent was obtained from all participants agreeing to their participation in this research. The consent form was signed by all participants before the interview. The interview data was recorded on a voice recorder with the permission/consent of the participant. All participants were assured that their responses would be treated as private and confidential. The interviewer carefully listened to the recorded data and wrote a verbatim account of everything said. Following this, transcription occurred (that is, the word-for-word quotation of the participant’s and interviewer’s conversation). 3.6.1

Strategies used in this research to address weaknesses in the interview design and implementation

Yin (1994) highlights some of the key weaknesses of interviews, including question bias, response bias, poor recall inaccuracies and reflexivity. Question bias in interviews occurs because of poorly constructed questions. This can be avoided if the researcher comes up with a well-thought through and tested set of interview questions. I developed the interview questions used in this study using various checks and methods to ensure that any potential weaknesses were controlled or avoided. The process included feedback from supervisors, a literature review of academic research papers on interview design and implementation and attendance at data collection research workshops. All of these processes assisted with the development and subsequent revisions to the interview questions. Particular importance was paid to ensure that the interview questions were focused yet open-ended to the extent that I was enabled to probe or seek clarification of matters based on an interviewee’s responses. To address response bias in the interview data, this study used the following strategies: (i) the interviewers only knew general research information and not the research questions;; (ii) the senior executives interviewed in this study have many years of experience participating in interviews and are very good communicators (a requirement of their positions);; (iii) the interviewer was cautious to avoid leading questions and sensitive/confidential questions that might put pressure on the interviewee;; (iv) the interviewer was conscious of maintaining a neutral tone and non verbal behaviour during the interview;; (v) the interviewer did not impose his own beliefs or knowledge about topics during interview questioning;; (vi) the study interviewed only people who

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can provide the right perspectives required for this research;; and (vii) the interviewer developed good relationships with the participants by providing all relevant information prior to the interview and explaining the expectations around interview process clearly. To address the issue of poor recall, an information letter was sent to all participants. The information letter included details about the anticipated activities during the interview, its purpose, the topic focused on in the interview, the issues of interest and what the participation will involve. All participants were encouraged to clarify any questions they might have about the interview process in order to allow them to make an informed decision. The day before the interview, a reminder was sent to all participants with a consent form (attached to the email) that participants were required to sign before the interview. Providing all relevant information about interviews well in advance helped in addressing the risk of poor recall. Reflexivity refers to conscious assessment of the influence of a researcher’s own background, experience, preconceptions and perceptions on the interviewing process (Krefting 1991). I was conscious of my IT background and special interest in the Internet industry from the start of this study. Conscious attempts to avoid leading questions or indicating approval or disapproval (for example, using an interview guide) during interviews were made. Debriefing notes at the conclusion of each interview formed part of a reflective journal. This assisted in continuous reflection and assessment about my thoughts, feelings and ideas about how the interview went. Overall, the methodological map used in this research is shown in Figure 3.1. Data analysis using thematic analysis is discussed in Section 3.8.

Level 1 (Nature of research)

Exploratory

Level 2 (Research approach)

Qualitative

Level 3 (Research tradition)

Thematic analysis

Level 4 (Research Methods)

Semi-structured Interviews

Figure 3.1 Research Design - Methodological Map

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3.7

Research procedures

This Section describes the participant selection and recruitment procedures, sampling techniques and justification for the sample size and interview data collection procedures. Justification for the focus on the top four vLISPs was provided in Chapter 2. Table 3.4 presents a further justification for selection of top four ISPs over other ISPs based on market and service characteristics. Table 3.4 Comparison of top four ISPs versus other ISPs based on market and service characteristics (ABC 2009;; ACMA 2012;; ACCAN 2012;; TIO 2012;; Communications Alliance 2013;; ACMA Communications Report 2014;; iiNet 2015) ISP Market/Service Characteristics 1. Subscriber numbers for Internet services

2.

3.

4.

5.

Visibility in the marketplace and explicit CS/CH performance scrutiny Exposure to pressures from external stakeholders in relation to improvement of CS/CH practices

Participation and engagement in the TCP Code development and revision Working relationship with external stakeholders

Top four ISPs included in the study They are major national ISPs and service customers throughout Australia. They have been in the market for many decades and are major players in influencing policy decisions. Collectively top four ISPs service at least 80 per cent of residential Internet subscriber base thus servicing a significant proportion of the market. They have high visibility in the marketplace given their huge subscriber base. They are members of various policy formulation committees. Their CS performance is constantly reviewed by the Government Department of Communications, and regulatory bodies given their huge subscriber base. They are members of TCP Code review steering and working groups. They are heavily involved in TCP Code development, review and revision. They have close working relationships with external stakeholders such as the industry ombudsman, regulatory bodies, the consumer association, industry association and the Government Department of Communications. They have an obligation under the Telecommunications Act 1997 to work collaboratively with external

Other ISPs not included in the study Collectively, the other ISPs service remaining 20 per cent (approx.) of the residential Internet customer market. There are hundreds of small providers in the market and their share of subscriber base is relatively small. They have low visibility in the market place as they service niche markets and are not necessarily national ISPs. These ISPs do not have close working relationships with external stakeholders such as the regulator and the Government Department of Communications. They service niche markets and do not have a huge subscriber base. They are not members of TCP Code review working committees. No active involvement. There is no evidence of close working relationships with external stakeholders.

They are able to provide response to telecommunications broadband

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ISP Market/Service Characteristics

Top four ISPs included in the study stakeholders and develop telecommunications broadband and consumer protection policy.

6.

Organizational approach to TCP Code implementation

They have a dedicated department (Department of Regulatory Affairs) and senior executives within their organization to develop systems and processes to demonstrate compliance with the TCP Code and to liaise with external stakeholders. They engage with the Government Department of Communications and regulatory bodies on a daily basis to discuss consumer issues.

7.

Engagement with Government Department of Communications and regulatory bodies

8.

Network infrastructure ownership and resources

They own their network infrastructure. Given that they are affected by technological advances they have the capital and resources to roll out new technologies and attract customers.

9.

Membership with Industry association

They are members of industry association with some occupying influential positions in the industry association boards.

10. Participation in Telecommunication industry conferences and consumer forums 11. Mergers and acquisitions to increase subscriber numbers

They are heavily involved in CS/CH discourses at industry conferences, consumer forums and sponsor some of these events. They have acquired a number of small ISPs and medium size ISPs in the past thereby increasing their subscriber base.

12. Large scale call centre management and staffing

They have call centres in major Australian cities and overseas. They employ hundreds of call centres staff to deal with CS issues.

3.7.1

Other ISPs not included in the study and consumer protection policy, however, are not influential in matters regarding the decision making processes. Not all ISPs have dedicated department and senior executives to oversee TCP Code implementation and compliance.

Their engagement with the Government Department of Communications and regulatory bodies is more on an ad hoc basis to discuss pertinent issues. Majority are resellers of services offered by major players. They enter into peering arrangements with big players to route their customer traffic. They do not have the capital and resources comparable with the top four to roll out new technologies and attract customers. Not all ISPs are members of industry association. Those that are members have minimal influence and input into policy decisions. Not all ISPs participate in CS/CH discourses at industry conferences and consumer forums. They are unable to compete with major players in mergers and acquisitions as they lack the capital, marketing and resources to do so. They have call centres in selected locations within Australia to provide support service to their customers.

Selection and exclusion criteria for participants

Chapter 2 discussed the ISP industry stakeholders: the top four vLISPs, Australian Government authorities (the regulator and the government department for broadband), the ISP industry association, the industry ombudsman and the consumer association.

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Selection criteria for the vLISP participants: x

All participants were to be currently employed with one of the top four vLISPs of interest to this study;;

x

Since this research is interested in understanding external stakeholder pressures experienced by vLISP organizations, participants within vLISP organizations should have a minimum of three years’ experience in areas involving customer service, complaints handling and regulatory affairs within the Australian telecommunications industry;;

x

They were to be the main point of contact in relation to regulatory affairs and compliance in their organization and closely interact with the external agencies such as the regulator, the industry ombudsman, the government department for broadband and the consumer association;; and

x

They are members of the TCP Code review working/steering committees (either through internal or external committees) and have played a role in the consultation process for development/review/revision of the TCP Code 2012.

Exclusion criteria: Senior management executives who did not have direct and active engagement with regulatory affairs and compliance matters were excluded from this study because they are unable to provide the perspective it required. Participants who only have technical background but no experience in customer service, complaints handling, contracts and customer advice within the vLISP organizations were excluded from this study as it was interested only in functional service quality practices and not on technical service quality. Selection criteria for Consumer Association participant Only one peak consumer association for the telecommunications industry was involved in this study. The consumer advocate participant should have a minimum three years’ experience in dealing with customer service and complaints handling issues and be an active member of the TCP Code review working/steering committees. They should be either a senior management executive or the main point of contact between their organization and other agencies such as the regulator, government authorities, the top four vLISPs, the ISP industry association and the telecommunication industry ombudsman.

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Selection criteria for the Telecommunication Industry Ombudsman participant This participant should have a minimum of three years’ experience dealing with customer service and complaints issues and should be the point of contact between their organization and other agencies such as the regulator, the consumer association, government authorities, the top four vLISPs and the ISP industry association. He or she should also be an active member of the TCP Code review working/steering committees. ISP industry Association participant The ISP industry association representative should have a minimum of three years’ experience in customer service and complaints handling related areas and should be the main point of contact between their organization and other agencies such as the consumer association, the top four vLISPs, the government department for broadband and the telecommunications industry ombudsman. He or she should have been an active member (preferably a leader) in the TCP Code development and revision process. Exclusion: Other Internet industry associations that were not involved in the development of the TCP Code and/or revision of the TCP Code for CS/CH practices of the vLISP industry were excluded because they are unable to provide the perspective required for this study. ISP industry consultant participant One of the key consultants to the vLISPs, the regulator and the ISP industry association was selected to be a participant for this study. This consultant [P2] was chosen because of his involvement in consumer protection policy development and his extensive experience in providing regulatory management services to the ISP industry in Australia. Further, his past experience as a regulatory manager for one of the top vLISPs would also add an historical perspective to this study. Regulator and the government department for broadband participant This representative should have a minimum of three years’ experience in dealing with customer service and complaints handling issues and should be the main point of contact between their organization and other agencies such as the consumer association, the top four vLISPs, the ISP industry association and the telecommunications industry 87

ombudsman. They should have been active member in the regulatory inquiry into CS/CH practices, members of the code review working/steering committees and have good knowledge of regulatory interventions of vLISP industry practices. Three years of experience at the participating organization was selected for the following reasons: (i) TCP code development consultation and review processes occurred in the three years preceding the time of interview (ii) engagement of industry stakeholders to discuss new and emerging CS/CH issues at industry forums, code review working committees and conferences occurred during the period 2008-2011;; and (ii) a minimum of three years experience within the chosen organization meant that the participants had sufficient exposure and knowledge about CS/CH issues and TCP code implementation within their organizations. Further, they would have had many opportunities during the three year period to adequately represent their organizations’ position and perspectives on CS/CH practices to other industry stakeholders. Finally, all participants must be able to participate in the study (attend a face-to-face interview) and provide informed consent. 3.7.2

Recruitment procedures

The potential participants and their email addresses were obtained through a combination of networking (for example, attendance at telecommunications industry consumer association annual conferences and Internet forums) and industry references (for example, industry contacts I had developed prior to the research were asked for their suggestions on who I could approach for participation in my study). Further, secondary sources such as the complaint analysis reports, CS/CH research reports published by the government agencies, the industry ombudsman, the ISP industry association and the regulator also assisted in finalizing the list of potential participants most suitable for this study. Once the participants and their email addresses were gathered, initial contact occurred in the form of a direct email invitation to participate in this study. An information letter stating the objectives of the study and the interview procedures was also attached to that email. Ten of the eleven participants targeted accepted the invitation to be interviewed.

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Further emails either with the participant or with their secretaries were sent to schedule and confirm appointment times and locations for the interviews. There was no response from one of the vLISP executives on both first and second attempt via email. A phone number for the organization was obtained from their website and a follow up phone call enquiring about the executive’s availability for participation in the research was made after three months. Another participant from the same organization was suggested by the regulatory team leader as the appropriate person to provide the perspective required for this study and his email address was provided. A direct email invitation was sent to that participant who accepted the invitation for the interview without any further delay. I collected the data as a sole researcher using semi-structured interviews. A convenient location, date and time for the interview were scheduled in consultation with the participant or their secretaries. The interview duration varied between fifty and eighty minutes. The participants were provided with the option to access the interview transcript if they wished to do so. An offer was also made to the participants if they wanted to receive a copy of the research findings.

3.7.3

Sampling techniques and size for this study

The study’s research objective and the characteristics of the study population were used to determine which sample (participant) to select. Purposive sampling was used to identify the participants based on purpose of this research (Groenewald 2003). The study used purposive sampling instead of probabilistic sampling (being statistical approaches) for ‘selecting information-rich cases for study in depth’ (Patton 2002). Maxwell (2005) highlights some important uses of purposeful sampling: ‘Purposeful sampling can be used to achieve representativeness or typicality of settings, individuals, or activities selected … [and] to capture adequately the heterogeneity in the population. The goal here is to ensure that the conclusions adequately represent the entire range of variation rather than only the typical members or some subset of this range … Finally, purposeful sampling can be used to establish particular comparisons to illuminate the reasons for differences between settings or individuals’ (Maxwell 2005). As the research informants required for this study come from a 89

heterogeneous group of ISP stakeholders (the regulator, the top four vLISPs, the consumer association, the industry ombudsman, the ISP industry association and government agencies) and the goal was to maximise variation of participant perspectives in relation to the CS/CH practices of the industry, purposive sampling was best suited. The other reason for choosing purposive sampling was because it allows for data review and analysis in conjunction with its collection. Further, snowball sampling was useful as the participant with whom contact was already established referred the researcher to other people who would be able to provide right perspectives required for this study. This sampling was used to find and recruit ‘hidden populations’, the groups that are not accessible to the researcher (Patton 2002). Sample size also plays an important role in validating qualitative research findings. Mason (1996) states: ‘Qualitative samples must be large enough to assure that most or all of the perceptions that might be important are uncovered but at the same time if the sample is too large data becomes repetitive and, eventually, superfluous. If a researcher remains faithful to the principles of qualitative research, sample size in the majority of qualitative studies should generally follow the concept of saturation.’ The qualitative approach takes the view that more data does not necessarily lead to more information and as a result usually has a smaller sample size compared to quantitative studies (Mason 1996). Frequencies, which relate to the number of times a piece of data occurs, are rarely important in qualitative approaches. The emphasis is on meaning and not on generalised hypothesis statements. Further, in qualitative research small studies with ‘modest claims’ might achieve saturation more quickly than studies that span across many disciplines (Morse 2000;; Mason 2010). Ritchie (2003) highlights factors that affect the size of sample in qualitative research. They are: (i) heterogeneity of population;; (ii) selection criteria;; (iii) extent of ‘nesting’ of criteria needed;; (iv) special interest groups that require in-depth intensive study;; (v) type of data collection methods used;; (vi) cost and resources available;; (vii) scope of the study;; (viii) nature of the research topic;; and (ix) research study design. All these factors were given consideration during the sample selection process. In this research, rather than focusing on the number of participants needed, the focus was placed on recruiting those

participants

who

were

able

to

provide

an

account

of

their

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perspectives/experiences in relation to the institutional forces that influenced CS/CH practices within the vLISP industry. Table 3.5 provides the justification for the sample and the sample size selection. While the concept of saturation is a convincing concept, one of its practical weaknesses lies in the fact that researchers do not always have the luxury of continuing the sort of open-ended research that saturation requires. Based on guiding principles in qualitative research (by Strauss & Corbin 1998) I was able to consider questions such as how many interviews are enough and when to stop collecting data. As a result, the focus on sample sizes that can help me defend my work took a lesser role in comparison to the focus on when I believed my work would actually be complete. This might mean a smaller sample size, but with detailed in-depth interviews with key participants identified in the study, keeping saturation as the guiding principle in qualitative data collection. As a result this research uses a sample size of ten qualitative interviews with eleven participants from ten ISP industry stakeholder organizations. One organization had two participants as they were jointly responsible for the regulatory affairs in that vLISP. Further, Strauss and Corbin (1998) suggest that the concept of saturation has practical challenges such as time, energy and availability of participants. They state that ‘sometimes the researchers have no choice and must settle for a theoretical scheme that is less developed than desired’ (Strauss & Corbin 1998). Best efforts were made to interview all relevant participants for this study and the number of interviews was sufficient because there was a strong indication of repetition of themes, and closer to saturation of variations in perspectives (Mason 1996;; Creswell 2007).

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Table 3.5 Factors affecting the sample size (Ritchie 2003) Factors

Explanation in the study context

Heterogeneity of population

The target population for this study comprises senior regulatory and compliance affairs executives of the top four vLISPs, senior executives from the industry ombudsman, the government department for broadband, the consumer association, the regulator and the ISP industry association. An experienced industry consultant who provides regulatory advice to vLISPs was also included in the study. All these participants provided a variety of perspectives on the subject that enriched the discussion of the findings and emergence of the key themes – assuring the strength of this research (Patton 2002). Purposive sampling was used for selection as it is useful when working with very small samples (Saunders, Lewis & Thornhill 2003) and only people meeting the selection criteria can provide the required perspective for this research. For example, all participants needed to have taken an active role in the TCP Code development and revision process through participation or membership in internal or external code review working/steering committees. This is again important to understand the institutional responses and effects of such new practices both within the organization and across the industry It also limited the pool for sample selection. The study focus was on the CS/CH practices of the vLISP industry and the role of institutional actors in shaping the industry practices. Only actors relevant for functional service quality were targeted as those with expertise in technical service quality were not able to provide the perspective required for this study. It also limited the pool for sample selection. There was a requirement for face-to-face interview with all the potential participants. Completion of questionnaires or other methods of data collection such as observation were inappropriate. Travel costs to Australian Capital Territory, New South Wales, Victoria and Western Australia for data collection.

Selection criteria

Extent of ‘nesting’ of criteria needed

Special interest groups that require in-depth intensive study

Type of data collection methods used Cost and resources available Scope of the study Nature of research topic Research study design

3.7.4

The research question is: How do institutional forces influence the customer service and complaints handling practices of very large Internet Service Providers in Australia? Importance attached to the subjective ways in which actors experience institutions. So it is important to seek these perspectives from institutional actors in the vLISP industry. An interpretive approach used to develop themes. Discussion that will assist in the construction of an ‘institutional story’ was key and only participants who are in certain positions within the chosen ISP stakeholder organizations can provide the perspectives sought by this research.

Profile of the participants

The profile of organizations interviewed for this study is in Table 3.6. Eight male and three female executives participated in this study. The profile of individual interview participants and description of their position within their organization is in Table 3.7.

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Table 3.6 Profile of organizations interviewed in the study Organization Telecommunication industry consumer association [O1] Telecommunication industry consultancy [O2] ISP Industry association [O3]

Telecommunication industry regulator [O4] Telecommunications industry ombudsman [O5] very Large ISP 1 [O6]

Description [O1] is the peak consumer organization that represents consumers in the communications policy arena and works towards getting affordable, available and accessible communications for all Australians irrespective of their place of work or living. They focus more on residential consumers but they also represent small business consumers. [O2] provides regulatory management services to the Internet Service Provider (ISP) Industry. Provided assistance to regulator by contributing to their commissioned report on RTC – Reconnecting the Customer inquiry. Has assisted consumer organization [O1] and [O7] in their research. Helped industry association [O3] in Telecommunications Consumer Protection (TCP) compliance training program. Covered the whole breadth of industry on all sides for the TCP Code development. The objectives of this organization fall into a number of categories. First, they have responsibility to undertake the self-incurred regulatory functions prescribed in the Telecommunications Act 1997. This involves creating, revising, maintaining the various codes, standards and guidelines under which the telecommunication sector operates. These are both technical and consumer related documents. Second, they provide a collaborative environment in which ISPs can work together on common issues of industry interest and formulate and create sensible solutions to regulatory and/or technical problems or challenges. Third, they are heavily involved in the creation of the national broadband network (NBN). They have operated eight working groups comprising more than 200 expert individuals from the industry who together have created much of the original planning and design work for the NBN. They provided free consultancy to because the industry is interested in making sure the NBN network operates not just as a successful access infrastructure, but also as a service delivery system. They are involved in advocacy on behalf of the industry, both in the public arena and in the political sphere. They undertake significant work on consumer policy development and on representing the industry's views in response to government inquiries, consultation papers and legislative processes. This organization is the key regulator for telecommunications industry including acting as a regulator for broadcasting, radio communication and telecommunications. They play a key role in areas of co-regulation which is related to the TCP Code and code compliance. They are responsible for the TCP Code enforcement and monitoring. This organization is an independent dispute resolution scheme manager. Its focus is to act as a consumer protection mechanism. Where consumers are not able to resolve their complaints directly with their ISP, they have the right to approach this organization as an independent umpire for advice and assessment of their complaint(s). This very large national ISP arrived on the scene when the industry was first de-regulated in 1997 and open to competition. It was one of the first to get a licence to compete with the top two very large ISPs ([O7] and [O9] in this study). Initially they were resellers of primarily a services, then also long distance telephony using the network where they would re-route the voice services onto their own network and turn it on again at the network at the other end. They developed their own broadband network over early 2000 and installed equipment in exchanges and were able to provide their own broadband services as well as voice services. They are an American owned company and a part of a global group with operations formerly in Europe, South America, Canada and the USA. They provide multiple telecommunication services in Australia.

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Organization very Large ISP 2 [O7]

very Large ISP 3 [O8]

very Large ISP 4 [O9]

Australian Government department for broadband [O10]

Description They are a national ISP and also a large carrier. That reflects the history and involvement in the industry for many, many years. This ISP is a full service provider in the Australian market. It provides a full range of services to consumers - fixed, wireless and value-added services. Through their history and status as the universal service provider, they are required to deliver all of those services to every consumer in Australia. So they have not only a full suite of services but also a full geographical delivery of those services. They have a presence in every geographical area in Australia, which is another important distinction between other suppliers who, in a competitive market, are able to choose where they physically supply services. This is a national company based in Western Australia providing services such as mobile voice, mobile broadband, fixed voice and fixed broadband. They commenced operations in 1993. It was a private organization to start with but listed around about 2000. The growth of the company came from very aggressive consolidation of two other ISPs. They rolled out their own infrastructure in such a way to provide much higher speeds or higher bandwidths to customers than other very large ISPs and introduced things like Naked DSL and Voice Over Internet Protocol (VOIP). They have received numerous customer service excellence awards and have a high reputation for customer service in the industry. This very large national ISP commenced operations in 1992. It has its own fixed, mobile and satellite networks. This ISP provides a range of communications services including mobile, national and long distance services, Internet services, telephony services and Internet television. They are the second largest provider of telecommunications services in Australia. This is the government agency responsible for communications portfolio. It's responsible for the Telecommunications Act 1997 which primarily regulates ISPs and carriage service providers (CSPs). It also regulates content and broadcasting. Further, it regulates the way in which various industry practices and standards occur. It has a renewed focus in looking at digital economy issues and is committed to building the NBN. It is primarily a policy department which sets the policy directions and relies on the regulator and the co-regulatory arrangements with the industry to regulate the day to day operations of ISPs.

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Table 3.7 Profile of participants interviewed in the study Organization Type [O] Consumer Association [O1] Industry Consultant [O2] ISP Industry Association [O3] Telecommunications Industry Regulator [O4] Telecommunications Industry Ombudsman [O5] very Large ISP1 [O6] very Large ISP2 [O7]

very Large ISP3 [O8] very Large ISP4 [O9] Australian Government department for Broadband [O10]

Participant’s role in the organization [P] Senior executive officer of the peak consumer association relevant for ISPs. Has decades of experience on consumer issues in the Internet industry [P1]. Principal of an ISP industry consulting firm with 30 years’ experience in the telecommunications industry and has worked for vLISPs in the regulatory affairs area in the past. Provides consultancy services to very large ISPs and the ISP industry association [P2]. Senior executive officer of the ISP industry association responsible for code development and engagement with industry members. Represents the views of industry members to stakeholders such as the consumer association, the regulator and the industry ombudsman. Has been heavily involved in all industry related policy activities [P3]. Senior executive staff in the regulator assisting and facilitating the development of codes, registration of codes, compliance monitoring and enforcement of codes [P4]. Senior executive staff involved in planning and stakeholder management. Oversees several functional teams at the industry ombudsman. They include policy, membership (which has responsibility for dealing with inquiries from members and giving them advice) and also general communications or public affairs. Has been with ombudsman for nine years [P5] General counsel executive who heads up the legal and also the regulatory functions of this vLISP. Another team member who is involved in a number of regulatory tasks, responds to code review submissions, participates in code review and implementing compliance also participated. [P6 is used to indicate both participants]. Senior executive who manages the consumer and compliance in the regulatory affairs team of this vLISP. Has been in that role for many years and is responsible for internal regulatory compliance program within his organization. Worked in this organization in excess of 30 years. Has extensive experience in the regulatory space but also within the industry and is currently the chairman of the industry association’s consumer issues reference panel. The senior executive is the nominated representative of [O7] on the Telecommunications Industry Ombudsman Council and was formerly one of the [O7] nominated directors on the ombudsman board [P7]. Regulator executive of a very large ISP based in Western Australia. Deals with the regulatory and compliance issues for this organization. Overall, has close to forty years’ experience in the telecommunications industry [P8]. Customer knowledge manager of a very large ISP based in Victoria. Has extensive experience in dealing with customer service issues and oversees call centre operations of this organization [P9]. Senior government executive from Government department for broadband who manages the consumer engagement section which is involved in a number of consumer policy issues. Has decades of experience in consumer affairs [P10].

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3.7.5

Interview implementation details

During the participant recruitment and selection process a detailed information letter was provided to all participants (Appendix B) concerning the study, the interview procedures and the contact details of the researcher and supervisors. The participants were informed that there is a requirement for them to sign the consent form (Appendix A) before the commencement of the interview. They were advised that interview will be audio-recorded and that their responses will be kept private and confidential. Participants were also informed that they are able to withdraw their participation at any time without giving a reason and without any consequences. They were informed that research papers for publication will not identify individual participants;; instead, a collective reference to a particular group and their experiences will be presented in a non-identifiable format. Participants were offered a copy of the research findings if they elected to receive it at the conclusion of the study. The contact details for the UWS Ethics Office were provided to the participants in the event they had any concerns about any aspects of their participation in this research. No participants withdrew from the study or lodged complaints against the study. The interviews with the ten ISP stakeholder organizations purposively chosen for the study were conducted between November 2011 and November 2012. Since the participants were senior executives in their organization in very responsible positions with busy schedules their availability for interview was negotiated either through direct email or through their office secretaries. An interview day and time that was proposed by the participant was accepted. All interviews were conducted at the participants’ business premises to avoid any inconvenience to them. I travelled to the participants’ offices (in New South Wales, the Australian Capital Territory, Victoria and Western Australia) to conduct the interviews. Since the organizations were large businesses or government organizations their boardrooms or small meeting rooms were booked in advance and used for the purposes of this interview.

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3.8

Data analysis

Qualitative researchers treat data analysis as a part of research design as opposed to conceptually separating it from the design, supporting the basic principle of qualitative research, namely, to conduct data analysis simultaneously with data collection. As a result, the researcher can progressively focus on interviews and decide how to test the conclusion (Coffey & Atkinson 1996;; Maxwell 2005;; Creswell 2007). Table 3.8 below provides a summary of various data analysis methods used in qualitative research. Table 3.8 Data analysis methods used in qualitative research (Strauss & Corbin 1998;; Patton 2002;; Creswell 2007;; Ratcliff 2008) Data analysis method Analytical Induction (Katz 1983)

Content Analysis (Weber 1990) Constant Comparison analysis (Strauss & Corbin 1998) Domain Analysis (Spradley 1980) Discourse Analysis (Gee 1992) Event Analysis/Microanalysis (Erickson 1992) Hermeneutical Analysis (Van Manen 1990) Logical Analysis/Matrix Analysis (Miles & Hubermann 1994) Metaphorical Analysis (Smith 1981) Narrative Analysis (Riessman 1993) Phenomenology/Heuristic Analysis (Creswell 2007) Quasi-statistics (Maxwell 2005) Semiotics (Manning 1987) Typology (Patton, 1990) Taxonomy (Spradley 1980) Thematic Analysis (Braun & Clarke 2006)

Description of the method (Ratcliff 2008) Look at an event and develop a hypothetical statement of what happened and then compare it to another similar event to see if it fits with the hypothesis. If it doesn’t fit, the hypothesis is revised. A hypothesis is finally developed that takes into account all cases. Analysis of documents, text and speech to identify themes that emerge. Used in grounded theory approach where the researcher looks for indicators of categories in events and behaviour. The codes are compared to find consistencies and differences. This analysis involves describing a social situation and cultural patterns within it. The emphasis is on the meanings of the social situation to the participants. In this analysis, several peoples’ discussion is analyzed and the researcher finds patterns of questions, who dominates the time and patterns of interaction. The emphasis is on finding precise beginnings and ending of events. In this analysis the researcher is not looking for the objective meaning of a text, but instead looks for meaning of text for people in the situation. This analysis involves an outline of generalized causation process using flow charts and diagrams. Using metaphors and figuring out how well they fit what is being observed. This analysis refers to the story a person shares about self. This analysis is oriented towards how individuals experience the world. Emphasizes idiosyncratic meaning to individuals, not shared constructions. This involves counting the number of times an event is mentioned in field notes as a rough estimate of frequency. This analysis determines how meanings of signs and symbols are constructed. This is a classification system taken from patterns, themes, or other kinds of groups of data (Patton 1990). A sophisticated typology with multiple levels of concepts. A method for the subjective interpretation of the content of text data through the systematic classification process of coding and identifying themes or patterns (Hsieh & Shannon 2005).

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A review of the above data analysis methods was carried out to determine the best analysis approach for this study. It was decided that thematic analysis provided the best fit because it assisted with subjective interpretation of the interview data and supported systematic coding approaches that were necessary for the analysis of the participant perspectives and emergence of themes. A list of advantages of thematic analysis is shown in Table 3.9. These directly supported the research aims and objectives and the capacity to discuss future implications of the study findings. Table 3.9 Advantages of Thematic Analysis (Source: Braun & Clarke (2006)) Advantages of Thematic Analysis Flexibility. Relatively easy and quick method to learn, and apply. Accessible to researchers with little or no experience of qualitative research. Results are generally accessible to educated general public. Useful method for working within participatory research paradigm, with participants as collaborators. Can usefully summarise key features of a large body of data, and/or offer a ‘thick description’ of the data set. Can highlight similarities and differences across the data set. Can generate unanticipated insights. Allows for social as well as psychological interpretations of data. Can be useful for producing qualitative analyses suited to informing policy development.

Other analysis methods (hypothesis generation, comparison studies of events or situations, analysis of documents or text or causation relationships) were not directly relevant to the objectives of this research. Bazeley (2009) describes how deeper analysis (more than the generation of themes) can be achieved during thematic analysis. Some suggestions discussed by Bazeley include using strategies to improve interpretation and naming of categories, using comparison and pattern analysis to refine and relate categories and themes, using divergent views and negative cases to challenge generalisations and using writing to prompt deeper thinking. For example, one such strategy involves researchers using an iterative approach of Describe-Compare-Relate during thematic analysis. The ‘Describe’ phase includes documentation of the context of the study, details about data source and demographic features of sample (for future comparative analysis, themes description and its characteristics). The key questions to be considered during this phase are: How 98

did people talk about a particular aspect, how many talked about it, and what’s not included? During the ‘Comparison’ phase the researcher compares differences (in the characteristics) for that category or theme across other variations in context. The key questions to be considered during this phase are: Who, Why, What, When, What did other groups express differently? During the ‘Relate’ phase the researcher attempts to relate a category or theme to others already written about (Bazeley 2009). The next Section describes how thematic analysis was conducted in this study. 3.8.1

Discussion of thematic analysis

After the interviews were conducted all interviews were transcribed. Transcribing involved producing the written version of the full script of the interview. When transcribing an interview I paid attention to the words used by the interviewees, and their tone and inflection to understand the feelings and meanings. While transcribing the interview I was also able to detect the positive/negative continuum on a topic and how supportive the interviewee was about the topic/questions discussed. The data analysis was carried out using the steps proposed for thematic analysis by Braun and Clarke (2006). Thematic analysis was chosen for this research because of its flexibility, its ability to generate unanticipated insights, producing qualitative analysis suited for informing policy development, to provide a thick description of the data set and to highlight similarities and different across the data set (Strauss & Corbin 1998;; Patton 2002;; Braun et al. 2006;; Creswell 2007). The main categorizing strategy in qualitative research involves coding. Maxwell (2005) describes the purpose of the coding as ‘not to produce counts of things but to “fracture” the data and rearrange it into categories that facilitate comparison between things in the same category and between categories … such categories make it much easier for you to develop a general understanding of what is going on, to generate themes and theoretical concepts and to organize and retrieve your data to test and support these general ideas’ (Maxwell 2005). The following steps were used for systematic analysis of the data collected (Braun & Clarke 2006):

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Step 1: Familiarisation: I repeatedly listened to the interviews recorded and read the transcripts of the interview to get a sense of the content of the conversation, initial ideas and clues to possible links. I actively searched for meanings and patterns in data. Notes were made regarding how to code before the formal coding process began. Step 2: Generating initial codes. In this step a systematic annotation of the transcripts was made whenever the conversation topic changed. An initial list of ideas about what is in the data and what is interesting about them was generated and provided with code names. Codes identify a feature of data that appears interesting to the analyst. Boyatzis (1998) defines code as ‘the most basic segment, or element, of the raw data or information that can be assessed in a meaningful way regarding the phenomenon’. The key ideas and issues raised by the study participants were captured during this process in order to make sure that the unit of analysis was a topic that has a relation to the data. After this initial annotation of each interview transcript, I returned to each annotation in the transcript and systematically considered/checked if the code name captured the essence of what was said by the participant. Hence, the coding process was data driven. All potential themes were considered during the coding process. Consideration was given to the context during the coding process. Individual data chunks were coded once or many times as required. Where there were no major ideas or points of interest those data chunks were not coded. Consideration was also provided to data patterns, relationships between data sets and any inconsistencies within and across data sets. Step 3: Searching for themes: In this step the analysis focused on the broader level of themes. Different codes were sorted into potential themes and collated. I then analyzed the codes and figured out how the different codes could be combined to form a theme. The relationship between the codes, between the themes and between the different levels of themes (main themes, sub-themes) was identified. The phase ended with a collection of candidate themes, sub-themes and data that have been extracted and coded in relation to them. The individual themes and their significance are of importance in this stage.

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Step 4: Reviewing themes: In this step the candidate themes were refined. During this review process I found that some of the themes were not really themes as there was insufficient data to support them. Other themes required further unpacking into separate and smaller themes. Consideration was provided to ensure that the data within the themes was coherent and meaningful. As suggested by Braun and Clarke (2006) two levels of reviewing of themes occurred. At the first level, the coded data chunks were reviewed. At the second level, the validity of individual themes in relation to the data set, the accuracy of candidate themes and the representativeness of the meanings from the data set as a whole were reviewed. The final output of this phase was an understanding of what the broader themes were, how they fit together and the overall story they tell about the data. Step 5: Defining and naming themes: In this step, I defined and refined the themes that emerged. The essence of each theme was identified and the aspect of data that each theme captured. For each individual theme, a detailed description and analysis was provided. The story that each theme included along with details as to how they fit into the broader overall story that I was explaining about the data was also written. Notes were also made about the relevance of these stories to the research questions. At the end of this phase clearly defined and labelled themes emerged along with the scope and content for each theme. A fifteen-point checklist of criteria for good thematic analysis proposed by Braun and Clarke (2006) was also used. A commentary against how those criteria were considered and achieved is shown in Table 3.10.

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Table 3.10 Fifteen point checklist criteria for good thematic analysis Source: Braun and Clarke (2006) Process

Number

Criteria

This study’s approach

Transcription

1

The data have been transcribed to an appropriate level of detail, and the transcripts have been checked against the tapes for ‘accuracy’

Yes. Transcription was word-for-word and all transcripts were checked against the audio-recording for accuracy.

Coding

2

Each data item has been given equal attention in the coding process

Yes. All data items were considered. Where there were no major ideas or points of interest those data chunks were not coded.

3

Themes have not been generated from a few vivid examples (an anecdotal approach), but instead the coding process has been thorough, inclusive and comprehensive

Yes. Detailed coding steps and procedures explained in Sections 3.8 and 3.9.

4

All relevant extracts for each theme have been collated

Yes. (Samples of such extracts are in Chapters 4 and 5)

5

Themes have been checked against each other and back to the original data set Themes are internally coherent, consistent, and distinctive

Yes. Re-reading and checking as per discussion in Section 3.8 and 3.9.

7

Data have been analyzed – interpreted, made sense of – rather than just paraphrased or described

Several iterations of analysis resulted in development of the sense of what the story the data was revealing.

8

Analysis and data match each other-the extracts illustrate the analytic claims

Data analysis and interpretations are evidenced using a series of direct quotes. (See Chapters 4, 5, and 6)

9

Analysis tells a convincing and well-organized story about the data and topic

Refer to Micro, Meso and Macro levels of analysis (explained in Chapters 4-7).

10

A good balance between analytic narrative and illustrative extracts is provided

This has been provided throughout the thesis discussion. Trustworthiness (Section 3.10) provides further details on the credibility of the research findings.

6 Analysis

Tools such as thematic map, concept and relationship diagrams and notes were used for checking coherence and consistency.

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Process

Number

Criteria

This study’s approach

Overall

11

Enough time has been allocated to complete all phases of the analysis adequately, without rushing a phase or giving it a once-over lightly

The data analysis occurred over a duration of 12 months and peer feedback and scrutiny assisted with ensuring the final themes and categories were accurately representing the data.

Written report

12

The assumptions about, and specific approach to, thematic analysis are clearly explicated

Yes. Any relevant assumptions have been discussed in Sections 3.8 and 3.9.

13

There is a good fit between what you claim you do, and what you show you have done- i.e., described method and reported analysis are consistent

Section 3.8 describes the approach used for thematic analysis. Section 3.9 describes how it has been applied to this study using samples of coding and thematic diagrams.

14

The language and concepts used in the report are consistent with the epistemological position of the analysis

The interpretivist subjective view of ontology and epistemology assumed by the research approach is acknowledged throughout the writing and discussion of the findings of the data analysis.

15

The researcher is positioned as active in the research process;; themes do not just ‘emerge’

I had an active role in the process. Frequent engagement with interview transcripts and re-reading of transcripts also aided in achieving sufficient engagement with the data. A considerable amount of time was spent for data collection and data analysis to develop an in-depth understanding of the views and perspectives of the study participants. Prolonged engagement with participating organizations also assisted (see Section 3.10.1).

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3.9

Application of data analysis techniques

The data analysis stage involved coding all interview data collected during the study. Coding occurred concurrently as the data was being collected from different stakeholders. Coding involves deriving and developing concepts from the data (Corbin & Strauss 2008). A concept represents groups or classes of objects, events and actions that share some major common properties (Silverman 2006;; Corbin & Strauss 2008). Categories are groups of concepts identified from data pertaining to the same phenomena (Strauss & Corbin 1998). Several tasks were undertaken during each coding phase (Figure 3.2) and iteration using qualitative data analysis techniques and guidelines described by Strauss and Corbin (1998). Firstly, the interviews were transcribed and phrases of interview data were grouped as data chunks. At the first level of coding these data chunks were assigned a code. The process was repeated for all the interview data and interviews. Then a list was compiled including all the codes and the chunked data to obtain an overall consolidation of the codes. This led to sub-categories. The tasks that were undertaken during this stage include naming, labelling, concept coding and description of the different dimensions and properties of each coded sub-category. At the second level of coding, the links between the categories and the relationship between similar categories were analyzed. Detailed notes/memos were written to determine if they belonged together under a higher level category, referred to as Minor category in this thesis. At the third level of coding, further analysis of the minor categories that emerged during this second level of coding and their relationship to each other resulted in re-grouping of minor categories under a higher level category label, referred to as Major category in this thesis. Microsoft’s Excel software program and Microsoft Word’s notes tool were used for recording, analysing and studying major, minor, and sub-categories and themes. In this research, a major category comprises one or more minor categories. A minor category comprises one or more sub-categories.

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Data Grouping

Coding Stage 1

Interviews transcribed

Thematic begins

Phrases are grouped as ‘chunks’

analysis

Interview data assigned labels using codes against data chunks Process repeated for all the interviews Result: Compilation of sub categories

Coding Stage 2 Grouping of chunked data using principles of thematic analysis Studied the links between the sub categories Grouped the sub categories to create minor categories Grouping of sub categories using detailed notes written to provide justifying such a grouping Result: Compilation minor categories

of

Emergence of Themes Studied the Major categories and their relationship with each other Identified broad Themes which will fits the associated Major, Minor and sub categories Thematic analysis ends Result: Compilation of Themes

Coding Stage 3 Analyzed minor categories for relationships with each other resulted in regrouped categories that could be classified under higher level Major category Result: Compilation of Major categories

Figure 3.2 Coding process used for data analysis in this study (Strauss & Corbin 1998) 3.9.1

First level coding process

In this stage, the aim of the coding is to label, code and categorise interview data. For each data chunk a main idea or message reflected by that data chunk was determined. An appropriate code name was then assigned. In some instances there was a possibility for assignment of more than one label allowing for multiple interpretations of each phrase. As the process of iteration of coding progressed, these code labels were considered and the most appropriate code name was retained. Code merging and collapsing of codes to avoid duplication of categories was also considered. The same codes were assigned to interview data from different stakeholders where similarities

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were identified. Some examples of the coding process at this stage are shown in Table 3.11. Table 3.11 Sample coding process for first level coding ‘Chunked data’ from interview transcript

Initial sub categories

With the , the , the Department, we meet formally once a quarter, but informally we talk all the time. With , again we're part of working groups with them so there's an ongoing relationship there. are a member of our consumer consultative forum so we meet with them formally as part of that but also have ongoing informal discussion about any issue. There has been strong and understandable political and regulatory pressure on these topics, as you would expect to happen when you see the sorts of difficulties and issues that have been thrown up and indicated by some of the complaint volumes. So, I mean the Minister, Minister has said repeatedly, he's probably said it more often than he wanted to have to say it. That unless the industry can pull its act together and can put measures in place and self-regulatory and co-regulatory steps in place to address the issues, he will come over the top in a not particularly subtle way and impose legislative or regulatory constraints that serve to generate that type of behaviour

Regulator’s interaction with other stakeholders such as the industry ombudsman, the ISP industry association, the consumer association and the Government department.

3.9.2

Formal/informal interactions between the regulator and the vLISP industry stakeholders. Influence of government department originated pressures. Threat of tighter regulation.

Revised sub categories (concepts) Interaction of regulator with other vLISP industry stakeholders.

Pressure from government agencies and its influence on the CS/CH practices.

Ministerial intervention.

Second level coding process

The list of codes compiled from first level coding were reviewed and grouped into minor categories. Where some of the sub-categories belonged to more than one minor category, a new minor category was created to address the duplication issue. Consideration was given to relationship between the sub-categories and the minor categories before finalizing the allocation of sub-categories to minor categories. Detailed notes were written to explain why a sub-category would fit into an identified minor category. At this stage the relationship between minor categories was also explored to check if further merging or collapsing of minor categories was required. An example of second level coding process is provided in Table 3.12.

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Table 3.12 Sample coding process for second level coding Sub-categories

Minor Category

TIO complaints data highlighting systemic CH issues Lack of focus on avoiding complaints instead of dealing with them Failure to resolving complaints in a swift manner Poor response time to complaints Industry ombudsman data as a primary source for CH performance of the ISP industry Net promoter score (NPS) as an indicator for complaints handling performance

3.9.3

Major Category

Understanding ISP industry complaints data. Complaints Handling related perspectives. Complaints resolution.

Complaints handling performance.

Third level coding process

In this phase, the minor categories were grouped based on the links and relationships determined amongst them. These categories were called major categories. The relevance of sub-categories to minor categories and major categories was once again checked. Although this was a time consuming process the engagement with the data provided me with opportunities to constantly check that the concepts emerging from the interview data were well analyzed and understood. A sample example of a major category is shown in Table 3.12 above. At the conclusion of this stage, eight major categories emerged. These major categories are discussed in Chapter 4 (see Section 4.1). 3.9.4

Emergence of themes

A theme is defined as an idea or a common meaning that runs through an identified chunk of data. A theme can also be a minor idea that captures particular emotions or facts. Drawing from my understanding of the research problem area, the data analysis, and the understanding of the relationship amongst categories and sub-categories broad themes emerged under which the major categories could be grouped. At the conclusion of this stage, five themes emerged. These themes are discussed in Chapter 4 (see Sections 4.1 and 4.9).

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Major categories 1 and 2 were grouped as they capture the perceptions and attitudes of participants belonging to external agencies and the top four vLISPs. The perceptions and attitudes of external agencies on CS/CH practices and their beliefs about key agencies that influenced those practices formed Theme 1. (One aspect of major category 6 related to perceptions of external agencies on key agencies that influence CS/CH practices.) The perceptions and attitudes of regulatory managers of the top four vLISPs and the ISP industry association on CS/CH practices and their beliefs about the key agencies that influence those practices formed Theme 2. (One aspect of major category 6 related to perceptions of regulatory managers and the ISP industry association on key agencies that influence CS/CH practices.) Major category 5 formed Theme 3 because stakeholder interactions are a major aspect of studying institutional influences in the ISP industry. Theme 4 was drawn from the discussion of major categories 6 and major category 7. Theme 5 was drawn from the discussion about collaboration efforts which was a key part of TCP Code development and review (major category 3), challenges associated with regulatory compliance and how it was addressed during the TCP Code revision (major category 4) and the discussion on the significance of customer service for future Internet services (major category 8). Overall eight major categories and five key themes emerged. These major categories and themes 1-5 are discussed in detail in Chapter 4.

3.10 Trustworthiness of this research Trustworthiness ensures that the researcher has carried out the research process correctly. The trustworthiness of this research will be established using Lincoln and Guba’s

(1985)

four

criteria:

Credibility,

Dependability,

Confirmability

and

Transferability.

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3.10.1 Credibility Credibility is important in establishing the researcher’s and readers’ confidence in the truthfulness of the data (Lincoln & Guba 1985;; Krefting 1991). The credibility of the research process and findings is satisfied in the following ways: Prolonged engagement: The prolonged engagement comes from my interactions with Internet industry stakeholders. Building trust and rapport with the participants during the recruitment process and data collection was carried out through attendance at industry events, and social and business functions which were attended or hosted by the participating organizations and stakeholders. Frequent engagement with interview transcripts and re-reading of transcripts also aided in achieving sufficient engagement with the data. A considerable amount of time was spent on data collection and data analysis to develop an in-depth understanding of the views and perspectives of the study participants. Peer debriefing: Peer debriefing sessions with the supervisory panel during the PhD candidature also contributed to the credibility of this research. The panel included experts who were able to provide advice on matters such as methodological approaches, neo-institutional theory, service quality management and telecommunications industry policy development. The supervisory panel also assumed the role of ‘devil’s advocate’ and raised several challenging questions that contributed to the research direction, data analysis and interpretation of the findings. Peer-scrutiny of the research: At various stages during the candidature the results of this research study were disseminated through ten refereed research publications (one journal paper and nine conference papers). Additionally, results of the research were also presented at the University of Western Sydney research student conferences and research symposiums. Feedback was obtained from peers on all such occasions. This assisted in refining the research method, the design of research and the discussion of findings, thereby improving the credibility of the study. 3.10.2 Dependability

Dependability is related to the stability of the findings over time (Denzin & Lincoln 1994;; Shenton 2004). Dependability can also refer to the extent to which similar 109

findings can be obtained if the study is repeated. Throughout this thesis I have provided detailed discussion of the research design and implementation, data gathering and analysis, and reflective commentary and appraisal of the study. This will enable readers and future researchers to follow the same research process to repeat the study and achieve similar results. However, if the research were to be repeated in say five or ten years’ time it is possible that the results would be different because of: (i) the changes that might have occurred during the process of the vLISP Organizational Field development;; and (ii) the subsequent effects those changes may have on the institutional environment of the top four vLISPs. 3.10.3 Confirmability Confirmability refers to the internal coherence of the data in relation to the findings, interpretations and the recommendations with the researcher’s pre-dispositions clearly admitted (Miles & Hubermann 1994;; Denzin & Lincoln 1994). Polit and Hungler (1999) suggest that inquiry audits can be used as a means of establishing confirmability. Systematic collection of data and documentation allows any auditor external to the researcher to repeat the study using the process outlined in the thesis and arrive at similar conclusions about the data. Further, my previous work experiences and interactions with ISP industry stakeholders were not directly relevant to the topic of research thereby reducing bias or negative implications on this study. Careful consideration was given to ensure that the interpretation of the data was a true representation of the participants’ experiences. This was done through sending copies of research

findings

and

publications

to

interview

participants

for

their

comments/feedback. 3.10.4 Transferability and applicability Transferability or applicability refers to the generalizability of the study’s findings, that is, the extent to which the findings from the data can be transferred to other settings (Chiovitti & Piran 2003). Detailed descriptions of the profiles of the participants and their organizations, recruitment and sampling strategies used, transparent discussions of data collection, data analysis processes used, discussion of data categories (major, minor, and sub-categories) provide a very good description of the study for readers to evaluate the applicability of the data and the findings to other contexts (Erlandson, Harris, Skipper & Allen 1993). Development of such detailed descriptions also enabled me to 110

assess the generalizability of the study findings. For example, some of the study findings could be generalizable to technology-based service industries (Content providers, other vLISPs and Application Service Providers) in the rest of Australia. 3.10.5 Triangulation Patton (2002) describes four main types of triangulation: methodological triangulation, source triangulation, analyst triangulation and theory/perspective triangulation. In methodological triangulation, the consistency of findings from various data collection methods is checked. In source triangulation, the consistency of different data sources using the same method is checked. In analyst triangulation two or more individuals independently analyse the same data. Finally, the theory or perspective triangulation involves using multiple theories to interpret data in order to understand differing assumptions that affect the findings. This research uses interviews as the only data collection method. A reflexive process of examining this data from various perspectives of stakeholders was carried out. For example, the participants were drawn from different types of vLISP industry stakeholder organizations. During the data analysis phases several supervisory panel meetings were organized to discuss the results of the analysis. My supervisors were provided with copies of my analysis and the corresponding data sets. They compared my analysis with their interpretations and analysis. Subsequent discussions provided opportunities for the refinement of the concepts, categories and themes that developed. Several iterations of this process were carried out. All the study’s participants were also provided with a copy of the research findings presented at research conferences with a specific request for their feedback. The final analysis was also tested through presentations and publications at business, management and IT conferences. All these processes helped achieve perspective triangulation. During the peer review process, other academic researchers external to the supervisory panel provided feedback on the study findings and analysis outputs such as the categories and themes for the study. The supervisory panel approved of the methods and analysis undertaken in this study.

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3.11

Ethical considerations

An ethics application seeking approval to conduct this research using the research methodology, method and procedures was approved by the UWS Human Research Ethics Committee. Ethical consideration was given using the following principles (George 2008): Research Merit and Integrity: The research merit and integrity of this study were achieved in the following ways. The study provided a deeper understanding of an industry-wide customer service problem that had serious repercussions for the reputation of the Internet industry in Australia. This is an area that is abundant with statistical data about complaints in relation to customer service and complaints handling. This research contributes to the understanding of some of the fundamental issues that help to make sense of external forces that will facilitate improvements in the industry’s CS/CH practices and achieve a desirable customer experience. The study provided valuable data that can assist the government department for broadband, the consumer association, the regulator, the industry ombudsman, the ISP industry association and the top four vLISPs to develop mechanisms for sustainable collaborative relationships to drive the desired behaviour in the industry in relation to its CS/CH practices. Finally, this study was peer reviewed through the confirmation of candidature process at UWS, presentations and publications in national and international Internet studies and business conferences. Justice: This principle ensures that the procedures used for the recruitment of participants are reasonable and fairly administered (Mertens 2005). Further, it requires those who bear the burden of the research to benefit from the conduct of the research (Mertens 2005). The rich description and discussion of the findings provide the different vLISP industry stakeholder groups with valuable insights for both planning as well as action in relation to CS/CH practices. The participants do not have a direct benefit. The study’s findings and its examination through the institutional lens provided a valuable perspective which was lacking in the existing body of knowledge. Participants were provided with copies of publications arising from this research and hence were kept informed about the research results. Informed consent was obtained from all participants before the commencement of the data collection process. Lastly, the

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recruitment procedures, including the inclusion and exclusion criteria, are clearly described and justified in Section 3.7. Beneficence: According to Mertens (2005) beneficence should achieve maximum possible benefits for research participants and minimize or avoid risk or harm to the participants. All the participant responses were kept private and confidential. Any reference to the participant responses used a pseudonym in publications. All interview transcripts, audio recordings, consent forms and email communications are stored securely in a locked filing cabinet in the supervisor’s office at UWS. The data will be stored for a period of five years in accordance with the UWS policies and will be destroyed at the conclusion of this period. The following strategies were used for risk minimization to participants: (i) privacy risks: informed consent was obtained from all research participants prior to participation in the interview;; (ii) risk of withdrawal of participant: all participants were contacted prior to the day of the appointment to check that they are still able to attend the scheduled interview;; (iii) confidentiality risks: identifiers such as name, address, and contact numbers were deleted after the data was analyzed so that the research data published does not make known publicly the connection between the participant and the information;; and (iv) anonymity risks: in face-to-face interviews anonymity cannot exist. Participants were promised confidentiality. After research data analysis the data identifying the individual was separated and deleted. Respect: All the study participants were treated with respect during the conduct of this research. It was made clear that the participation was voluntary and that participants had the right to withdraw from the study at any time without giving a reason and without any negative consequences to themselves or their organizations. Participants were also provided with a detailed information letter describing the study, including contact details for the three supervisors and the ethics office at UWS in the event they had any concerns about the conduct of the research.

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3.12

Summary

This Chapter justified the qualitative approach as best suited to this study. It described the ontological, epistemological and axiological assumptions behind, and the reasons for, the position taken. The research procedures for selection, recruitment of participants (including exclusion criteria, sampling techniques) and sample size for the semi-structured interviews were explained. Data collection procedures, participant and organization profiles were also included. A justification for the choice of thematic analysis and coding procedures used were discussed in detail. The three steps of coding used for the development of themes and analysis has been explained with examples. Then, the trustworthiness of this research was also established. The next Chapter 4 discusses the findings from the data analysis of this research.

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CHAPTER 4 QUALITATIVE DATA ANALYSIS

In reading of scientific discoveries one is sometimes struck by the simple and apparently easy observations which have given rise to great and far-reaching discoveries … but in retrospect we see the discovery with its significance established. Originally the discovery usually has no intrinsic significance;; the discoverer gives it significance by relating it to other knowledge, and … using it to derive further knowledge. -

4.0

Beveridge, 1963 (Quoted in Corbin and Strauss (2008))

Chapter overview

The research problem, literature review and research questions were introduced in the previous Chapters along with a discussion of the qualitative methodology that was used for data collection and analysis. In this Chapter, the focus is on the results of data analysis and the discussion of the findings grounded in data collected from the study participants. Several direct quotes from the study participants are used to discuss their perceptions and attitudes towards customer service and complaints handling issues faced by the vLISP industry, their role in the development and revision of CS/CH practices and the stakeholder interactions that occurred during the TCP Code revision process. Further, the key agencies that influenced CS/CH practices and the external stakeholder pressures that influenced the development/revision of CS/CH practices of the vLISP industry are also described. Eight major categories and five key themes emerged following data analysis. These major categories and themes are listed in Section 4.1. Their relevance to the research sub-questions is also provided in Section 4.1. Detailed discussion of major categories 1-7 and themes 1-5 is presented in this Chapter. Discussion of major category 8 is integrated with the analysis in Chapter 7 due to its relevance to the development of future Internet services. The research in this Chapter is published in Vilapakkam Nagarajan (2013d, f) 2.

2

Vilapakkam Nagarajan, Karthik (2013d), ‘Do External Stakeholder Pressures Influence Customer Service and Complaints Handling Practices in the Australian Internet Service Provider Industry?’, Proceedings of News and Media Research Centre (NMRC 2013) Conference, November 1819, 2013, Canberra, Australia pp. 1-16. Vilapakkam Nagarajan, Karthik (2013f), ‘Functional Service Quality: Why it matters? : The case of Australian Internet Industry’, Proceedings of International Conference on Marketing Studies (ICMS 2013), September 7-8, 2013, Hong Kong, China.

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4.1

Major categories and themes that emerged from data analysis

During the data analysis all interview data was transcribed and every line of data was read and categorised. In the case of connected sentences, paragraphs (or chunks of data) were read and provided with a label and an interpretation note was recorded on a spreadsheet. All such interpreted notes were then provided with a label (category). Several low level categories (see Sub-category in Table 4.1) emerged and were then merged, based on the relevance to each other, to form the next set of categories (see Minor category in Table 4.1). These steps were carried out for all interviews. Following this, merging of categories occurred and a new list of categories emerged (see Major category in Table 4.1). The eight major categories that emerged are: x

Customer service related perspectives (Major category 1);;

x

Complaints handling related perspectives (Major category 2);;

x

Insights into TCP Code development and review processes (Major category 3);;

x

Regulatory compliance with the customer service and complaints handling practices stated in the TCP Code (Major category 4);;

x

Stakeholder interactions for discussion of customer service, complaints handling issues and challenges (Major category 5);;

x

Key agencies and their role in influencing customer service and complaints handling practices of the vLISP industry (Major category 6);;

x

External stakeholder pressures in the Internet Service Provider industry and its influence on customer service and complaints handling practices of vLISPs (Major category 7);; and

x

Significance of customer service in the context of the National Broadband Network (NBN) (Major category 8)

Table 4.1 presents a detailed view of the major, minor and sub-categories. The table provides a snapshot of the rich variety of insightful perspectives provided by the participants on the research topic. Further data analysis led to the emergence of five key themes. They are: Theme 1: Perceptions and attitudes of external agencies (ombudsman, consumer association, regulator, Government authorities and ISP industry association) towards the 116

CS/CH practices in the top four vLISPs and the key agencies that influenced those CS/CH practices. Theme 2: Perceptions and attitudes of regulatory managers of vLISP organizations towards CS/CH practices and the key agencies that influenced those CS/CH practices. Theme 3: Stakeholder interactions for discussion of CS/CH issues and challenges. Theme 4: External stakeholder pressures in the Australian vLISP industry and its influence on the CS/CH practices of the top four vLISPs. Theme 5: The collaborative efforts of institutional actors and their role in influencing CS/CH practices of vLISPs in Australia. Having listed the main themes, it is essential to map the related themes to the research sub-questions to highlight their relationship to this study. Theme 1 captures the industry stakeholder perspectives on the CS/CH practices of the vLISP industry and the key agencies that influenced those CS/CH practices. This theme is related to research sub-questions 1 and 2: What are the perceptions and attitudes of key institutional actors in external agencies (the regulator, the ombudsman, the government department for broadband, the ISP industry association and the consumer association) on the CS/CH practices of vLISPs in Australia? What is the role of external stakeholder pressures in influencing the CS/CH practices of vLISPs? Theme 2 captures the perspectives of regulatory managers of vLISPs on CS/CH practices and the key agencies that they believe influenced the industry’s CS/CH practices. This theme is related to research sub-question 3: What are the perceptions and attitudes of regulatory managers in vLISPs on CS/CH practices and the key institutional pressures that influence those in the vLISP industry? Theme 3 captures the individual stakeholder interactions with each other and the role such interactions played in influencing CS/CH practices in the vLISP industry. This theme is related to research sub-questions 4 and 5: What is the level of interaction of individual stakeholders with one another in relation to CS/CH practices? What role do such interactions play in influencing the CS/CH practices of the vLISP Industry? 117

Theme 4 discusses the external stakeholder pressures that participants believe influenced the CS/CH practices of the vLISP industry. This theme is related to research sub-question 6: What institutional pressures influence the CS/CH practices of the vLISPs in Australia? Theme 5 discusses the collaborative efforts of institutional actors and their role in influencing CS/CH practices in vLISPs. This theme is related to research subquestions 7 and 8: What led to collaboration on CS/CH practices between the institutional actors in the very large ISP industry? What do the collaborative efforts of institutional actors in the very large ISP industry inform us about their role in influencing the industry’s CS/CH practices?

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Table 4.1 Detailed mapping of major, minor and sub-categories Qualitative Data Analysis: Major Categories and Sub-categories Major Category Customer Service related perspectives

Minor Categories Challenges for providers in dealing with Customer Service

Understanding ISP consumers

ISP industry performance in relation to Customer Service

Complaints Handling related perspectives

Understanding ISP industry complaints data Complaints resolution

Sub-categories Internet as an essential service. Inability of providers to deal with customer service issues. Rapid growth in Internet technologies and associated challenges. Economic value of keeping existing customer base satisfied. Customer service excellence providers increasing competition. Consumer education on Internet contracts and implication on CS performance. Consumer decision-making at point of purchase of a service. Customer not wanting to use customer service in the first place. Customer service provided by ISP call centres. Customer service as a competitive advantage for customer attraction and retention. Customer service and complaints handlings as two top issues for ISPs. Failure of vLISPs to engage on consumer affairs. ISP industry performance and issues around the advancements in Internet technology. Measurement of customer service by vLISPs and its implication for management and monitoring of customer service performance. Customer service improvements by vLISPs. Factors considered essential in providing good customer service (organization culture and commitment to customer service). Lack of consistency in delivering Internet service by ISP size. Resellers of Internet services in Australia and their limitations for service guarantee. TIO complaints data highlighting systemic complaints handling issues. Lack of focus on avoiding complaints instead of dealing them. Failure to resolve complaints in a swift manner. Poor response time for complaints.

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Qualitative Data Analysis: Major Categories and Sub-categories Major Category

Minor Categories Complaints handling performance

Insights into TCP Code development and review processes Regulatory compliance with CS/CH practices stated in the TCP Code Stakeholder interactions for discussion of customer service, complaints handling issues and challenges

Key agencies and their role influencing customer service and complaints handling practices of the vLISP industry

TCP Code Development TCP Code Review Compliance handling mechanisms Perspectives of Government, Consumer association, ombudsman and regulator on ISP industry stakeholder interactions

Perspectives of ISP industry association and vLISP providers on ISP industry stakeholder interactions Perspectives of Government, Consumer association, ombudsman and regulator on key agencies for ISP industry influencing CS/CH practices of the ISP industry

Sub-categories Ombudsman data as a primary source for CH performance of the ISP industry. Net promoter score (NPS) as an indicator for complaints handling performance. Code development and code related issues. Code signatories. Code review and implementation. Code breaches. Revised TCP Code and new consumer safeguards. TCP Code compliance reporting, monitoring and enforcement. Interaction of Government department for broadband with other very large ISP industry stakeholders. Interaction of regulator with other very large ISP industry stakeholders. Interaction of ombudsman with other very large ISP industry stakeholders. Interaction of consumer Association with other very large ISP industry stakeholders. Interaction of industry Association with other very large ISP industry stakeholders. Four very large ISPs interacting with each other. Perspectives of ISP industry consultant firm on interaction of ISP industry stakeholders. Regulator’s perspectives on the key agencies influencing customer service and complaints handling practices in the very large ISP industry. Ombudsman’s perspectives on the key agencies influencing customer service and complaints handling practices in the very large ISP industry. Government department for broadband perspectives on the key agencies influencing customer service and complaints handling practices in the very large ISP industry. vLISPs’ perspectives on the key agencies influencing CS and CH practices of the industry. Consumer Association’s perspectives on the key agencies influencing CS and CH practices in the very large ISP industry.

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Qualitative Data Analysis: Major Categories and Sub-categories Major Category

Minor Categories Perspectives of ISP industry association and vLISP providers on key agencies for ISP industry influencing CS/CH practices of the ISP industry

External pressures operating in the very large External stakeholder pressures Australian ISP industry in the Internet Service Provider industry and its influence on customer service and complaints handling practices of vLISPs Relevant actors exerting and or responding to pressures in the very large Australian ISP industry

Relevant actors exerting and or responding to pressures in the very large Australian ISP industry

Sub-categories ISP Industry consulting Firm’s perspectives on the key agencies influencing CS and CH practices in the very large ISP industry. Industry association’s perspectives on the key agencies influencing CS and CH practices in the very large ISP industry. Pressure from regulator and government agencies and its influence on CS and CH practices. Pressure from competitors excelling in CS and its influence on CS and CH Practices. Pressures from ombudsman on CS and CH practices. Pressures from industry association on CS and CH practices. Pressures from consumer organizations on CS and CH practices. Industry association and their examination of the ISP CS and CH practices. Institutionalized manner of dealing with complaints by very large ISPs. Regulatory compliance in very large ISP industry (Superficial conformance). Role of competitive pressures in influencing CS and CH practices. Institutionalized behaviour of vLISPs with respect to CS and CH practices. The role of regulatory managers in vLISPs in influencing CS and CH practices. Intra organizational issues and its impact on response of very large ISPs to institutional pressures. Impediments to customer service improvements in very large ISP organizations. Regulator examination of very large ISP CS and CH practices. Regulatory inquiry into very large ISP CS and CH practices. Communication compliance committee in the revised TCP Code and CS and CH practices. Drivers of CS improvements in very large ISPs. Regulatory action on CS/CH issues in very large ISP industry. Organization culture within vLISP organizations and its influence on CS and CH practices. TIO’s campaign and its influence on CS and CH practices.

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Qualitative Data Analysis: Major Categories and Sub-categories Major Category Significance of customer service in the NBN context

Minor Categories

Sub-categories ACMA’s inquiry and its influence on CS and CH practices. Perspectives of various stakeholders on the future impact of NBN on CS and CH practices.

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4.2

Major category 1: Customer service related perspectives

All study participants shared their perspectives and reflected on their experiences in relation to the CS/CH problems faced by the vLISP industry. The two main issues that all participants indicated as most problematic for the industry are customer service and complaints handling. In discussing the customer service issues, the participants highlighted the challenges the top four vLISPs face in dealing with customer service issues, the mismatch in stakeholder expectations in relation to service delivery and the key reasons for the industry’s ongoing poor CS/CH performance . All participants were covenant that the Internet has become an essential service for both residential and business customers. They highlighted the increasing number of choices that customers have in choosing an Internet service plan that fits their usage criteria. [P1] from the consumer association describes the challenges these choices present to customers. [P1] observes that in the current Internet market, consumers are overwhelmed by the numerous choices for Internet plans and increasingly rely on sources other than ISPs such as their family and friends to make purchase decisions. Therefore, vLISPs have a responsibility to provide clear and concise information to customers about their Internet service plans to assist them in making informed decisions. Another challenge raised by participants is in relation to the increased number of providers entering the market to provide Internet services. According to [P4], a huge influx of new service providers who are underprepared (both in terms of services and resources) to deal with customer service has resulted in customer dissatisfaction and increased complaints about providers. [P1] from the consumer association states that excessive waiting times, misleading claims, poor or no follow-up action by providers, shifting of customers to various departments when they call to seek assistance have contributed to this increase in CS/CH complaints. The industry ombudsman executive [P5] agrees that customer service and complaints handling are prevalent issues for the largest members (the top four vLISPs). [P5] states:

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Certainly it’s fair to say that customer service and complaint handling issues are extremely prevalent in telecommunications complaints. In fact, they typically figure in the top three complaint issues we have. The third issue there is usually billing and payments [P5]

According to [P5] other contributing factors to increase in complaints are: (i) incorrect advice to customers at the point of sale;; (ii) inadequate advice to customers during reporting of a problem;; and (iii) incorrect advice provided during complaint resolution. Another possible reason for poor CS/CH performance is the inadequate importance attached to customer service by the vLISPs. [P10] from the government department for broadband was quick to critique that vLISP management are usually passionate about the technology and products while customer service took a backseat role: I think you get a lot of people who are technologists and they come into this sector as engineers or as people who have a love of the product, the technology … there are strengths and weaknesses in that obviously because these people are very passionate about the technology, they’re passionate about the products, but I think that they often overlook or underplay the importance of customer service [ P10]

Other reasons include: (i) complexity of products and services;; (ii) lack of commitment to customer service;; and (iii) failure of vLISPs to engage in activities that broaden their understanding of consumer affairs. This is illustrated by the following quote: The professional networks that do tend to exist in the industry tend to be around the engineering technology side. They don't tend to be around the customer service or the professional side. Now, you have organizations, for example, that exist as a broader church of interest, like SoCAP - the Society of Consumer Affairs Professionals - but you don't see a lot of telcos as part of that [P10]

Strong rates of service growth, dynamicity of the nature of services and inability of customers to understand new technologies and how to best utilize them also played a role in contributing to poor CS/CH performance in vLISPs: Firstly, you need to remember that we are continuing to undergo very strong rates of service growth. We're putting in place about three million new services in operation each year in Australia. So that's going to have an influence on any complaints statistics when you're seeing such strong growth. Secondly the nature of the services is changing dramatically. The complexity of the products and services has risen, so it's perhaps not surprising from some perspectives that customers who embrace new technologies and new services, but [have] not always understood how best to utilise them, or exactly what they've purchased, will often be in a situation where they're confused or haven't bought what they thought they'd bought and have a tendency to make complaints about that [P3]

Compatibility of different technologies and programs used for Internet-based applications is an important issue for customers. Regulator executive [P4] describes the ‘multitude of problems’ presented by incompatible technologies and Internet solutions to customer service centres: 124

I think there's also been this amazing growth in the use of technologies and how it's being used. People are buying these - getting the modems from the providers or they might get a modem from somewhere else. The problem might be with their computer. It might be with a program they're running, an application they're trying to install. It all comes back to the provider because they're your gateway to this whole new world of technology. So I think there's a multitude of problems [P4]

Resellers of Internet services in Australia who do not own their network infrastructure and do not have control over the network have been unable to provide service guarantees to their customers. As a result, a lack of consistency in delivery of services is a noticeable systemic problem in the industry. Customers of resellers are also unclear about which network and provider they are signing up to. There is evidence in the data to suggest that some vLISPs have excelled in customer service by adopting a ‘Beyond Compliance’ strategy and avoiding complaints arising through taking proactive measures rather than dealing with the problems after they arise. One of the proactive approaches suggested by [P10] is: We would like to see the customer service or the customer experience built in to product design, rather than bolt it on afterwards and so what we're seeing is they don't think of that up front, it causes a problem and then there's some focus on it and solving it. Whereas if the same level of focus in working out the technical running of a service was done as far as customer service then we wouldn't see these problems at the other end [P10]

Participant [P4] emphasized the economic value of keeping existing customers satisfied: I think that it's got to a point now that it's - I think they've worked out that it's probably more expensive to lose a customer and then to try and gain them rather than keep them. So I think they're learning that there's economic value in keeping their customers happy. I think that's a very important thing because they're businesses after all [P4]

Retaining customers by keeping them satisfied and loyal is important. ISPs such as [O8] in this study demonstrate excellence in customer service and have won many customer service accolades in the past. Such accolades assisted them to gain competitive advantage. [P4] states that [O8] has good customer service strategies and in-house tools to diagnose problems and provide instant feedback to assist customers. One of the reasons for [O8]’s success is that they provide all relevant information about their products and services to customers in a format that is easy for customers to understand and interpret. The customer service performance of the industry is dependent on consumer education, consumers asking the right questions to providers, and the provision of easy to understand contracts and accurate information on ISP products and services. 125

A challenge for consumer education is the willingness of customers to be educated. There is evidence in the data to suggest that some customers complain about overloading of contractual information while others complain about the lack of information. This poses a dilemma for providers as they need to strike a balance between providing too much or too little information about the terms and conditions of their products and services in their contracts. One of the study participants believes customers are to share some responsibility for educating themselves. A telecommunications industry veteran [P2] expresses his disappointment over customers who make incorrect or inaccurate assumptions about how they are protected by the regulation. He attributed some of the customer complaints to the lack of ability of customers to make logical enquiries about the ISP services: Quite frankly it's part of the issue in the industry, which is that consumers make a lot of assumptions about how or why they're protected rather than actually making enquiries about the logical enquiries, the logical questions to ask. Sometimes the approaches should be better about teaching consumers what to ask rather than making them think that the industry is regulated [P2]

[P2] argues that customer service is not an influential factor when a customer signs up to a service. However, that is contradicted by the evidence that [O8] is able to attract new customers because of the many customer service accolades they have received. Factors that are key to winning and keeping customers include: (i) providing opportunities for customers to express their concerns;; (ii) providing accurate information on products and services;; (iii) ensuring that staff members dealing with customers have the right level of authorization to troubleshoot customer service problems;; and (iv) directing customers to the right department to resolve their complaints. According to [P2], managing customer expectations is key to avoiding customer complaints. For example, marketing by vLISPs promotes their products and services such that they deliver outcomes that are not true in reality leads to discrepancy between what was promised and what was delivered. This failure of vLISPs to deliver on service promises translates into customer complaints.

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A key factor raised by the majority of the study participants in relation to customer service improvements is the role and attitude of senior management within vLISPs towards prioritizing customer service and committing to customer service excellence. [P2] argues for an organization-wide focus on customer service rather than shifting the responsibility to call centre managers. [P2] believes that real improvements to customer service can only occur when there is a strong commitment from senior management to introduce new customer service initiatives. All participants agreed that providers need to measure customer service continuously to inform their customer service initiatives. [P1] describes how [O8] measures customer service continuously using international benchmarking standards such as the NPS (Net Promoter Score). The NPS tool assisted [O8] to gather and present evidence that they were excelling in customer service. It calculates the number of customers promoting [O8]’s products and services to their families and friends through word-of-mouth. A positive NPS score is indicative of good customer service performance. Many participants discussed examples of customer service improvement campaigns during the interviews. One such campaign by the industry ombudsman, the Connect.Resolve campaign (targeting the top ten vLISPs to bring CS/CH complaint numbers down) provided monthly complaints statistics to the vLISPs along with key recommendations to improve their CS/CH performance. Such campaigns were important to engage providers and their managements. The industry ombudsman executive [P5] acknowledged the positive response the Connect.Resolve campaign received from CEOs of the top four vLISPs. For example, the industry consultant [P2], the consumer association executive [P1] and the government executive [P10] described significant changes that were brought about by the CEO of [O7] in relation to customer service at the conclusion of the ombudsman’s campaign: In terms of the individual steps they’re taking, we’re often not privy to their sort of internal performance matrix and things of that nature. They do however disclose to us on occasion that they are making process improvements to make the customer experience a better one and again I’ll probably refer you back to the connect.resolve report and particular examples there, because we actually invited responses from the top CEOs there as to what changes they were making off the back of the campaign [P5]

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There were some fairly frank statements in there, including from who commented that overall he was pretty disappointed with the results and talked about some of the steps they were taking [P5]

Customer service process changes within [O7] related to point of sale matters, increased accountability on staff for customer service, use of customer service performance as a driver for salary performance and the introduction of a new project aimed at self-audit of their internal customer service processes and procedures. The next Section focuses on complaints handling perspectives of study participants.

4.3

Major category 2: Complaints handling related perspectives

During interviews with the study participants, several perspectives emerged about the complaints handling issues and complaints handling performance of the vLISPs. Participants discussed complaints handling processes used by the top four vLISPs, complaints reporting, interpretation of results and their concerns about vLISP handling of customer complaints. 4.3.1

Attention to complaints handling performance

There are several important reasons why the top four vLISPs pay attention to their complaints handling performance. Firstly, the top four vLISPs value their reputations. Being unable to resolve complaints to the satisfaction of their customers can lead to customers complaining about their vLISP to a third party dispute resolution provider such as the industry ombudsman. If such trends continue for a vLISP and a majority of their customers are frustrated about the inability of their vLISP to deal with CS/CH issues, a rapid increase in complaints will be recorded against that vLISP with the industry ombudsman. Such increasing complaints statistics damage the service reputation of the vLISPs. According to the industry ombudsman executive [P5], failure by the top four vLISPs to pay sufficient attention to their complaints handling performance creates negative publicity about vLISPs in the media which can not only potentially damage the industry’s image but also lead to increased scrutiny by the external stakeholders on the industry’s CS/CH practices.

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Secondly, customers are becoming better at complaining. More customers are encouraged to complain about their vLISPs to the industry ombudsman if they are not satisfied with the services they receive. Another senior executive from the consumer association [P1] agrees that customers are not only complaining but also voicing their concerns strongly and publicly: I also think that thing that we said before about reputation, that people are far more inclined to complain these days and complain loudly. The industry as a whole would prefer to not see itself on the front page [P1]

Finally, complaints data acts as a vital source of information for providers to improve their complaints handling mechanisms and take steps to avoid complaints. There is a need for the industry to view complaints as an opportunity to improve their existing services and complaints handling processes. 4.3.2

Key areas of concern

Some key areas of concern involving complaints handling were described by the study participants. One common problem is the failure of vLISPs to take action on undertakings negotiated with a customer. The industry ombudsman executive [P5]’s perspective on this area of concern is illustrated in the quote below: The issue is to do with complaint handling and it’s to do with the failure to action undertakings. It’s an area we’re pretty concerned about to be fair because it really describes those circumstances where a consumer has approached their provider, they’ve reached an agreement to resolve the complaint, they’ve accepted an outcome, that outcome is then not delivered. We see that fairly commonly as well. They’re probably the two most common customer service complaint handling issues that are coming through the scheme [P5]

A second area of concern for complaints handling is the customer’s lack of understanding of the services they have purchased. The industry consultant [P2] refers to the regulator’s RTC inquiry findings that identified that one of the causes of complaints related to the customer’s lack of understanding of the services they have purchased. [P2] describes some of the initiatives undertaken by the top four vLISPs, including recent revisions to the TCP Code, aimed at educating customers about the products and services prior to their purchase: The reconnecting the customer enquiry came to the conclusion that a core cause of complaints was that customers didn't actually understand what they were signing up for in the first place. Now a part of the response to that has been the code - the creation of a thing called a summary of offer which is going to be a maximum of two A4 pages that must be given to the customer prior to the sale that summarises all the important conditions of the offer [P2]

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An third concern with implications for complaints handling performance is the failure of vLISPs to recognise those customers that are in fact complaining and to direct them to the right area within their organization for complaints resolution. The industry ombudsman executive [P5] described his view on this issue: So potential areas for improvement for - a lot of the big providers out there maybe just simply making sure that people with a complaint are firstly recognised that they have a complaint and secondly they’re directed to an area with the authority and the mechanisms to resolve it [P5]

[P5] highlights one of the findings from the resilient consumer campaign in 2011 which revealed that in a majority of the complaints related cases the customers contacted their vLISP multiple times and made an effort to resolve their complaints before contacting the industry ombudsman: But I guess our experience around customer service and complaint handling really is more slanted towards the complaints side of things because the consumers actually approach us when they’ve already had the customer service problem. They’ve already flagged it with their provider. Typically they’ve already tried to work with their provider to resolve it. They’re usually coming to us when they’ve got a substantive complaint which typically involves two or more issues and our insight into their experience is often what they report to us in that first stage of the complaint [P5]

Another area of concern for the consumer executive [P1] is the failure of some vLISPs to inform their customers about the avenues available for them to escalate their complaints (such as to the industry ombudsman) if they believe they have not been treated fairly. [P1] believes that this has resulted in many customers complaining about not being able to complain about their provider. According to [P1], factors such as customers not knowing the contact phone number to ring to complain, not being able to get through on a complaint phone number that is provided and incurring charges to ring a complaints line number instead of a toll free phone number also played a role in generating more complaints about complaints handling by providers. 4.3.3

Complaints data and reporting

The study participants acknowledged that TIO complaints data is an authoritative source of information for them to understand the complaints handling performance of the top four vLISPs. According to the regulatory executive [P4], performance reporting by the industry ombudsman acts as a vital source on complaints recorded about individual providers.

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In relation to complaints reporting, the industry association executive [P3] raises some important issues about the ombudsman’s reporting mechanisms. He questions the validity of the ombudsman’s complaints data and believes that some of the findings reported are inaccurate and distorted. According to him, the complaints statistics are not presented as a function of the complaints per ‘x’ thousand services in operation. He also questions the accuracy of the level one complaints (basic complaints) recorded by the industry ombudsman and argues that the majority of those complaints should not have been logged in the first place. Although [P3] raises these concerns about the reporting of complaints data, he admits that there are problems with poor CS/CH performance by providers across the industry and that the industry was keen to take steps to address the shortcomings involving customer service and complaints handling practices. A vLISP executive [P7] claims that the currency of the complaints data is also influenced by new players (ISPs) who enter and exit the industry leaving behind huge volumes of unresolved complaints. While this statement is correct, the discrete complaints data published by the industry ombudsman in 2009, 2010 and 2011 on the top four vLISPs does not indicate consistent complaints handling performance. Such inconsistent complaints handling performance has implications for industry performance as a whole, as the top four vLISPs have more than eighty per cent of residential Internet subscribers. According to [P2], when a huge volume of CS/CH complaints is recorded against an individual provider, the industry ombudsman refers the matter to the attention of the regulator who then seeks an explanation from the concerned provider about the reasons for such a large volume of complaints recorded. Another problem described by the government executive [P10] relates to the varying levels of complaints handling performance of the industry most of which is attributed to many providers outsourcing their call centres. The industry consultant [P2] provided an insight into what typically happens within vLISPs when they see a spike in complaints related calls. He states that the senior management of some providers send their call centre offshore in order to reduce the per call cost for each customer. He believes that such changes impact on the quality of service provided to customers. According to him, such vLISP attitudes towards prioritising reduction of per call costs for a complaining customer over addressing the source of the complaints are problematic.

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4.3.4

Areas for improvement

So what changes need to occur to improve the complaints handling performance of the vLISP industry? The majority of the participants believe that a change in attitude and culture towards dealing with complaints is required. All participants agreed that providers need to adopt a proactive approach by paying more attention to avoiding complaints arising in the first place rather than having to deal with them later. [P2] expressed his frustration over some of the past initiatives to improve the complaints handling performance which he believed focused on improving the internal complaints handling mechanisms of providers instead of attempting to avoid complaints. [P2] argues that providers need to undertake a proper audit of their quality management practices (for example, Total Quality Management or TQM) and recognise the need for their CS/CH practices to be focused on actions or practices that will facilitate reduction in complaints related calls. That is, instead of focusing on what to do after a complaints call is received the focus should shift towards strategies for avoiding such calls. This argument is in line with the regulator’s RTC inquiry finding recommendations. A vLISP executive [P6] shared her organization’s proactive approach to bringing complaint numbers down: It's all about driving down complaints. We'd rather be using those conversations for something more constructive rather than taking out people's time from our contact centre dealing with complaints. So we try and make everything as easy as we can for customers so we don't have to generate any calls [P6]

All the study participants are in agreement that the revisions in the Telecommunications Consumer Protection code (revised TCP Code) have some proactive measures focused on avoiding complaints. The regulatory executive [P4] described some key initiatives within the revised code to avoid complaints, for example, simple and clearer presentation of information to customers and provision of easy to understand contracts: I think that apart from the complaints handling section of the Code, I think the rest of the Code is all about avoiding complaints because it's about presenting your information clearly. Make your contracts easier to understand. Make your advertising easier to understand. Ensure your bills are clear. I mean all of those things should help prevent complaints [P4]

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Even if a proactive approach to avoiding complaints is adopted, complaints can still occur. It is important to have efficient customer service and customer communication in such cases to avoid further complaints. For example, the regulatory executive [P4] and the vLISP executive [P6] describe how in such a technical environment complaints will still occur. They argue that in those circumstances companies will be judged by their performance on how well they deal with the actual issue and how well they communicate with their customers to resolve such issues. An interesting question that arises from such a finding is: What were the actual reasons for the increase in complaint numbers recorded by the industry ombudsman? The vLISP executives [P6] and [P7] attribute the increase, especially over the period 20082011, to issues such as growth in volume of services, the size of the industry and marketing as well as advertising of products and services that confuse customers, particularly at the point of sale. How to resolve complaints when they occur? This is an important question given that many study participants acknowledged that failure to provide a fast response to complaints was a major concern for ISP customers. The consumer advocate [P1] described the role the company ethos plays in responding to customer complaints. She provided an example of how vLISP senior managers (individuals such as the CEO from vLISP [O8]) can directly engage with the ISP user community to determine the needs of customers and use that knowledge to inform organization-wide CS/CH improvements. According to [P1], [O8]’s CEO has led and driven an organization-wide culture that attaches huge importance to quickly responding to customer concerns, learning lessons from past experiences and constantly adapting and responding to changing customer service needs. The industry association executive [P3] appreciates [O8]’s track record in relation to customer service and believes that [O8] has set an example for others to follow similar paths to improve the industry’s customer service reputation. Sections 4.2 and 4.3 unpacked and discussed participants’ perspectives on customer service and complaints handling issues. The TCP Code is central to the CS/CH practices adopted by the top four vLISPs. The next Section examines participants’

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responses in relation to TCP Code development and review and the problems associated with its implementation.

4.4

Major category 3: Insights into TCP Code development and review processes

All participants described their involvement in the development, review and revision of the TCP Code. They acknowledged that there were several deficiencies in the old TCP Code. They were of the view that the old code did not drive the right behaviour in the industry because: (i) it did not enforce code conformance;; (ii) it failed to encourage continuous improvement of customer service and complaints handling practices;; and (iii) it was inadequate in providing guidance to deal with emerging consumer issues. Figure 4.1 is a diagrammatic representation of the central actors involved in TCP Code development and review.

Actor from Industry Ombudsman Actor from ISP Industry Association

Actor from Consumer Association

Actor from Regulator

INTERNET SERVICES

CS AND CH PRACTICES IN TCP CODE

Actor from Government department for broadband

The Top Four vLISPs (Regulatory managers)

Figure 4.1 Central actors in the vLISP industry involved in TCP Code development

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Ongoing conversation between the regulator and the industry association is a key part of TCP Code development: We work with to establish codes, codes that we - and we will indicate to as the industry body where we think their existing codes aren't adequate or where we think there needs to be new rules. So we have an ongoing relationship there and generally we will say we think you should do this. They will say, hmm, maybe not. We will say we want you to do this. They'll say okay. You know, it's a negotiation and it's quite constructive and focused on an outcome [P4]

The regulator executive [P4] acknowledged that the code is not always perfect and that there is an ongoing need to negotiate and reach a consensus with the industry association to improve the code in the event it failed to deliver desirable outcomes for consumers. Further, [P4] indicated that extensive dialogue, discussion and negotiation occurred during the code review in 2010/11 to address shortcomings in the old TCP Code. Consumer association executive [P1] attributes such shortcomings to its lack of definition of good customer service: There’s no chapter in the TCP Code that’s called customer service per se and the thing that’s interesting about customer service is that you ask people about what it means and immediately they think about waiting on hold. That’s the thing that comes to their mind first and foremost. Quite often you also get people saying I get put through to call centres and they’re overseas and I don’t understand the person or they don’t understand my problem [P1]

The data analysis revealed that there were very few signatories to the old TCP Code. When the issue of code signatories was raised with the regulator during the interview, [P4] stated that it is not mandatory for vLISPs to be signatories to the code. [P4] believes that vLISPs use a risk averse practice and choose not to sign up to the code: Well they don't have to be signatories … We cared from an attitudinal perspective but if you look at it from the perspective, a big major company with a raft of lawyers in it, looks at the Code, all 75 pages of it and says can we comply with every single word in this Code? The lawyers would say no. From the customer's experience they probably could have, but you know, so from the risk averse practice of the Telcos, they would say no, we can't sign. From our perspective as the compliance and monitoring and enforcement body, it didn't make any difference to us whether they signed or not. If the Code is registered, our expectation is that everyone will comply with it. If we can find an area of non-compliance we will work with the provider to get them to comply or we'll issue them a direction [P4]

However, other external stakeholders, [P1], [P2] and [P10], seriously question the genuine commitment of vLISPs to CS/CH if they fail to sign up to the code. Under the old TCP Code, the regulator can enforce it if they identify an area of non-compliance. This directive occurs when a provider is picked up for systemic CS/CH issues (for 135

example, confirmed code breaches) and has been reported to the regulator by the industry ombudsman. However, providers were not motivated to demonstrate compliance with the old TCP Code because: (i) there were no penalties associated with non-compliance;; and (ii) they had no explicit legal obligation as they were not signatories to the code. [P10] argues that this has led to a ‘race to the bottom’ on customer service. One important question arising from such an observation is: What is the extent of code breaches in the vLISP industry? This exploration is crucial to understand the industry’s compliance with the code and how it influences CS/CH practices in the industry. The ombudsman executive [P5] detailed the processes used in recording confirmed code breaches. According to [P5], when a complaint is recorded by the industry ombudsman as a Level 1 (or) Level 2 complaint (which are classified as not serious) their staff flag that there might be possible code non-compliance issues. Upon further investigation and identification of possible code breaches, the industry ombudsman escalates complaints to Level 3 or 4 (which are serious complaints that require further investigation). During this process an opportunity is given to the providers to respond to the alleged code breaches. If a breach has occurred, the industry ombudsman confirms it and publishes it as confirmed. If there is a persistent breach of a code clause, the industry ombudsman flags it as a systemic issue and alerts the regulator to take necessary action against that provider. The industry association executive [P3] raised concerns about the reporting mechanisms (for example, an inappropriate classification scheme for recording complaints lodged) used by the industry ombudsman for code breaches. Although [P3] raised such concerns, the majority of participants believe that the industry as a whole failed to demonstrate compliance with the old TCP Code. They provided examples of their own campaigns, such as the Connect.Resolve campaign, the regulator’s RTC (Reconnecting the Customer) inquiry and independent research reports commissioned by consumer groups to present evidence of the industry’s lack of code conformance. [P2] argues that vLISPs are not motivated to change their attitude or behaviour even when a code breach is confirmed due to lack of strong enforcement. [P2] believes that the lack of strong enforcement and monitoring has led to watering down of CS/CH

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standards. This raises questions not only about the effectiveness of the old TCP Code to deal with CS/CH issues but also whether providers have fully adopted all Sections of the code and have clear, transparent systems and processes to demonstrate compliance with it: I think the other issue that's important in this current code review is that the industry has acknowledged that its own internal code compliance arrangements were deficient. The industry wasn't really monitoring and reporting and asserting compliance against its own codes of practice [P7]

The findings discussed in this Section confirm that the TCP Code is developed through a coordinated engagement model between various stakeholders. The lack of strong enforcement and monitoring mechanisms, lack of penalties for non-compliance and the inability of the code to deal with emerging consumer issues were key factors that contributed to poor CS/CH performance by the vLISPs. As a result, the old TCP Code failed to deliver acceptable CS/CH outcomes for Internet customers.

4.5

Major category 4: Regulatory compliance with the customer service and complaints handling practices stated in the TCP code

This Section analyzes participant perspectives on the vLISP industry’s regulatory compliance, recent revisions in the TCP Code, the introduction of new consumer safeguards, and increased requirements for code compliance reporting, enforcement and monitoring. Regulatory compliance requires vLISPs to act in accordance with their external obligations. In meeting those obligations, they reflect their internal structures, processes, policies and procedures. It is important to understand how regulatory compliance was assessed in the old TCP Code. The regulator considers a number of factors when assessing vLISP’s code compliance. Firstly, the industry ombudsman complaints data plays an important role in assessing compliance as it provides information about possible code non-compliance issues, confirmed code breaches and systemic CS/CH issues. Secondly, the number of individual consumers expressing their frustration about their provider to the regulator is an indication of the magnitude of the problem. Thirdly, 137

repeated complaints about a provider from its customer base also trigger the interest of the regulator to formally investigate the matter: There are a number of factors we take into account when we're maybe assessing compliance. The is certainly one of them and the biggest one of those. We also have individual consumers [who] may say look, this has happened. We might hear that a few times and then we think, alright, that's something to be delved into. So they're all things that trigger our interest and then we would then talk directly to the provider and perhaps formally require them to provide us with documents or evidence about how they're meeting their obligations [P4]

[P4] confirms their active role as an enforcement body when they see a spike in complaints by directing the industry players (ISPs) to meet their responsibility to comply with the code: With individual providers we often work with them. Our objective is for them to achieve compliance with the existing rules. If we meet with - we notice a provider's got a spike in their complaints. Our first instinct and our first action is to talk to them and to say are you aware of this? Do you know what the problem is? Is it going to continue? What are you doing about it? Then if it doesn't work we might try more formal actions and then we might go into an enforcement [P4] We are the enforcement body but we see that the industry has obligations and responsibility to comply with the code. We're encouraging that anything it can do to get its - to put the pressure on its members to demonstrate compliance, proactively demonstrate by reporting or any of those sorts of things, that's terrific. Ultimately if we're aware of non-compliance it's our role to enforce [P4]

[P2] highlighted many difficulties that arose while enforcing the old TCP Code. A finger-pointing exercise between the regulator and the industry association over whose responsibility it is to actually get providers to comply with the code once it has been written presents a major challenge for enforcement. Another challenge is to avoid communication breakdown between the ombudsman and the industry, and the ombudsman and the regulator regarding the ombudsman’s power to investigate complaints under the code: So they've said to industry write us these codes which we will register because we can enforce them. Then they turn round to industry and say but you never do anything about getting people to comply with your codes to which industry says well we didn't do that because you told us to give us ones that you can register so you could enforce them. So there's been a finger-pointing exercise between the regulator and the industry association over once a code has been written, whose job is it to actually get people to fulfil it? The second one is a similar breakdown between the and industry and the and the regulator because the code process and the legislation notionally creates this idea that the can be given power to investigate complaints under the code [P2]

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Do vLISPs superficially conform to the code? Although several code breaches were recorded against vLISPs in the absence of strong enforcement, [P3] dismisses the view that the vLISPs superficially comply with the code: All of the large providers have good systems for monitoring their compliance and improving their compliance performance. I know this because I talk regularly to the regulatory managers and I understand what they've done. We've used some of their work as models for how other providers might be able to comply within the new code. I don't agree that compliance has been superficial … But the important thing about the new code is that there is a stronger compliance framework to it [P3]

While this notion is not applicable to all players, as some of them have adopted a ‘Beyond Compliance’ approach (for example, [O8] in this study), it raises questions as to why there is a contradiction in the actual behaviour of vLISPs. [P7] openly acknowledged that the industry was not really monitoring its own code and compliance measures. [P10] also confirmed that there were instances where providers claimed that they were compliant with the code but the number of complaints kept rising. This view is also supported by [P1], [P4] and [P5] who expressed their disappointment in the failure of the industry to monitor code compliance. All these views point to a serious failure of the old TCP Code in relation to code compliance and monitoring. The vLISPs adopted the old TCP as they saw fit or on a ceremonial basis to maintain certain outward appearances and demonstrate compliance while their actual behaviour on CS/CH practices differed. Such behaviours raise serious concerns for the customer service reputation of the vLISP industry. If vLISPs are not transparent about their compliance mechanisms and do not demonstrate that their existing CS/CH practices go ‘Beyond Compliance’, serious questions arise about their genuine commitment to CS/CH practices. It is also indicative that many vLISPs see investment in customer service as a cost factor as opposed to a profit factor. In the interviews, I further investigated with the participants their views on what the industry needed to do to address the gaps in compliance with the old TCP Code. In particular, the consumer association perspective provides a holistic view on this subject. [P1] argues that there is a need to have clear mechanisms in the code involving compliance, monitoring and enforcement to bring the industry in line with consistent CS/CH practices. [P1] believes that the ISP industry association should take a lead role in building a compliance culture within the industry. In the quote below some ideas of how code compliance could be improved are stated: 139

You’ve got compliance, you’ve got enforcement and you’ve got monitoring so compliance and building compliance culture we think is something that the industry association should take responsibility for … With monitoring we’d like to see monitoring done by an independent body so somebody who, not necessarily monitors every single clause of the code or every single provider in the industry but based on information about systemic problems, possibly even the would be well placed to do this, that you could actually conduct specific audits … So we’d like to see that separately and we’d like to see it possibly sitting with the and then, of course, there’s enforcement and that’s the role [P1]

The revisions that occurred in the TCP Code during 2010/11 focused on strengthening code compliance and enforcement mechanisms. The following questions were explored during the data analysis of participant responses in relation to code compliance measures in the TCP Code 2012. x

What led to the compliance initiatives in the revised TCP Code?

x

What are the new initiatives in relation to compliance in the revised TCP Code?

x

What did the participants believe this meant in terms of driving the right behaviour in the industry to demonstrate compliance with the code?

The data analysis revealed that there were ‘Trigger Events’ that led to the introduction of new compliance initiatives in the revised TCP Code. Two key ‘Trigger Events’ were the regulator’s RTC inquiry and the timing of the code revision. The regulator’s RTC inquiry (an 18-month investigation) into the industry’s CS/CH practices identified systemic issues with CS/CH across the industry and found that many ISPs were not signatories to the code because they believed they were not fully compliant. The inquiry identified that the lack of clear monitoring, reporting and strong enforcement measures in the old TCP Code led to poor attitudes industry-wide towards customer service improvements. Such attitudes meant that providers used the TIO scheme as a de facto mechanism to handle complaints instead of making a genuine attempt to address the source of the complaints and improve customer service experiences. The second ‘trigger event’ was the timing of the code revision. It was due for review in 2010 and coincided with multiple stakeholder concerns regarding systemic CS/CH failures, high media profile of the problem, Ministerial intervention and the industry ombudsman’s campaign. Collectively, these events placed increased pressure on the top four vLISPs to strengthen compliance and enforcement mechanisms during the code revision. The industry as a whole believed that it faced a real threat of tighter regulation if it failed to address their stakeholder concerns. As a result, the ISP industry association significantly

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increased its member education activities in relation to the code’s revision and compliance issues and sought closer collaboration with external stakeholders to discuss and address their CS/CH concerns. The regulatory executive [P4] described the increased collaboration between the vLISP industry stakeholders during 2010-2011 to address the CS/CH shortcomings in the old TCP Code so as to avoid tighter regulation: The Code at the moment, the industry participants who have been involved are reasonably enthusiastic about it … .I think overall they've been involved - something like 25 different participants from industry have been involved in drafting the Code. So it's been a process that's involved a lot of consultation, negotiation, input from industry. So I think industry as we mentioned before, recognise that they prefer to have a Code than direct regulation. So they've put a lot of effort and energy into it [P4]

[P3] from the ISP industry association explains how the industry started to address the shortcomings of the old TCP Code during the code review process months in advance of the regulator’s RTC inquiry report findings being published. Further, [P3] states that a draft code was submitted to the regulator before the publication of the inquiry’s findings. [P3] emphatically refutes the argument that the industry was simply parroting the RTC recommendations because such recommendations did not exist at the time the code revisions occurred. It is acknowledged that the ISP industry association played a key role in making significant changes to the code with input from all stakeholders. Twenty out of the 21 RTC initial inquiry recommendations were incorporated by the ISP industry association into the revised TCP Code. This re-emphasizes the earlier argument that the timing of the events, pressure from external stakeholders and a real threat of tighter regulation all played a crucial role in increasing the top four vLISPs commitment to the TCP Code revision process. The industry ombudsman executive [P5] and consumer association executive [P1] acknowledged that the RTC inquiry and its recommendations assisted with securing the commitment from the top four vLISPs and keeping the discussion regarding code revisions focused on the central issues. The ombudsman executive [P5] states: I think in terms of the existing code, I’m sure it’s fair to say that some of those recommendations out of reconnecting the customer would no doubt have had an impact on the discussions that occurred at those working committee groups and probably would have influenced the substance of the code [P5]

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To answer the question about the new compliance initiatives in the revised code, a comprehensive overview and discussion about an independent compliance body to oversee compliance activities in the revised TCP Code is crucial. Several new initiatives related to compliance were addressed in the revised TCP Code. The introduction of an independent compliance committee, Communications Compliance (CC), and a new compliance framework were important achievements. This independent committee comprises an independent chair, consumer representatives, industry representatives (who formerly held positions in the top two vLISPs). They are responsible for the CC’s day-to-day operations in overseeing the code compliance activities. The revised TCP Code specifies that all providers need to submit mandatory compliance statements to CC and demonstrate that they have the systems and processes to be able to comply. The providers are also required to submit their compliance activities against a list of customer service metrics that has been developed by the CC. The CC works closely with the regulator on code enforcement and must report to the Australian Communications and Media Authority on compliance breaches. The industry consultant [P2] appreciated the strong enforcement power that CC and the regulator now have in relation to compliance. Another key initiative led by the ISP industry association in relation to code compliance is evidenced through the series of compliance workshops that it runs for its members. Such workshops educate providers on how to demonstrate compliance with the revised TCP Code. The industry association executive [P3] explains the added benefits of the new compliance initiatives: The difference in the new code is that there is a new independent body being set up called Communications Compliance whose task it will be to make sure that all of the service providers in the industry, all of them, not just the members, are performing in a way that is consistent with compliance with the code. That they have the systems and processes in place to be able to comply. If they are not complying on day one, that they have a plan in place which maps out how they are going to become compliant [P3]

According to the industry ombudsman executive [P5], the industry needs to be genuinely committed to the revised code to achieve best outcomes for consumers. The effective monitoring and enforcement of the revised TCP Code is crucial to bringing the industry into line with its CS/CH performance.

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Will the newly formed independent body CC drive the desired behaviour in the industry to demonstrate compliance with the code? Several participants shared their perspectives on this topic. The government executive [P10] believes that the more power and resources CC has for code enforcement, the better it is positioned to drive the desired behaviour in the industry: I think there's a view that the compliance committee is as good as the teeth it has and the representation it has. I think it needs to be fairly represented by consumer and independent representatives, but there's a question about whether it takes a role as, whether it needs to have that representation or whether it needs to have just professional governance, and being able to - it doesn't matter what the background of the representative is, just that they play a role in governance. I think the penalties and the teeth and the seriousness which industry take that body will be how well it performs … The more powers it has and the more teeth it has I suppose the better it is [P10]

A vLISP executive [P7] strongly believes that the CC has powers to raise questions and conduct investigations in relation to compliance. According to [P7], the revised TCP Code with its higher threshold on CS/CH and improved compliance framework will drive the desired behaviour in the industry to deliver compliant outcomes in CS/CH areas: This current code - the industry has committed to set up its own monitoring body called Communications Compliance. That body will be empowered to seek reports from all of the industry members about their compliance with that particular code. It will have powers to ask questions and investigate if necessary. Where a participant hasn't responded to those requests, then they'll be submitted off to the regulator to take necessary action. So we think that combined with raising the rules of the roads, as I said before and making a higher threshold, together with improved compliance framework, it will, one hopes, drive the right behaviour in the industry to deliver better compliant outcome both in complaint handling and customer service [P7]

Further, [P7] argues that the new compliance measures in the revised TCP Code will lead to greater transparency in relation to code compliance. It will lead to increased involvement of company senior management in compliance matters due to high threshold/standards within the revised TCP Code and the stringent requirements the code now places on the providers to demonstrate their compliance: What we anticipate coming out of the new code and the new code compliance framework is that industry's compliance with the code would be more transparent. One of the things we're wanting to do is to have this new communications compliance group get reports from the various participants saying, I'm complying. It's important to recognise that the bigger players, like us, will have to have a third-party assessment that their statement of compliance is reasonable against the Australian Standard for Compliance Programs. It's also important to realise that before we submits it, someone like our CEO has to put his name to it. So it's quite a high threshold before you assert you're compliant. Communications compliance will then publish that statement of compliance and it will say on a public website that says it's compliant, … So imagine if you're a supplier

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and your name is not on that list? The general public will come to the conclusion, oh, I'm not going to deal with that supplier because it's not on the list [P7]

This transparency with code compliance is also expected to drive the desired behaviour in the industry in relation to the customer service and complaints handling practices.

4.6

Major category 5: Stakeholder interactions for discussion of customer service, complaints handling issues and challenges

The previous Section discussed TCP Code development, the central actors involved in developing the TCP Code and regulatory compliance matters. In this Section, the focus is on the stakeholder interactions during 2010-2012 that occurred with a view to improving the industry’s CS/CH practices. The findings suggest that recent revisions to the TCP Code occurred due to frequent and fateful interactions among all industry stakeholders. In particular, the following questions about stakeholder interactions on CS/CH practices and TCP Code revision are addressed in this Section: x

Where does the engagement occur?

x

By what means the engagement occurs?

x

What is the level of interaction of individual stakeholders with other stakeholders?

x

What did the increased interaction, collaboration, cooperation lead to in the revised TCP Code? What changes occurred to the CS/CH practices in the revised TCP Code?

The engagement between various institutional stakeholders in the vLISP industry occurred through the TCP Code review working groups, TCP Code review steering committees, the regulator’s RTC inquiry meetings, the consumer association’s annual conference and the industry ombudsman’s workshops and campaigns. The engagement occurred using both formal and informal communication channels. The formal communication channel refers to face-to-face communication at various events while informal communication channel refers to communication through videoconferencing, conference call, email conversations and telephone conversations.

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The regulator has ongoing interactions with the industry ombudsman and the government department for broadband. They meet formally every quarter, but informally discuss CS/CH issues as required. With the ISP industry association, the interaction occurs through their membership of the code review working committees. There is both formal and informal interaction between the regulator and the consumer association on CS/CH issues. Formal interaction occurs through the regulator consumer consultative forum of which the consumer association is a member. The interaction with the top four vLISPs occurs in code review meetings, the inquiry into CS/CH practices, consumer forums, the consumer association’s annual conference, the industry ombudsman’s campaigns, government department broadband policy formulation committees and the ISP industry association’s annual conference. A sample quote in relation to these interactions is provided below: With the , the , the , we meet formally once a quarter, but informally we talk all the time. With , again we're part of working groups with them so there's an ongoing relationship there. The [is] a member of our consumer consultative forum so we meet with them formally as part of that but also have ongoing informal discussion about any issue [P4]

Interaction between the ombudsman and the top four vLISPs occurs through their day to day operational dealings on individual customer complaints. The industry ombudsman complaints handler works with the vLISP complaints manager to resolve complaints. The industry ombudsman plays an intelligence role by supplying complaints data to individual vLISPs to conduct their own root cause analysis of the data and what drives those complaints. Additionally, the industry ombudsman has both formal and informal interactions with the regulator and the ISP industry association for regular reporting of complaints data. The study data showed that a close interaction between the industry ombudsman and the chairman of the regulator existed during the regulator’s RTC inquiry into CS/CH practices. With the ISP industry association, the industry ombudsman meets four times a year formally and contributes to their code development processes. The industry ombudsman also provides regular complaints data to the consumer association and interacts with them at various events (for example, at the consumer association’s annual conference). The ombudsman executive [P5] describes the nature of its interactions with other stakeholders: 145

We have good working relationships with all of those stakeholders. With the two regulators, with the and , we provide them with regular reporting. So we provide them with regular data reports to really give them a snapshot of the types of complaints and consumers issues that we’re seeing .That’s on top of a number of different functional relationships that we have throughout the office … then various other parts of our organization will I guess liaise with their contemporaries over at the regulators as well. , we have frequent conversations with. We make an effort to make submissions to as many of their co-development processes as we feel are relevant to our work and we also provide them with important data on their own members [P5] With the likewise, we’d have a range of different touch points there. We’d have some periodic meetings that we would attend with them. We would also, as I say, provide that data to them, which is a monthly basis and if there’s any follow up conversations they need to have there, we’ll obviously have those. We also make submissions to things like their reconnecting the customer enquiry and also some of their other regulatory programs, such as the numbering program [P5]

The consumer association’s interaction with the regulator occurs through their membership of the regulator’s consumer consultative forum. They meet with the regulator twice a year but informally discuss CS/CH issues as required. [O1] had close interaction with the regulator during the RTC inquiry. Specifically, the consumer association executive [P1] has a close working relationship with the chair of the regulator’s board. [O1]’s interaction with the ISP industry association occurs through their representation on the TCP Code review steering and working committees. In particular, they have had many interactions in recent times to attend to code compliance and reporting matters. [P1] also meets with the CEOs of the top four vLISPs to discuss CS/CH issues. An example of a recent meeting with the CEO of [O6] and [O7] was provided during the interview. The consumer association also interacts with vLISP [O9] through their consumer liaison forum. [O1] has regular contact with the government department for broadband and the Minister’s office to discuss consumer protection policy issues: With the industry association, I’m sitting on their Telecommunications Consumer Protection Code Review Steering Committee at the moment. So that’s looking at complaint handling and benchmarks for that … Just this morning we had a meeting with so we’re regularly meeting with all the different providers, quite high level, sometimes with their CEOs and also with - , we’ve met with the CEO. So we are engaging with all of them at different points, some of them in slightly different ways because some of it is decided by how they work things but has a consumer liaison forum … and also the Department of Broadband and also the Minister’s office. We regularly consult with the Minister’s office [P1]

The ISP industry association [O3] representative has close working relationships with executives from the top four vLISPs [O6], [O7], [O8] and [O9]. For example, [P3] interacted with [P6] who was the industry representative chair on the TCP Code review committee. [P3]’s interaction with the top four vLISPs occurs through board meetings,

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TCP Code review meetings and informal networking. The top four vLISPs are members of the ISP industry association and part of its operations council, supplying some of its current board members, and of working committees for TCP Code review. The ISP industry association acted as a conduit for the top four vLISPs to openly discuss CS/CH issues and be able to meet and agree to the code. The recent revisions to the TCP Code had six working groups undertaking revisions to its specific chapters. The data analysis indicates that such committees have met more than 100 times collectively to discuss pertinent issues. The TCP Code review steering committee with representations from [O6] and [O7] met about 20 times to discuss code issues. The industry association executive [P3] decides on the industry’s position on different issues (technical as well as non-technical) and represents the industry in both the public and the political arenas. Such a multitude of interactions is captured in the ISP industry association executive [P3]’s responses presented below: It happens at a range of levels. Three of those players are Directors on our Board. They are part of various working committees, they're part of the Operations Council, which is one level below the Board, the committee that manages our overall work plan. All of those players are involved in that operation [P3] They do meet on issues of common industry concern, … But the primary channel for cross industry collaboration on things like customer service in broadband is and is relating to the TCP Code. At the moment in the revision of that code, we've had six working groups charged with undertaking revisions of particular specific chapters of the code. They've met more than 100 times collectively. The major players have been on those working groups. The steering group has met about 20 times and and were represented on the steering group. The industry group that I run which is these - the less formal group that decides the industry position on all of the different issues, has been meeting on a weekly basis for more than a year. So it's all of those related channels or mechanisms that provide the means for them to sit down and talk about those things [P3] Our Board meets every two months and there is discussion at that level about these issues. The working groups have met more than 100 times. The industry group that I run to craft positions, is meeting at the moment on a weekly basis, sometimes more than once a week as we get to the pointy end of the revision process. So it's been - since the code revision started in May 2010, those meetings have been regular over the last six months they've probably increased in frequency [P3]

A further insight gained from vLISP executive [P6]’s response indicates that the industry association [O3] is a key player in facilitation of challenges common to the whole sector. The government department executive [P10] shared his perspectives on the interaction his department has with other stakeholders. According to him, [O10] is constantly in touch with vLISPs [O6], [O7], [O8] and [O9] as they have additional obligations (due to their high visibility and market share) for TCP Code development and implementation. 147

[P10] explained that the top four vLISPs go out of their way to engage with the government department for broadband to discuss CS/CH issues, recognising that there are areas that the government has a legitimate interest in. [O10] engages with the regulator on a frequent basis to discuss consumer issues. Their engagement with the ISP industry association occurs through various communication channels such as meetings, forums and emails. [P10] acknowledges the existence of strong professional network contacts among the top four vLISPs and the ISP industry association. However, [P10] emphasized that the discussions between the top four vLISPs focused more on technical issues and an increased engagement on CS/CH issues did not occur until recently: I think it's fair to say that there are some ISPs who go out of their way to engage with the Department because they want to talk about these issues and they recognise that they're things that Government has a legitimate interest in. There are other ISPs I think that take an attitude that we'll only talk to Government when they subpoena us. So I think that there's a mixture there, but I think that the top , , definitely, we do engage with them quite regularly. We do engage with the very, not a day goes past when we don't probably deal with the . , similarly, we regularly engage with them. So, no, I think we have a - there's an ongoing dialogue. We have teleconferences, we have meetings. There's often forums held about issues. There are get togethers, like I've got a regular get together with which we're having tomorrow. We have emails if things come up. You know might be in the paper over something and they might say, well this is our side of the story and we correspond that way. A range of means, I couldn't sort of single out one. It depends on the issue, really [P10]

The top four vLISPs also interact with various stakeholders directly. For example, [O6] has a staff member who sits on the board of the ISP industry association [O3] which meets fortnightly. [P6] confirms the close interaction he had directly with the ISP industry association during code revision. [O6] interacts with other vLISPs [O7], [O8] and [09] on an informal basis. [P6] highlights that such cooperation and contact between the top four vLISPs is required because he believes that in numbers they have a better chance of achieving a desired outcome (for example, avoiding tighter regulation). The CEO of [O6] meets with the consumer association [O1] every six months to discuss CS/CH issues. [O6]’s interaction with the regulator and the government department for broadband occurs during TCP Code review meetings, policy discussion forums and regulator inquiries. Their interaction with the industry ombudsman occurs on a daily basis to resolve customer complaints: There’s a lot of common ground and common issues across the industry and that includes as well. Most of the times. So we do meet frequently on more of an informal basis … It's useful from our perspective because a lot of those other telcos are much better resourced. So we can benefit from a lot of the work they can do on some of these issues. But it also - we acknowledge and recognise that in numbers we have a better chance of getting a more favourable outcome on some of these issues [P6]

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Other avenues for interaction between the top four vLISPs also exist. The vLISP executive [P8] described his organization’s role as a member of a coalition of competitive carriers (CCC). The CCC comprises vLISPs [O6], [O7] and [O8]. They have quarterly formal meetings and an annual general meeting. Additionally, fortnightly meetings between members occur through teleconference. With the ombudsman and the industry association, [O8] interacts regularly to discuss CS/CH issues. [P8] stated that when he meets actors from stakeholder agencies at various industry events, it is the same people he interacts with (executives from external stakeholder agencies such as the regulator, the industry ombudsman, and the government department for broadband). Significant engagement between [O8] and other vLISPs occurred during the TCP Code revision. [O8] interacts with the consumer association by participating in the association’s annual conference and special events. Their interaction with the government department and the regulator occurs on a needs basis to discuss broadband policies: So my comments about the CCC and the regularity of our meetings: what I find is, when I go to say, the or I have other meetings at other times about other matters, like the NBN stuff, it’s the same people - often it’s the same people. So we can be meeting on a CCC agenda on the phone but that’s not to say that at the end of the phone call I might say to from or somebody, have you got a sec ? Can I ask you a couple of quick questions about this, that or the other thing? So the TCP Code is one where we shared - swapped a lot of notes. I think we’ve probably had two or three people across the development of that TCP Code over the last 12 months [P8]

One example of interaction between a national vLISP [O7] and other stakeholders provides a good insight into the comprehensive and frequent interactions that occurred in the lead up to and during the TCP Code revision process. [O7]’s relationship with [O1] occurs through a dedicated relationship manager based in [O7]. [P7] highlighted the need for the consumer association to play a dual role in not only seeking the industry’s attention to CS/CH problems but also contributing to the development of possible solutions. [O7]’s interactions with the government department for broadband [O10] is frequent because they communicate regularly through meetings they attend together (such as TCP Code review steering committees). It is through similar means that [O7] interacts with other vLISPs [O6], [O8] and [O9]. [P7] used an example to describe how his organization [O7] was keeping the government department for broadband [O10] updated on their new CS/CH initiatives. [P7] acknowledged the pressure the government department placed on his organization 149

to improve their CS/CH processes and performance. [P7] also described the extensive engagement [O7] had with the regulator and other external stakeholders during the regulator’s RTC inquiry. This occurred through submissions to the regulator, attendance at public hearings and participation in the TCP Code review working committees. He confirms that the resulting revisions to the code are clear evidence of increased requirements for the vLISP industry in areas such as customer service, complaints handling, advertising, compliance and staff training: I'll go with the first, the . Our engagement is through a coordinated engagement model. We have a standard policy within our organization that says our engagement with the will be on a professional and respectful basis that will be coordinated through the regulatory affairs team - the team that I work in. Typically we'll appoint a manager to manage that relationship. For the I am the relationship manager. Obviously we are a large organization and the has over 600 staff, so on a day-to-day basis there are a number of relationships at an operational level through different parts of our organization and different parts of the . We will regularly have senior engagement. The CEO directly reports with the authority and gives direct reports. We had one recently where - I just had a new GMD appointed and we had a meeting with the Chairman of the , the Deputy Chair and the other full-time member. That went for an hour just to talk about the relationship and what we're trying to do. That's a regular sort of issue [P7]

[P7] described further interactions with other vLISPs through professional working relationships and the ISP industry association’s board meetings. He provided confirmation that while there is disagreement in some areas there was consensus among the top four vLISPs on commitment to the TCP Code revision process and the need to improve the industry’s customer service reputation. [O7]’s interaction with the ombudsman occurs during TIO board/council meetings and forums. Further, [O7]’s relationship manager has direct and daily operational dealings with the ombudsman to resolve complaints. [O7] also interacts with the industry association [O3] during the association’s code review and board meetings. [O7] representatives have also been involved in the code review sub-groups and working groups that develop various chapters of the code (for example, chapters on complaints handling, credit management, sales, service and compliance): As I spoke about the code work and the inquiry, the industry hasn't done well. So we accept that and I've just described what we're doing. We will do certain things and the industry is going to do certain things. The industry now is saying that the basic rules of the road, as set out in the codes of practice, are not good enough. We need to raise the bar slightly and that's what we're doing. We're listening to the , we're listening to the inquiry, we're listening to the , we're listening to the Department and we're saying, yes, we accept that we've got to do things differently, we've got to raise the bar. We're definitely listening to them in that sense. So the revised code that's being finalised as we speak will have increased requirements on the industry as well as us, in respect of advertising. You will have increased requirements in respect of complaint handling … There is a range of things that will raise the bar so in that sense they are influential [P7]

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Altogether, this Section provided the participant perspectives on stakeholder interactions that occurred in relation to CS/CH practices. The key venues for such interactions were the TCP Code review working as well as steering committees, the consumer association annual conferences, the industry ombudsman campaigns, the regulator’s RTC inquiry, board meetings in various stakeholder agencies and the ISP industry association’s events. Both formal and informal interactions occurred among the stakeholders to discuss CS/CH practice improvements. In particular, these interactions peaked in 2010/2011 while revisions were being made to the TCP Code to address shortcomings in relation to CS/CH practices. The key agencies that the participants believe influenced the CS/CH practices of the Australian vLISP industry is the focus of next Section.

4.7

Major category 6: Key agencies and their role in influencing customer service and complaints handling practices of the vLISP industry

Data analysis showed that the CS/CH practices of the vLISP industry are developed through the collaborative efforts of the central actors in stakeholder agencies. In this Section, key agencies that study participants believe influenced the CS/CH practices of the vLISP industry are presented. The top three stakeholder agencies identified by the participants in influencing the CS/CH practices of the industry include the Regulator, the industry Ombudsman and the ISP industry association. All participants identified the regulator as a major player in influencing the industry’s CS/CH practices. However, [P1] believes that the regulator does not have a track record for being a strong enforcer of the old TCP Code. [P1] acknowledges the recent initiatives of the regulator to bring the industry into line with desirable CS/CH practices. The regulator inquiry into CS/CH practices was launched after a number of stakeholders expressed their disappointment about the rapid increase in the volume of complaints and code breaches recorded by the industry ombudsman. All study participants agreed that the regulator inquiry led to increased dialogue, discussion and 151

collaboration on CS/CH practices. [P10] is of the view that the inquiry put the industry on notice and as a result the industry players were quick to express their full commitment to the TCP Code’s revision. Further analysis of the role of regulator in influencing CS/CH practices revealed that their recent regulatory initiatives led to stronger enforcement and monitoring processes in the revised code. Following the development and publication of inquiry recommendations for improving CS/CH practices, the regulator also pressured the industry to address shortcomings in the old code. Such initiatives sent a strong message to the industry about the regulator’s willingness to tighten regulation if the industry failed to adopt the inquiry’s recommendations. Another key agency in influencing CS/CH practices is the ISP industry association. The vLISP executives [P7] and [P8] highlight several activities the industry association undertook in 2010/2011 in relation to the TCP Code revision. These activities include the setting up and conduct of the TCP Code review working committee meetings, a special discussion panel on customer service at industry and consumer conferences and contributing to submissions to the regulator’s inquiry. The ombudsman executive [P5] commends the ISP industry association for taking a lead role in educating its members about code compliance and fostering compliance culture within the industry. [P4] noted that the ISP industry association has a major role in influencing their members to adopt the CS/CH practices contained in the revised TCP Code. For example, it runs compliance workshops to assist their members to demonstrate compliance with the revised TCP Code. There is a role for the industry ombudsman in influencing the industry’s CS/CH practices. The vLISP executive [P7] and the regulator executive [P4] explain the important role the industry ombudsman plays in informing the CS/CH performance of the industry. [P4] believes that the industry ombudsman’s complaints data, campaigns and ongoing concern about poor CS/CH performance played an influential role in raising awareness about the systemic issues. The government executive [P10] refers to a number of forums and workshops the industry ombudsman organized which brought the consumer groups and the industry together to openly discuss CS/CH issues. Additionally, the industry ombudsman has a dual role in influencing CS/CH practices. It manages the day to day operational dealings with the top four vLISPs to resolve

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complaints. For example, vLISP executive [P7] notes the day to day interaction the industry ombudsman has with [O7] to resolve complaints. He characterises such interactions as a trigger for self-auditing of [O7]’s CS/CH policies and procedures. The relationship the industry ombudsman has with the regulator includes reporting on systemic code breaches about individual vLISPs to the regulator. The regulator then directs vLISPs to comply with the code and demonstrate that steps have been taken to improve CS/CH performance: One of the key agencies is the , primarily from a complaint handling but clearly also from a customer service [point of view]… The ombudsman is empowered to make decisions that are binding on the ISP in certain guidelines. Secondly, the ombudsman clearly is then able to make decisions about complaints that are of a systemic nature and make recommendations and findings against individual ISPs about systemic breaches. In that sense it can look at individual transactions but look at a broader number of transactions and seek to change, modify and influence a supplier's policies and procedures. Lastly, the ombudsman has a role in articulating to the general community and to the consumer body at large the performance of the telecommunications industry in respect of complaint handling and trends in complaints and issues that give rise to complaints. In that public forum it provides increased awareness about where the industry is not delivering adequate service. Therefore, there is a consequential focus on poor performance [P7]

In addition to the key agencies discussed above, the participants also identified factors such as: (i) company ethos and senior management attitude towards CS/CH practices (whether they see CS investment as a cost or profit factor);; and (ii) social media sites such as Whirlpool which provide a platform for customers to share their service experiences are also relevant to the industry’s CS/CH practices Thus, complaints against an ISP are publicly discussed in online forums have direct implications for their business. As a result, ISPs are forced to pay attention to customer concerns. In summary, the study findings indicate that the key agencies which played a role in influencing CS/CH practices of vLISP are the regulator, the ISP industry association and the industry ombudsman.

4.8

Major category 7: External stakeholder pressures in the Internet Service Provider industry and their influence on customer service and complaints handling practices of vLISPs

In this Section, individual participant responses about the pressures that the vLISP industry was subjected to are presented. These responses provided insights into not only 153

the pressures that existed but also how they influenced the revisions to the TCP Code and enhancements to CS/CH practices. A rigorous analysis of these findings using past expert institutional studies is presented in Chapter 5. Data analysis revealed that the top four vLISPs came under increasing pressure from competitors such as [O8] who excelled in customer service. Consumer association executive [P1] and vLISP executive [P8] stated that vLISPs which were underperforming in CS/CH areas came under increasing pressure from providers such as [O8]. [P8] provided an example of how the customer service measurement tool known as Net Promoter Score (NPS) used in [O8] was considered for adoption by one of their competitors [O9] in an attempt to make customer service practice improvements: I have seen a copy of an internal memo that circulated, which was an analysis of and what it was doing in relation to its customer service and it’s clear that they, I think, were looking to see if they could learn anything from what we did and the way we operated in order to apply it to their own business. I had a conversation with some staff who also claim … that they were using NPS as well … I think there are people now, more and more companies looking at this NPS because we’ve given it a fair bit of publicity. We quite happily will go out there and talk about it and we’re quite happy for the rest of the industry to lift its game [P8] when you go and talk to them they’re all aware of what is doing and now sits on the Telecommunications Ombudsman board and they play an influential role even though they’re not in the whole industry, even though they’re not a very big player compared to like or [P1]

The government department executive [P10] believes that there is a role for competitive pressures created by providers excelling in customer service to make under-performing ISPs look more inwardly into their CS/CH practices and identify what they are doing wrong. The ISP industry association executive [P3] regards competition as the primary pressure in influencing the vLISP attitude towards CS/CH practices. [P3] acknowledges that other pressures such as the pressure from the regulator (for example, enforcement or direction to comply) and government agencies (Ministerial intervention) also played a role in influencing the CS/CH practices of the industry. According to him, the real threat of tighter regulation along with Ministerial intervention played a key role in bringing the top four vLISPs together to quickly act in failed areas of the consumer code. The vLISPs’ fear of tighter regulation and their preference to be masters of their

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own destinies over imposition of stringent regulation on the industry is evident from the quote below: The force that outstrips all of those is the pressure of competition. This is a very competitive market. Customers are mobile in the Internet space and they are looking for a better deal. So apart from any of the other factors you mentioned, all of which are important and significant, it's the power of competition that drives the actions [P3]

The industry consultant [P2] observed that in a co-regulatory environment the regulatory managers of the top vLISPs are quite keen to satisfy the needs of external entities such as the regulator, the ombudsman and the consumer association. They do so in order to avoid tighter regulation, seek legitimacy for their practices and influence practices that suit their collective interests. [P2] states that the pressure that will work effectively in such an environment is the pressure from the regulator threatening further regulation. [P2] recommends that the regulator shifts their attention to appreciate and publicize vLISPs that excel in customer service rather than publicize the poor performers. He argues that by pointing to good players in the market the regulator is able to drive and generate competition pressures that will drive desirable behaviour in the industry. The regulator executive [P4] states that a combination of pressure from the regulator, the ombudsman, the consumer association and competitors excelling in customer service played an influential role in both making significant improvements to the TCP Code and bringing in new customer service initiatives within the top four vLISPs. The regulator executive [P4] shares other participants’ views that the top four vLISPs prefer co-regulation with strong enforcement to direct regulation. She further adds that the real threat of tighter regulation played a dominant role in influencing the attitude of regulatory managers to demand serious attention to various stakeholder concerns on CS/CH. The vLISP executives [P6], [P7], [P8] and [P9] acknowledge customer pressures as a key pressure or driver in influencing their CS/CH practices. According to them, customer service is important for their business success now and for the future. The top four vLISPs acknowledged the influential role of the regulator, the ombudsman, competitors and consumer advocates in pressuring the vLISP industry as a whole to improve their customer service reputation. The top four vLISPs consider the external stakeholder pressures to be secondary drivers in influencing their CS/CH practices. The top four vLISPs responded to pressures to avoid increased scrutiny, repair customer service 155

legitimacy, avoid excessive regulation and influence practices that suit their collective interests: It's important to recognise that we put a considerable amount of effort into talking to and listening to customers ourselves. We have an extensive program of not only analysing complaint data that we receive as well as the complaint data but also an extensive program of listening to our consultants talking to customers. We go back and talk to our customers after they've had a transaction with us and seek their feedback. It's that voice of the customer that is the key driver of changes to our behaviour. We obviously are very cognisant of the role those agencies have and we listen to what they tell us but I wouldn’t want to suggest that they are the key driver of our behaviour. It's our customers, our engagement. I spoke about customer satisfaction. That's all about us listening to our customers, what they're telling us, what's working, what's not working. We put a great deal of effort into doing that [P7]

In this Section, the external pressures that exist in the vLISP industry were identified and discussed based on participant responses. The pressures were exerted by the regulator, the ombudsman, the industry association, government authorities and the consumer association. The vLISP that excelled in customer service also placed additional pressures on under-performing vLISPs. The top four vLISPs consider customer pressure as the primary pressure in influencing their attitudes towards CS/CH improvements. The external stakeholders on the other hand consider the pressures that they exert on the top four vLISPs as being influential in securing CS/CH improvements. Participant beliefs about external pressures that had an influence on CS/CH practices of the vLISP industry are presented with examples in the subsequent sub-Sections. 4.8.1

Pressure 1: Ombudsman’s Connect.Resolve campaign

The industry ombudsman exerted pressure on the top four vLISPs to lift up their CS/CH performance through its Connect.Resolve campaign. Participants shared their views on the effectiveness of this campaign, the responses of vLISPs to it and the role the campaign played in bringing complaint numbers down. The majority of the study participants believed that rising complaint numbers related to CS/CH and the failure of providers to address systemic CS/CH issues were the main reasons the ombudsman launched the Connect.Resolve campaign. The campaign targeted the top ten ISPs in Australia. During the campaign period, monthly complaint statistics were provided to the vLISPs to conduct their own root cause analysis of the

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problems and to make new initiatives within their organizations to improve their CS/CH performance: Our previous Ombudsman, decided that really a targeted campaign was the best way to firstly try and shed light on the issues but secondly, to try and work with the providers collaboratively to try and bring this ratio of complaints down and particularly try and address those customer service and complaint handling issues that had been picked up. So it was run for a period of six months … the 10 providers were given advanced briefings of the campaign. This is what we’re going to be measuring. We’re going to be giving you regular updates on the numbers that are coming through our scheme and we’re interested in working with you to help develop any kind of mechanisms that might improve things [P5]

According to [P5], the top four vLISPs viewed the campaign as an opportunity to work with the industry ombudsman and introduce mechanisms to improve their CS/CH performance: It was overwhelmingly positive and I think the Ombudsman at the time was actually very encouraged with the response that she got at the commencement of that campaign. We then endeavoured to keep updating those companies during and after the campaign as to how they were tracking against the complaint handling, customer service issues that were the focus [P5]

The ISP industry association executive [P3] acknowledges that the campaign provided valuable feedback to the top four vLISPs on CS/CH issues. He indicated that the campaign had an overall positive impact both during the campaign and at its end in bringing complaint numbers down for some vLISPs: We were satisfied with the campaign in that we actually observed a decrease in the rate of growth around those types of complaints. I wouldn’t go so far as to say that at the end of that campaign customer service and complaint handling issues were almost non-existent;; that just wouldn’t be accurate [P3]

The campaign drew the attention of vLISPs’ regulatory managers to focus on CS/CH practices. [P10] also shares this view that the campaign helped raise awareness of the systemic CS/CH issues that needed to be addressed. The campaign raised the profile of the problem and sent a warning signal to the top four vLISPs to address CS/CH concerns as a matter of priority. The regulator executive [P4] highlighted that the monthly complaint statistics provided to the top four vLISPs during the campaign were useful in ascertaining the progress made by vLISPs in relation to customer service compared to the previous time period. When the regulator deconstructed the data to determine the reasons for improvements in CS/CH in some vLISPs, it was found that the CEOs of those companies were paying

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more attention to CS/CH areas and there were signs of genuine organization-wide commitment to improve CS/CH performance. One vLISP [P6] indicated that the campaign assisted their organization to understand the types of complaints recorded about their services and to introduce proactive strategies to combat CS/CH related issues. In contrast, [P8] stated that the TIO campaign was merely a brand awareness campaign that was aimed at promoting the TIO’s services to increase demand. However, the majority of the study participants viewed the campaign as applying useful pressure and an opportunity to lift up the CS/CH performance of the vLISP industry. 4.8.2

Pressure 2: ACMA’s Reconnecting the Customer (RTC) inquiry

The study participants were asked about the role of the regulator’s RTC inquiry in influencing changes to CS/CH practices under the revised TCP Code and the top four vLISPs’ responses to the inquiry. The regulator executive [P4] stated that the RTC inquiry was timely in that it coincided with the TCP Code review process during 2010. The RTC inquiry provided the regulator with an opportunity to take additional evidence (related to CS/CH shortcomings) to the industry while the TCP Code was being reviewed. It was noted that the ISP industry association left on hold the CS/CH Sections of the TCP Code in order to accommodate any recommendations that might come out of the RTC inquiry at a later time. Hence, the RTC inquiry took a prominent role in informing changes and significant improvements that the old TCP Code required. According to [P4], if there had not been an inquiry and, instead, a code review alone, it was highly likely that the top four vLISPs would not have taken the code review process seriously. [P4] describes the reaction of the top four vLISPs to the regulator’s launch of the RTC inquiry as a cautious approach. That is, the top four vLISPs were keen to know why the regulator was launching the inquiry, the intentions behind it and what the expectations were in relation to its outcomes. The ISP industry association executive [P3] confirmed feelings of mild inconvenience and curiosity among their members at the time of the inquiry’s launch, but welcomed

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such a move by the regulator as it allowed the industry association to get direct input to the TCP Code and engage with the regulator to improve various Sections of the code: There has been strong and understandable political and regulatory pressure on these topics, as you would expect to happen when you see the sorts of difficulties and issues that have been thrown up and indicated by some of the complaint volumes. So, I mean the Minister … has said repeatedly, he's probably said it more often than he wanted to have to say it. That unless the industry can pull its act together and can put measures in place and selfregulatory and co-regulatory steps in place to address the issues, he will come over the top in a not particularly subtle way and impose legislative or regulatory constraints that serve to generate that type of behaviour. The has said similar things. It's said exactly that when launching its RTC inquiry also in about May last year. So I think that all that pressure from regulators and from politicians is not surprising and I think in most cases, not unhelpful [P3]

The vLISP executive [P6] believes that the inquiry was launched as a direct result of the pressure that came out of the consumer association and the ombudsman who were raising serious concerns about the failure of the industry to lift up their CS/CH performance. According to [P6], both the regulator and the Minister’s department felt the need to investigate the underlying CS/CH problems. The inquiry served as a reminder to the industry to get its act together and provided a final chance to fix the CS/CH problems. When asked why the industry took this inquiry seriously? [P6] explained that the threat of tighter regulation made providers take the inquiry seriously and genuinely participate in the hearings, TCP Code review submissions and meetings to discuss problematic issues. Another reason for the inquiry’s launch was because the regulator felt many providers were using the TIO scheme as a de facto CH mechanism instead of setting up their own complaints handling processes. The regulator and the ombudsman were concerned that providers were not able to resolve basic complaints that should not have reached the TIO in the first place. The government department executive [P10] shares the view of the vLISP executive [P6] that the consumer association played an active role in pressuring the regulator to act. He further believes that the public and media outcry over the rising number of CS/CH complaints in the industry also pressured the regulator to act. [P10] is of the view that had there not been that pressure before and after the inquiry from stakeholders such as the regulator, the consumer association and the ombudsman, the industry would have had a similar code to the one they had before. He further states 159

that the coincidence of the timing of the inquiry and the TCP Code review provided opportunities for both the ISP industry association and the regulator to respond to each other’s expectations through forums, hearings and code review discussions. Such interactions placed direct pressure on the ISP industry association and the top four vLISPs to address the regulator’s CS/CH concerns. [P7] commends the regulator on spending a significant amount of time consulting with both the industry and the key stakeholders during the inquiry to address CS/CH problems. He strongly believes that the regulator played an important role in bringing the stakeholders together and that this has led to numerous improvements in the TCP Code in areas such as compliance, advertising, pricing arrangements, complaints handling and point of sale concerns. He points to one of the new initiatives in the revised TCP Code which is a mandatory requirement for providers to give customers a ‘Critical Information Summary’ document at the point of sale. The industry came up with this requirement to improve product and service disclosure information at that point: I think to be fair, the spent a lot of time consulting both with industry and with other key stakeholders and they had a very good process of consultation. They had a round of engagement workshops with industry before they even started their inquiry. They had, as I said before, a series of public hearings involving a range of stakeholders who all put in submissions. They sought a large amount of information and data from participants so they used their powers to seek information from us prior to starting their inquiry. Then they had a fairly detailed draft report that came out and highlighted areas of concern. I think to be fair to the that process was pretty robust and I think the general findings in the draft report have now flowed through to their final report [P7]

When asked whether the inquiry made a difference to the code, the vLISP executive [P8] commented that the industry would have not addressed the CS/CH issues in a more focused way had there not been an inquiry: They would have dealt with them in a much more leisurely pace and maybe not given them as much attention as an industry. Individual providers might have gone their own way and done their own thing at their own pace but as an industry, probably not. So the TCP Code, which comes out of an industry body is industry-wide and is possibly an initiative that may not have occurred otherwise [P8]

He strongly believes that the inquiry brought stakeholders together and led to an industry-wide collaboration which would have been hard to achieve had there not been this initiative from the regulator.

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4.8.3

Pressure 3: Response to regulatory pressures: ACMA inquiry recommendations in the revised TCP Code

In this Section, the vLISP industry’s response to recommendations from the RTC inquiry is discussed. The ombudsman executive [P5] drew attention to the pressure placed on the ISP industry association by the regulator to incorporate the inquiry’s recommendations into the revised TCP Code. Both [P1] and [P5] indicated that the industry as a whole was willing and keen to incorporate the recommendations in the revised TCP Code to avoid the risk of tighter regulation. The ISP industry association executive [P3] further commented that his organization and the top four vLISPs were strongly responsive to the regulator’s RTC inquiry findings. As a result all of its practicable recommendations were incorporated into the revised TCP Code: There were 21 initial recommendations that the put to us, to include in the code. We ended up incorporating 20 of those 21. The 21st, it was impossible to incorporate because it referred to something which didn't exist. So we have been strongly responsive to the [P3] I think has been on the record in saying that one of the things it’s tried to address in this new draft code is to incorporate those strong recommendations coming out of the RTC [P5]

4.8.4

Pressure 4: Customer and competition pressures to prioritise customer service within vLISP organizations

In addition to pressures from the regulator and the industry ombudsman, the top four vLISPs also came under increasing pressure from other stakeholders such as customers and competitors excelling in customer service. These pressures had implications not only for their attitude and commitment to customer service but also for their business survival. The government department executive [P10] uses an example of a passionate CEO of organization [O8] to highlight the need for organization-wide focus on customer service excellence. [P10] argues the need for CEOs of the top four vLISPs to engage with their customers both using traditional communication channels (telephone) and through online user community sites such as Whirlpool to gauge customer satisfaction as well as understand changing customer needs. [P7] provides a similar example of [O7]’s CEO who championed structural changes within [O7] and made customer service their top priority as a direct response to stakeholder pressures. Such 161

initiatives led to increased accountability of staff on customer service, and cultural change within [O7] that embraces the concept that everything the staff does has customers as the focus of their action: The other key activity is that our CEO has also put in place key structural changes to the organization. He has brought together the customer-facing business units into a single unit and had them led by one senior executive. The title of that customer exec - of that same executive, he is the Chief Customer Officer. You can see from that simple title that the customer is clearly his accountability … The third limb of the change that our CEO has brought in place is a cultural change within the organization … The cultural change is about embracing all of your staff into a concept that everything they do must have the customer as the focus of what they do [P7]

Another example of organizational change towards customer service was described by vLISP executive [P8]. He explained how [O8] embraced the concept of distributed responsibility for CS/CH performance against every staff member in its organization rather than with a group of elite managers. He confirmed that his organization benefited from these initiatives, as evidenced by their increased focus on avoiding complaints arising rather than having to deal with them. In sum, the pressures exerted through the Connect.Resolve campaign and the regulator’s RTC inquiry played an influential role in gaining the top four vLISPs’ commitment to the code revision process. They collaborated with external stakeholders to address systemic CS/CH issues. Twenty out of twenty-one recommendations that came out of the regulator’s inquiry were incorporated into the revised TCP Code. This occurred due to pressure from the regulator to incorporate their inquiry’s recommendations into the revised TCP Code. Further, the pressure from customers and competitors also played a role in bringing about cultural change within vLISP organizations. Some additional direct quotes for major categories discussed in this Chapter are provided in Appendix H.

4.9

Discussion of key themes

Now, I describe the five key themes under which the major categories could be grouped. Section 3.9.4 (Chapter 3) discussed the relationship between the eight major categories and the five themes. I provided a comprehensive discussion on major categories 1-7 that emerged in this Chapter (Sections 4.2-4.8). These five themes are 162

further analyzed using past institutional and organizational studies in Chapters 5, 6 and 7. Theme 1: Perceptions and attitudes of external agencies (ombudsman, consumer association, regulator, Government authorities and ISP industry association) towards the CS/CH practices in the top four vLISPs and the key agencies that influenced those CS/CH practices.

Relevant major categories: 1, 2 and 6 (External stakeholder perspectives only) All external stakeholders acknowledged that the CS/CH performance of vLISPs was poor. They identified customer service and complaints handling as the top two Internet service issues. The external stakeholder participants believe that there were several reasons for the vLISPs’ poor CS/CH performance. The first was that the inability of the old TCP Code to deal with emerging consumer issues created myriad problems for the industry. Next, the complexity in products and services alongside the rapid increase in service growth made it challenging for vLISPs to address systemic CS/CH problems. Moreover, the lack of strong enforcement and monitoring in the old TCP Code meant a lack of motivation for vLISPs who failed to prioritize customer service within their organizations leading to increased focus on technical aspects compared to customer service. Finally, other contributing factors such as customer inability to understand new technologies and how best to utilize them, increased focus on handling complaints instead of avoiding complaints and failure of vLISPs to engage in activities that broaden understanding of consumer affairs also led to poor CS/CH outcomes for customers. The key agencies that the external stakeholder participants believe influenced the CS/CH practices are the Australian Communications and Media Authority, Communications Alliance and Telecommunications Industry Ombudsman. The external stakeholders’ responses revealed that the CS/CH practices of the vLISPs are developed by central actors in the consumer association, the regulator, the industry ombudsman, the government department for broadband, the ISP industry association and the top four vLISPs themselves. Theme 2: Perceptions and attitudes of regulatory managers of vLISP organizations towards CS/CH practices and the key agencies that influenced those CS/CH practices.

Relevant major categories: 1, 2 and 6 (The top four vLISPs perspectives only) 163

The regulatory managers of the top four vLISPs acknowledged the vLISP industry’s poor CS/CH performance and the damage it has caused to the customer service reputation of the industry. Their responses allude to the lack of stringent enforcement mechanisms in the old TCP Code leading to industry-wide failure to monitor the adoption and implementation of the code. This became a deep-seated problem fuelled by repeated code breaches and inept responses by vLISPs to address systemic CS/CH issues. In the absence of clear enforcement and monitoring of the TCP Code, discrepancy occurred between the espoused CS/CH practices stated in the TCP Code and the actual behaviour of vLISPs in implementing them. This resulted in poor CS/CH outcomes for customers. The regulatory managers of the top four vLISPs shared the external stakeholders’ view that there were serious shortcomings in the old TCP Code and a substantial revision to the code was warranted. The timing of the code revision and the regulatory inquiry coincided and the regulatory managers viewed this as an opportunity to work collaboratively with external stakeholders to strengthen the TCP Code. The key agencies that the regulatory managers believe have an influence on their CS/CH practices are the Australian

Communications

and

Media

Authority,

Communications

Alliance

and

Telecommunications Industry Ombudsman. Theme 3: Stakeholder interactions for discussion of CS/CH issues and challenges.

Relevant major category: 5 The interactions between stakeholders to address CS/CH shortcomings under the old TCP Code occurred in key venues such as the TCP Code review working committees/steering

committees,

ISP

industry

association

meetings,

external

stakeholder board meetings, consumer association annual conferences, the regulator’s consumer consultative forums and its RTC inquiry and industry ombudsman campaigns. There were both formal and informal communication channels used by industry stakeholders to discuss pertinent issues during the code revision. The frequency of interactions between the institutional stakeholders increased during the code revision period (2010-2011). Such frequent and fateful interactions between the top four vLISPs and the external stakeholders led to significant improvements in the revision to CS/CH sections of the TCP Code.

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Theme 4: External stakeholder pressures in the Australian vLISP industry and its influence on the CS/CH practices of the top four vLISPs.

Relevant major categories: 6 and 7 The external stakeholders that exerted pressure on vLISPs to improve their CS/CH performance are the Australian Communications and Media Authority, Communications Alliance, Telecommunications Industry Ombudsman, Australian Communications Consumer Action Network and the Government department for broadband. The pressures were exerted through the regulator’s RTC inquiry, the industry ombudsman’s campaigns, Ministerial intervention and consumer association research reports that brought into the limelight the poor CS experiences. The collective pressures from external stakeholders such as the consumer association, the regulator and the ombudsman on the industry association induced further activities by the ISP industry association and the top four very large ISPs to address systemic CS/CH issues. The pressures from external stakeholders led to frequent and fateful interactions between the institutional stakeholders of the vLISP industry. Such interactions played a crucial role in collectively sensitising all institutional stakeholders to CS/CH issues and mobilising collective action on them. The pressures resulted in the top four vLISPs paying more attention to external stakeholders’ CS/CH concerns and collaborating with them to address systemic CS/CH issues. The high visibility of the top four vLISPs subjected them to pressures from all external stakeholders. Their responses to those pressures is evident in the revised TCP Code through the inclusion of the regulator’s inquiry recommendations in the revised TCP Code, the introduction of an independent compliance monitoring and enforcement committee, tighter time frames for complaints acknowledgement and resolution and the provision of clearer information to customers at the point of sale. The real threat of tighter regulation played a dominant role in influencing vLISP managers’ attitudes to CS/CH practice improvements. The role of these external stakeholder pressures are further analyzed using Institutional theory (specifically, institutional pressures) framework in Chapter 5.

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Theme 5: The collaborative efforts of institutional actors and their role in influencing CS/CH practices of vLISPs in Australia.

Relevant major categories: 3, 4 and 8 All participants explicitly identified that the vLISP industry’s CS/CH practices are influenced by central actors in key stakeholder agencies. The central actors include the regulator executive, ombudsman executive, consumer advocate, industry association executive, government department for broadband executive and regulatory managers of the top four vLISPs. All the central actors in the vLISP industry worked collaboratively to address the old TCP Code’s shortcomings. The collaboration on pertinent issues occurred in venues such as TCP Code review working committees/steering committees, ISP industry association board meetings, external stakeholder board meetings, consumer association annual conferences, the regulator’s consumer consultative forums and inquiry on customer service practices and the ombudsman’s campaigns. The increased collaboration in the recent past led to numerous improvements in the revised TCP Code. This is indicative of industry-wide input that was required to resolve complex and multi-faceted CS/CH problems. The increased collaboration, co-operation, dialogue and discussion on CS/CH came about due to pressures from multiple constituents. The pressures were exerted through regulatory activities, the ombudsman’s campaigns, the regulator’s inquiry findings, ministerial intervention and the consumer association’s research reports on poor CS practices, all highlighting systemic failure by the industry to deliver desirable CS/CH outcomes. A critical examination of collaboration by vLISP industry stakeholders using organizational studies literature is covered in Chapters 6 and 7.

4.10 Key findings from data analysis In this Section, a summary of key findings that arise from the analysis of participant responses is presented. The analysis is presented on Micro, Meso and Macro levels as described in Dahlgren, Dahlgren, Hult, Hård af Segerstad & Johansson (2007). Microlevel analysis provided insight into participants’ perceptions and attitudes respecting CS/CH practices, the pressures they believe operate in the vLISP industry and their influence on its CS/CH practices. The micro-level findings are informed by institutional theory concepts discussed in Chapter 2 (Sections 2.3-2.9). For example, 166

institutional approaches on collaboration allowed me to take an actor-centered institutional approach to understand the central actors’ interactions on CS/CH practices, the institutional context they are embedded in, their level of interactions with one another and how such interactions influence CS/CH outcomes. At the meso-level, further insights into understanding pressures (Who?, What?, Why?, Where? When? and How?) and their role in influencing the CS/CH practices of the top four vLISPs are presented using an institutional lens in Chapter 5. At the macrolevel, broader implications arising from both micro- and meso-level analysis is studied with the use of theoretical frameworks (Emerging Organizational Fields, Structuration of Fields and future policy implications) which assists the understanding of the implications of the research findings for the vLISP sector. That is, qualitative findings from micro- and the meso-level analysis are further examined with a view to understand and derive meanings or relationships across such findings in Chapters 6 and 7. 4.10.1 Micro-level findings All participants acknowledged the poor CS/CH performance of the vLISP industry as a whole. They confirmed that customer service and complaints handling are the top two Internet service issues in the Australian vLISP industry. Several reasons were identified by participants for poor CS/CH performance by the top four vLISPs. These were discussed in detail in Sections 4.1 and 4.2. The study participant responses revealed that key agencies and central actors are involved in developing/reviewing/revising the CS/CH practices stated in the TCP Code. The majority of the participants indicated that the old TCP Code did not drive desirable behaviour in the industry due to the code’s inability to deal with new and emerging consumer issues, lack of strong enforcement and monitoring, complexity of products and services, rapid increase in services growth and increased focus on improving internal complaints handling mechanisms as opposed to avoiding complaints in the first place. The frequent and fateful interactions among the vLISP industry’s central actors on CS/CH issues (an issue-based coming together of actors) occurred during the TCP Code review in 2010/11. There were both formal and informal interactions between 167

these central actors on CS/CH practices during the TCP Code revision. The main venues for these interactions include the ISP industry association’s meetings, the TCP Code working committees/steering committees, the consumer association’s annual conference, the regulator’s inquiry/forums and the ombudsman’s campaigns. The key agencies that played a dominant role in influencing the CS/CH practices stated in the revised TCP Code include the regulator, the ISP industry association and the industry ombudsman. The majority of the participants acknowledged that the pressures from external constituents (the regulator, the industry ombudsman, the consumer association, the government department for broadband and competitors excelling in customer service) drove the top four vLISPs to engage frequently with external stakeholders on CS/CH issues. This led to increased collaboration, cooperation, dialogue and discussion on CS/CH issues during the TCP Code review in 2010/11. The frequent and fateful interactions between central actors assisted in developing amenable CS/CH solutions. This led to significant improvements in the revised TCP Code in areas such as customer service, complaints handling and code compliance. The top four vLISPs responded to external stakeholder pressures because of ‘Trigger Events’ that led to increased scrutiny of CS/CH practices and boosted their sense of the seriousness of CS/CH issues. The real threat of tighter regulation by regulator eventuated because of these ‘Trigger Events’. The response to pressure from the regulator is evident in the revised TCP Code where twenty out of twenty-one initial recommendations from the inquiry were incorporated into the revised TCP Code. Participants described several pressures that the top four vLISPs were subjected to and how they responded to such pressures. The real threat of tighter regulation played a dominant role in securing commitment from the top four vLISPs to address CS/CH issues as a matter of priority. The consumer association, the industry ombudsman, the regulator and the government department for broadband consider the pressures they exerted on the top four vLISPs as primary drivers in influencing the vLISP attitudes on make CS/CH improvements. The top four vLISP executives and the ISP industry association executive consider pressures from customers as primary pressures in influencing their CS/CH practices and view external pressures more as secondary drivers in influencing their CS/CH practices. A critical examination of such participant

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perspectives in the context of institutional pressures (DiMaggio et al. 1983;; Oliver 1991) is provided in Chapter 5. Participant responses explicitly identified the customer service initiatives within individual vLISPs as a direct result of external stakeholder pressures. They include cultural change within vLISPs in making customer service a priority, structural changes (with increased accountability of staff on customer service) and increased focus on avoiding complaints arising rather than having to deal with them. All participants corroborate that customer service will play a key role in the future of Internet services where providers have to compete on service quality differentiation as opposed to infrastructure differentiation.

4.11

Conclusion

Chapter 4 presented a qualitative data analysis arising from this study. Eight major categories and five key themes emerged. A detailed account of participants’ attitudes and perceptions regarding CS/CH practices of the top four vLISPs in Australia was presented. A rich description was provided of vLISP industry stakeholders’ (including Australian regulatory managers’) perceptions and attitudes respecting the external pressures that operate in the vLISP industry and their beliefs about how such pressures influenced the CS/CH practices. The CS/CH performance of the vLISP industry has important economic, social, financial and business implications for vLISP businesses as well as Internet consumers. The results of this study show that pressures from external stakeholders resulted in an increase in frequent and fateful interactions and collaboration amongst all the stakeholders. This resulted in important revisions to the TCP Code particularly in relation to customer service, complaints handing and code compliance Sections of the TCP Code. The next Chapter explores the following question using a neo-institutional theory lens: How do institutional pressures influence the customer service and complaints handling practices of the top four vLISPs in Australia?

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CHAPTER 5 INSTITUTIONAL PRESSURES AND THEIR ROLE IN INFLUENCING THE CUSTOMER SERVICE AND COMPLAINTS HANDLING PRACTICES OF VERY LARGE ISPS

All organizations, to one degree or another, are embedded in both relational and institutionalized contexts and are therefore concerned both with coordinating and controlling their activities and with prudently accounting for them. -

5.0

Meyer and Rowan (1977)

Chapter overview

In Chapter 4 I presented the study’s findings on and participants’ beliefs about the customer service and complaints handling practices of the vLISP industry, the central actors involved in the development/revision of CS/CH practices, stakeholder collaboration on CS/CH practices that occurred in 2010/11 and the pressures the external agencies exerted on the vLISP industry in the light of poor CS/CH performance. Major themes that emerged from data analysis were discussed. In this Chapter, the institutional pressures that operate in the vLISP industry and the role they played in influencing the development and review of CS/CH practices is critically examined through analysis of participants’ responses using a neo-institutional framework (DiMaggio & Powell 1983;; Oliver 1991). In this Chapter I show that the top four vLISPs were responsive to external stakeholder demands due to institutional pressures exerted on them. The Australian Communications and Media Authority imposed regulatory pressure through enforcement actions on and public inquiry into customer service practices. This led to increased commitment from the top four vLISPs to address the old TCP Code’s CS/CH shortcomings. The peak industry association, the Communications Alliance, acted as a conduit for the top four vLISPs to discuss pertinent customer service issues. The Communications Alliance

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imposed normative pressure on vLISPs to develop standardized CS/CH practices that deliver desirable CS/CH outcomes. A vLISP that excelled in customer service and received numerous customer service excellence awards imposed mimetic pressure on under-performing ISPs resulting in other vLISPs mimicking their practices. The customer pressures mediated through the Australian Communications Consumer Action Network, Australian Communications and Media Authority and social media placed additional pressures on the top four vLISPs to improve the industry’s customer service reputation. Further, it is shown in this Chapter that institutional pressures had a potent conforming influence on the customer service and complaints handling practices of the top four vLISPs. I also argue in this Chapter that the compliance with external stakeholder customer service demands occurred because the approbation of external stakeholders enhanced legitimacy of the vLISP CS/CH practices and collectively helped them avoid stringent regulation. The intensification of the institutional pressures and the interplay between them (regulatory pressures combined with customer and competitive pressures) led to an increased degree of inter-organizational collaboration and cooperation between vLISPs and external stakeholders thereby creating inter-organizational linkages that never existed before. This has resulted in significant improvements in the revised TCP Code in areas such as customer service, complaints handling, code compliance, enforcement and advertising. The main arguments made in this Chapter are presented below. x

Five key factors influence CS/CH in the top four vLISPs;;

x

Central actors from various stakeholder agencies played a role in influencing the CS/CH practices of the top four vLISPs;;

x

Institutional pressures (regulatory, customer, mimetic (competitive) and normative pressures) in the vLISP industry played a role in influencing the CS/CH practices of the industry;;

x

CS/CH practices in the vLISP industry are institutionally derived practices developed through the collaborative efforts of the central actors interviewed in this study. The increased collaboration, co-operation, dialogue and discussion on addressing CS/CH concerns in the old TCP Code (TCP Code 2007) occurred as

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a direct result of the regulatory pressures combined with customer and competitive pressures;; x

The top four vLISPs’ responses to addressing CS/CH shortcomings in the old TCP Code was conditioned by the institutional pressures;; and

x

The top four vLISPs’ responses to institutional pressures were dependent on who exerted the pressures and under what circumstances the pressures were exerted.

The research in this Chapter is also discussed in Vilapakkam Nagarajan (2012a, b;; 2013e) 3.

5.1

Factors influencing the customer service and complaints handling performance in very large ISPs

The research analysis identified five key factors influencing CS/CH performance in the top four vLISPs. They are:

TCP Code (ability of the code to deal with CS/CH issues has implications for CS/CH performance): The TCP Code is fundamental to addressing CS/CH issues facing the vLISP industry. The old TCP Code was inadequate to deal with many of the emerging customer service and complaints handling issues faced by the industry. One study participant’s comments on the lack of compliance monitoring in the old TCP Code and the commitment of the industry to strengthen its compliance mechanism in the revised TCP Code illustrates this point: I mean if you look at the TCP Code and the reconnecting from the customer enquiry, everyone's focus was on improving internal complaints handling as opposed to irradiating enquiries in the first place. So it's what do I do as an ambulance man at the bottom of a cliff? As opposed to stopping people jumping off the cliff [P2]

3

Vilapakkam Nagarajan, Karthik (2012a), ‘Towards understanding how institutional forces influence the functional service quality practices of Australian very large Internet Service Provider industry’, Proceedings of 26th Australia and New Zealand Academy of Management (ANZAM 2012) Conference, December 5-7, 2012, Perth, Australia, pp. 1-19. Vilapakkam Nagarajan, Karthik (2012b), ‘Institutional Pressures in Australian Internet Industry and its influence on Functional Service Quality Practices of very large Internet Service Providers’, Proceedings of International Conference on Internet Technologies and Society (ITS 2012), November 28-30, 2012, Perth, Australia, pp.43-52. Vilapakkam Nagarajan, Karthik (2013e), ‘Understanding strategic responses to institutional pressures: The case of Internet industry in Australia’, Proceedings of 6th International Symposium on Business and Management (ICBM 2013), August 19-22, 2013, Bangkok, Thailand, pp. 1-29.

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Penalties and code enforcement mechanisms (regulatory compliance with the code): The success of any code depends on how well the compliance mechanisms enforce the agreed-to codes of practice. This raises questions about the penalties for nonconformance that were in place in the old TCP Code. It has been widely acknowledged by industry stakeholders that the old TCP Code was inefficient in code compliance, enforcement and penalties. These deficiencies contributed to poor CS/CH outcomes for customers and also led to poor CS/CH performance across the industry. Comments by [P7] and [P10] illustrate this point: I think the other issue that's important in this current code review is that the industry has acknowledged that its own internal code compliance arrangements were deficient. The industry wasn't really monitoring and reporting and asserting compliance against its own codes of practice. This current code the industry has committed to set up its own monitoring body called Communications Compliance [P7] I think one of the big criticisms of the original code as you say is not many signatories but, also, what was the compliance mechanism? If people were going to breach the Code well what was the penalty? [P10] Well again, I think you've got a culture there that says we will do what we can get away with and if there's no penalties for bad behaviour we'll behave badly [P10]

Complexity of products and services: As the complexity in products and services increases, the top four vLISPs have to provide simple and clear pre-sales information to customers to allow them to make informed decisions. When the top four vLISPs fail to deal with customer-oriented issues in selling their new products and technologies, their CS/CH performance is affected because of the customer complaints that arise. This occurs because customers are not fully aware of what they purchased and whether it best suits their service needs. Hence, the ability to manage customer expectations in the light of increasing complexity in products and services has implications for the CS/CH performance of the top four vLISPs: But I think my observation of the failures have been, there have been a number of issues. One of which the industry themselves have raised which is the nature of the industry, which is it's an industry that's moving very fast, there's a lot of complexity, there's a lot of technical complexity with the products, there's a lot of different products in the market which can cause confusion to people as to which one is the best one to suit their needs. I guess their view might be - and I think there is a legitimacy to this view - is that because of that this has caused confusion amongst consumers who struggle to keep up with what they need to know, struggle to know what products best suit their needs, struggle to know how they work as far as the billing arrangements and everything else. So there is a need I think generally to simplify products to make it easier for consumers to understand what their choices in the market are [P10]

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Competition politics: One of the major drivers for successful business is winning the competition. [O8] a vLISP which has excelled in customer service and have received numerous customer service awards placed pressure on [O6], [O7] and [O9] to lift their game. The data analysis revealed evidence of such instances and as a result a level of mimicry of those providers with better CS/CH results occurred. Such a competitionbased on customer service is healthy for the industry and has implications for CS/CH performance: I think it's also true in a competitive environment, and the ISP market is a very competitive one, that when a provider, like for example, does better than the customer average on customer retention, and loyalty and so forth, that all of the other players do take note and do look what are the elements of that success formula and how that relates to their own business [P3]

Organization culture and attitude towards CS/CH practices: Senior management’s attitudes to CS/CH and whether they view investment in customer service as a cost factor or a profit factor determines the organization-wide commitment to customer service. ISP management attitudes to customer service play a crucial role in influencing how the CS/CH practices in the TCP Code are adopted and implemented within the top four vLISPs. The challenge is that direct financial benefits are not easily seen from improvements to or investments in customer service. Such an attitude is likely to influence an organizations’ response to CS/CH issues facing them. Organizations such as [O8] have customer champions who lead and strive to raise the attitudes of senior managers demanding high commitment to customer service. Therefore, organization culture and attitudes to CS/CH practices have implications for CS/CH performance: Well I think it's probably a cultural thing. I think companies like and … came about because of individuals … [like] from - and they had a strong passion for a certain image for the company. While they were both technologists they I think had a broader sense that they wanted to be loved by their customers and so they basically went about forming a company that would do that from scratch [P10]

5.2

Institutional pressures and their role on influencing the customer service and complaints handling practices of the vLISP industry

DiMaggio and Powell’s work on institutional pressures identified three key formal pressures that operate in an industry: regulatory, mimetic and normative pressures.

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DiMaggio and Powell (1983) define regulatory pressures as ‘pressures exerted on organizations by other organizations upon which they are dependent and by cultural expectations in the society within which organizations function, such pressures may be felt as force, as persuasion or as invitations to join in collusion’ (DiMaggio & Powell 1983). Regulatory pressure is exerted on organizations through enforcement actions/directions to comply. In discussing mimetic pressures they argue that ‘when an organization faces a problem with ambiguous causes or unclear solutions;; problemistic search yields a viable solution with little expense’ (DiMaggio & Powell 1983). Mimetic pressure stems from competitors who excel in customer service and are perceived by other players to be leading the industry on customer service practices. Normative pressure ‘arises when professionals operating in organizations are subjected to conform to a set of norms, values and rules developed by occupational and professional bodies’ (Munir, Perera & Baird 2011). Normative pressure exerted by industry association urges organizations to conform to societal norms and values and stems primarily from professionalization. Informal pressures such as customer pressure are also exerted on organizations. Williams, Lueng, Taylor and Cook (2009) define customer pressure as ‘force, persuasions or invitations that is applied both implicitly and explicitly by Customers to which firms must respond’.

In analysing institutional pressures, I was guided by the discussion on this subject by Oliver (1991) and Clemens and Douglas (2005). These discussions focus on five key questions, which assist in understanding and analysing the role of institutional pressures in influencing the CS/CH practices of the vLISP industry. The five key questions addressed in the analysis are: (i) Why these pressures were being exerted? (Cause);; (ii) Who was exerting them? (Constituents);; (iii) What these pressures are? (Content);; (iv) By what means they were exerted? (Control);; and (v) Where they occurred? (Context) (Oliver 1991). Why the pressures were exerted? My examination of the causes or the reasons the institutional pressures were exerted led me to several factors that culminated in arriving at the origin of those pressures. Prolonged increase in the volume of complaints in relation to CS/CH drew the attention of the relevant vLISP industry stakeholders. The inability of the top four vLISPs to deal with CS/CH issues became a major concern for external stakeholders such as the regulator, the ombudsman, the government department for broadband and the consumer association. These stakeholders were extremely concerned about the poor customer service outcomes for customers. There 175

was also a lack of consistency in delivering Internet services across the industry that led to mismatch in expectations between customers and other stakeholders. Such concerns had implications for the customer service reputation of the whole industry. Further, TIO complaints data showing increasing trend in CS/CH complaints over the period 2008-2011 drew the attention of the regulator and the government authorities who were convinced of systemic failure in the industry’s CS/CH performance. This raised questions about whether the regulatory arrangements that existed at the time were adequate for consumer protection and safeguards. Research reports published by the ombudsman, the consumer association and the regulator (especially its inquiry on CS/CH practices) identified CS/CH issues as the top two issues in the vLISP industry. This attracted a high media profile for CS/CH issues. Competition pressures from providers performing well in customer service (for example, customer service award recipients) such as [O8] placed additional pressures on under-performing vLISPs. In an environment where exponential growth in the Internet subscriber base was occurring there was an urgency to respond to the increasing volume of customer complaints. Who was exerting them? The investigation to understand the actors who exerted pressures on the top four vLISPs and their CS/CH practices revealed that several institutional actors exerted palpable pressures on the top four vLISPs. The actors include: (i) the regulator (who placed pressures through ACMA’s RTC inquiry recommendations and code enforcement activities);; (ii) the industry ombudsman (through their Connect.Resolve campaign);; (iii) the government department for broadband (through Ministerial intervention and press releases);; (iv) competitors excelling in customer service (for example, vLISP [O8] was honoured for customer service excellence by the Customer Service Institute of Australia-CSIA);; and (v) the consumer association (their independent research reports that highlighted the ongoing poor CS/CH performance of vLISPs between 2008-2011). Figure 5.1 shows the central actors in the vLISP industry who exerted pressures on the top four vLISPs.

176

Australian Communications and Media Authority [P4]

Department of Communications [P10]

Top Four Very Large ISPs [O6, O7, 08, O9] Australian Communications Consumer Action Network [P1]

Communications Alliance [P3]

Telecommunications Industry Ombudsman [P5]

Figure 5.1 Central actors in the vLISP industry who exerted pressure on the top four vLISPs What these pressures are? (i) Regulatory pressures;; (ii) Customer pressures;; (iii) Normative pressures;; and (iv) Mimetic (competitive) pressures. By what means they were exerted? The answer to this question emerged from evidence in the academic literature and study data. Regulatory pressures were exerted through the regulator’s RTC inquiry recommendations, regulator forums on customer service, enforcement action on individual players and media releases signalling tighter regulation from the Minister’s department if the industry failed to lift its CS/CH performance. Several means were used: the Connect.Resolve campaign by the industry ombudsman, customer service forums/conferences organized by the regulator, the 177

industry ombudsman, the consumer association and the ISP industry association. Further, TCP Code review working committees and Internet forums (Whirlpool) through which customers expressed their frustrations about the vLISPs’ poor CS/CH procedures also opened a channel through which pressures were exerted. Customer pressures came about through customers’ directly voicing their concerns to the regulator or consumer advocate about their CS/CH concerns. Mimetic pressures came through vLISPs such as [O8] excelling in customer service and calling on [O6], [O7] and [O9] to improve the customer service reputation of the industry. Where they occurred? In relation to understanding where these pressures occurred (that is the context of their application) they were exerted on the top four vLISPs in Australia and the industry as a whole. The top four vLISPs were the target of attention from the regulator, the industry ombudsman, the consumer association, customers and the government department for broadband because of their high ‘visibility’ in the marketplace. 5.2.1

The role of regulatory pressures on customer service and complaints handling practices of the vLISP industry

Regulatory pressures occur when the Australian Communications and Media Authority and the Department of Communications directly or indirectly influence the top four vLISPs not only to provide acceptable levels of customer service but also to comply with the TCP Code. With a noticeable increase in complaints and code breaches, the frequency of the regulatory activities increased during 2010-2011 in comparison with pre-2010 years. [P3] highlights the regulatory pressure placed on the top four vLISPs: There has been strong and understandable political and regulatory pressure on these topics, as you would expect to happen when you see the sorts of difficulties and issues that have been thrown up and indicated by some of the complaint volumes. So, I mean the Minister … has said repeatedly, he's probably said it more often than he wanted to have to say it. That unless the industry can pull its act together and can put measures in place and selfregulatory and co-regulatory steps in place to address the issues, he will come over the top in a not particularly subtle way and impose legislative or regulatory constraints that serve to generate that type of behaviour. The has said similar things. It's said exactly that when launching its RTC inquiry also in about May last year. So I think that all that pressure from regulators and from politicians is not surprising and I think in most cases, not unhelpful [P3]

Regulatory activities (for example, the inquiry on CS/CH practices) sent a strong signal to the whole industry to prioritise customer service and deliver desirable consumer

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outcomes. As a result, the regulatory pressures: (i) provided opportunity for the top four vLISPs to work with all the industry stakeholders, particularly the Australian Communications and Media Authority, Australian Communications Consumer Action Network and the Telecommunications Industry Ombudsman, to address systemic CS/CH deficiencies;; (ii) exposed industry-wide systemic CS/CH issues that boosted the seriousness of the issue during the TCP Code revision;; (iii) led to regulatory initiatives which gathered evidence (RTC inquiry findings) to provide suggestions for improvements to CS/CH practices;; (iv) assisted the Australian Communications Consumer Action Network to directly provide feedback to the industry regarding consumer expectations;; (v) drew the attention of CEOs of the top four vLISPs to prioritising customer service within their organization and initiated organization-wide accountability for customer service;; and (vi) led to imminent threat of tighter regulation and drew the attention of the top four vLISPs to genuinely commit themselves to TCP Code revision. [P5] uses their Connect.Resolve campaign to illustrate the pressure placed on the vLISPs to improve their CS/CH performance in response to a huge increase in complaints: What led to the campaign was I think two things, the first was this fairly exponential growth in complaints in absolute numbers terms and the second was the high proportion of customer service and complaint handling issues that we were observing as part of those complaints. Our previous Ombudsman, decided that really a targeted campaign was the best way to firstly try and shed light on the issues but secondly, to try and work with the providers collaboratively to try and bring this ratio of complaints down and particularly try and address those customer service and complaint handling issues that had been picked up. So it was run for a period of six months. The providers concerned that the 10 providers were given advanced briefings of the campaign;; this is what we’re going to be measuring. We’re going to be giving you regular updates on the numbers that are coming through our scheme and we’re interested in working with you to help develop any kind of mechanisms that might improve things [P5]

5.2.2

The role of normative pressures on customer service and complaints handling practices of the vLISP industry

Normative pressures were exerted by the Communications Alliance with a view to achieving consistent and standardized approaches for CS/CH practices. The Communications Alliance’s role in disseminating the message that prioritizing customer service is the right thing to do was important in securing the commitment of their larger members. The Communications Alliance placed direct pressure on the top four vLISPs to improve their CS/CH performance. In the environment where the whole industry’s customer service reputation was at stake, the ISP industry association led compliance initiatives and CS/CH deliberations placed direct pressure on the top four vLISPs to 179

conform to the code’s requirements even if they were not signatories to it. Such normative pressures placed additional obligations on the top four vLISPs to collaborate with each other to discuss pertinent issues in the Communications Alliance’s board/operations council meetings and reduce the risk of stringent regulation. This is consistent with findings by Ahrne and Brunsson (2008) that organizations whose members are organizations (meta-organizations) play a key role in bringing members together, engaging them and setting standards. The sample quote below highlights the influential role of the Communications Alliance in engaging their largest members on code matters and fostering a compliance culture within the industry: They are members and I think has got a dual role there. It’s got the role of actually developing the codes to begin with but it’s then got the role of bringing its own members on board, actually educating them about those codes and trying to encourage or foster compliance with those;; because will be acutely aware of the alternatives if the code’s not successful [P5] Well, is a standards organization and they’ve done a lot of work in the last 12 months on the telecommunications consumer code … So setting some standards for response times and the way things are dealt with is useful I think, and the Industry Association> … This is a good approach as well in customer services standards, to get some of those established [P8]

5.2.3

The role of customer pressures on customer service and complaints handling practices of the vLISP industry

Internet customers directly voiced their concerns to the top four vLISPs, the Australian Communications Consumer Action Network and the Australian Communications and Media Authority, demanding that vLISPs meet their expectations in relation to CS/CH. Additionally, consumers also voiced their concerns through online communication channels such as Whirlpool where they openly criticized their vLISP’s poor customer service performance and demanded tighter regulation. [P10] provided an example where one of the vLISP [O8]’s CEO responds to online broadband community user groups and their queries, thereby ensuring that customer concerns are attended to on a timely basis. This is a typical example of how customer pressures are mediated through online user groups and social media: On Whirlpool, the consumer industry forum, which is for all the technology fans and things like that and so forth. He's there every day posting things, responding to people's questions. He's out in the media talking about issues that concern customers or concern people about the NBN or about some other issue, so he's a very public and personal face to the company. So people who come to that company actually like the fact that the CEO takes an interest in them and as customers has interest in their issues and so there is that sense that it's a caring person [P10]

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It's important to recognise that we put a considerable amount of effort into talking to and listening to customers ourselves. We have an extensive program of not only analysing complaint data that we receive as well as the complaint data but also an extensive program of listening to our consultants talking to customers. We go back and talk to our customers after they've had a transaction with us and seek their feedback. It's that voice of the customer that is the key driver of changes to our behaviuor … It's our customers, our engagement. I spoke about customer satisfaction. That's all about us listening to our customers, what they're telling us, what's working, what's not working. We put a great deal of effort into doing that [P7]

5.2.4

The role of mimetic pressures on customer service and complaints handling practices of the vLISP industry

Peer pressure is intensive in the competitive vLISP industry. The role of mimetic pressures can be understood by using an example. [O8] is a vLISP which has received numerous customer service excellence awards. Table 5.1 lists the customer service awards received by [O8] since 2008. Table 5.1 List of Customer Service Excellence Awards won by [O8] Year August 2008 January 2009 August 2009 October 2009 October 2009 July 2010 November 2010 November 2011

Award Name [O8] received ACOMMS Communications Alliance and Comms Day Awards in industry leadership innovation. [O8] was finalist in Western Australia IT and Telecommunications Awards for customer service. [O8] received ACOMMS Communications Alliance and CommsDay Award ‘Commitment to Customer Service’. [O8] named in ‘Top 20 Most Admired CS Companies’ across Australia and New Zealand by International Customer Service professionals. Customer Service Institute of Australia (CSIA) awarded [O8] the WA Large Business Award for Service Excellence. [O8] CEO was chosen as National Customer Service CEO of the year. [O8] received ACOMMS Communications Alliance and CommsDay Award ‘Innovation Large Company award’. [O8] takes ‘National Large Business of the Year’ award by CSIA for service excellence. [O8] awarded ‘Large Business of the Year’ award by CSIA for customer service.

Such awards are noticed by [O8]’s competitors who develop a curiosity about the reasons for [O8]’s customer service excellence. As a result there is evidence (see quote below) to suggest that some competitors mimicked [O8]’s CS/CH practices to improve their own performance. Such mimicking of CS/CH practices occurred because it acted as a convenient source of information (Williams et al. 2009) for vLISPs not performing as well as another to reduce uncertainty and improve their own CS/CH performance. Mimetic pressure motivates vLISPs to review their existing CS/CH practices to stay ahead of the competition:

181

I have seen a copy of an internal memo that circulated, which was an analysis of and what it was doing in relation to its customer service and it’s clear that they, I think, were looking to see if they could learn anything from what we did and the way we operated in order to apply it to their own business. I had a conversation with some staff who also claim … that they were using NPS as well … I think there are people now, more and more companies looking at this NPS because we’ve given it a fair bit of publicity. We quite happily will go out there and talk about it and we’re quite happy for the rest of the industry to lift its game [P8] I can’t give specific examples but when you go and talk to them they’re all aware of what [O8] is doing and [O8] now sits on the Ombudsman board and they play an influential role even though they’re not in the whole industry, even though they’re not a very big player compared to like [O9] or [O7] [P1] The force that outstrips all of those is the pressure of competition. This is a very competitive market. Customers are mobile in the Internet space and they are looking for a better deal. So apart from any of the other factors you mentioned, all of which are important and significant, it's the power of competition that drives the actions [P3]

5.2.5

Interplay between the institutional pressures

Looking at the history of CS/CH events in the vLISP industry it is clear that institutional pressures worked in tandem with each other in influencing the changes required to the CS/CH practices (Figure 5.2). For example, pressure from the Australian Communications Consumer Action Network and the Telecommunications Industry Ombudsman about ongoing poor CS/CH performance by vLISPs led to the Australian Communications and Media Authority launching new initiatives such as regulator customer consultative forums. These regulatory initiatives induced further activities by the ISP industry association, the Communications Alliance and the top four vLISPs to engage in serious discussions about CS/CH issues and manage each other’s expectations: There has been just simply the public and media outcry over the rising complaints that industry really are on the nose and they need to do something about it, so that's been a pressure I think the inquiry has been appreciating. I think also having on the actual steering committee has been another pressure because have been quite forceful in trying to push for various things and there's been a number of heated meetings … So I think there's been a number of things there that have put a lot of pressure on industry to do better [P10]

In summary, the customer service and complaints handling practices of the top four vLISPs are influenced by the formal and informal interactions the regulatory managers of the top four vLISPs have with other institutional stakeholders of the vLISP industry, institutional pressures they are exposed to, their perception of institutional pressures and their organizational culture and attitude regarding customer service and complaints handling practices. Figure 5.3 summarises the changes from the old TCP Code to the revised TCP Code based on the analysis of the pressures presented so far.

182

Pressure due to poor CS/CH performance

Pressure from regulator

ISP Industry Association

Pressure from ISP industry association

Consumer Association

Pressure due to Poor CS/CH

performance

Customers

Regulator

Pressure from ombudsman due to poor CS/CH

Very Large ISP1

Very Large ISP2

Very Large ISP3

Very Large ISP4

performance

Ombudsman

Competition pressure from peer ISPs

Figure 5.2 Interplay between pressures in the Australian vLISP industry 183

Figure 5.3 Diagrammatic representation of change from the old TCP to the new TCP Code (Communications Alliance 2013)

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5.3

Response to institutional pressures by regulatory managers of the top four vLISPs

The top four vLISPs’ responses to institutional pressures depended on their perception of those pressures. The sources of the institutional pressures and the circumstances under which they were exerted played an influential role in the response achieved by the pressure. When the institutional pressures were weak (that is, no collective pressures imposed by multiple constituents) and were in conflict with the organization goals, customer service improvements were not seen by vLISPs as generating more revenues. As a result, CS/CH corrective actions were not viewed as a priority for some vLISPs. For example, when the vLISPs were asked by individual constituents (such as the consumer association) to improve their CS/CH practices, there was insufficient motivation for them to address those issues. When faced with collective pressures from salient stakeholder groups to improve CS/CH practices and performance during 2010/11, the top four vLISPs provided a collective response. When they were subject to similar regulatory pressures in relation to poor CS/CH performance, they came together and acted in a unified manner to avoid excessive regulation. Wooten and Hoffman (2008) highlight this notion as ‘the influence of regulatory environment in leading organizations to collectively develop appropriate responses that ultimately led to uniformity in organization form or structure’. Additionally, a ‘compromise’ strategy was used to respond to institutional pressures. [O6], the industry representative chair in the TCP Code review working committee, negotiated with the relevant stakeholders on revisions to the TCP Code. The industry as a whole put forward an argument for a prescriptive regulatory framework is unsuitable for the ISP industry and for their willingness to include stringent enforcement measures in the revised TCP Code. Rowley (1997) states that ‘an organization must acquiesce to external pressures, since its survival is contingent on its compliance with expectations from Institutional constituents, such as the state, and professional and interest groups’. Other studies (DiMaggio et al. 1983;; Rajagopalan & Yong 1995;; Bjorck 2004) revealed that actors pay more attention to external stakeholder demands when there is a real threat of tighter regulation. It was clear from the study participant responses that when the threat of tighter regulation became real, the top four vLISPs choose negotiation with 185

the stakeholders instead of resisting stakeholder demands. Table 5.2 explains the types of tactics used by the top four vLISPs in response to pressures from the Australian Communications and Media Authority, Telecommunications Industry Ombudsman and Australian Communications Consumer Action Network (APPENDIX K has sample direct quotes). Table 5.2 Response to institutional pressures by the top four vLISPs Oliver (1991) Response to pressures by the top four vLISPs

Acquiescence (used when threat of tighter regulation became real)

Tactics used by the top four vLISPs in responding to external pressures IMITATE: Followed the approach used by vLISPs that have successfully implemented the CS/CH practices and achieved customer service excellence. COMPLY: Understood specific regulatory requirements on CS/CH practices and complied with the regulatory processes.

Compromise (used when threat of tighter regulation became real)

BALANCE: Balanced the expectations of multiple constituents on CS/CH practices. Negotiated with the regulator, the consumer association and the government department to a mutually agreeable solution to CS/CH issues in the revised TCP Code. BARGAIN: Negotiated with the institutional stakeholders on CS/CH practices. Bargained with the regulator to secure their interests which was to avoid excessive regulation.

Avoidance (used when pressures were weak and there was no imminent threat of tighter regulation ) Defiance (used when pressures were weak and there was no imminent threat of tighter regulation) Manipulation (used when pressures were weak and there was no imminent threat of tighter regulation )

CONCEAL: Disguised non-conformity. vLISPs appeared to have complied with the regulatory processes, but avoided certain aspects of the regulatory requirements on the CS/CH practices because of lack of strong enforcement and monitoring in the old TCP Code.

CHALLENGE: Contested rules and requirements on CS/CH practices. vLISPs were quick to respond to the regulator that industry was taking steps to improve their CS/CH performance.

CO-OPT: The industry liaised with the regulator to address CS/CH issues and influence policy decisions.

Why did the industry prefer co-regulation over prescriptive regulation? Why did the top four vLISPs use a compromise strategy over resistance to stakeholder demands? A compromise strategy was adopted by the regulatory managers of the top four vLISPs because: (i) the industry perceived that a prescriptive regulatory framework would impose undue burdens on the industry (such as developing new reporting systems);; (ii) prescriptive measure adds significant costs to their businesses;; and (iii) implementing 186

prescriptive framework did not reflect commercial realities. Instead, the industry viewed a co-regulatory framework with strong enforcement through an independent compliance committee as the step in the right direction. Such attitudes are consistent with previous studies (Tolbert & Zucker 1983;; Leblebici, Salancik, Copay & King 1991;; Schneiberg & Bartley 2001;; Martin & Sayrak 2003) that investigated the preference of industries for co-regulation over prescriptive regulation frameworks. Another interesting question raised by this study finding is: Which pressures attracted strong responses from the top four vLISPs? The study found that regulatory pressure was dominant in influencing the attitude of the top four vLISPs on improving CS/CH practice. Regulatory pressure escalated vLISPs’ fear of tighter regulation. In particular, the top four vLISPs that participated in this study responded to this pressure because they preferred to be masters of their own destinies rather than allow a third party player such as the regulator to impose or regulate the industry with non-negotiable legislation. The inevitable response of the top four vLISPs is also due to their ‘visibility’ in the marketplace. Delmas and Toffel (2008) argue that the ‘Visibility of leading firms often subjects them to more pressure’ which could be because of the market leadership expected from the larger

players.

The

Australian

Communications

and

Media

Authority’s

inquiry

recommendations placed direct pressure on the top four vLISPs and sent a clear signal demanding code revisions, extensive conformance to code requirements and measurement of outcomes for consumers. As a direct response to these demands, the Communications Alliance and the top four vLISPs acknowledged the shortcomings in the old TCP Code and came together swiftly to address them. The response to regulatory pressure is evident in the revised TCP Code where twenty out of twenty-one RTC inquiry recommendations were incorporated along with stringent enforcement measures. The creation of an independent compliance monitoring body called the Communications Compliance (CC) to oversee code compliance and enforcement is one of many new initiatives added to the revised TCP Code. The quote below summarises the top four vLISPs’ collective response to the regulatory pressures: Timing is one word for it, yes. So I went to right at the outset and I said, well you said you've got views and thoughts, please put them on paper and give them to us. There were 21 initial recommendations that the put to us, to include in the code. We ended up incorporating 20 of those 21. The 21st, it was impossible to

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incorporate because it referred to something which didn't exist. So we have been strongly responsive to the . We also implemented elsewhere the recommendations from the RTC inquiry, which I think is a useful sign as well. We have included the on the steering group that governs the process. We have consulted regularly with their staff and with their Chair.. and with the authority itself. I've had several meetings and workshops with staff and authority members as we've been thrashing through the detail of recommendations … So the engagement has been sustained and broad and deep [P3]

The introduction of the independent compliance committee to oversee compliance activities is expected to drive desired behaviours in the industry as compliance with regulation is a key driver for the top four vLISPs to acquire legal legitimacy. Hu, Hart and Cooke (2006), DiMaggio and Powell (1983) and Major and Hopper (2005) have shown that organizations thrive for legitimacy and the key drive for change in organization behaviour and attitude towards industry practices is compliance with regulation. Table 5.3 summarises key changes to the CS/CH initiatives in the revised TCP Code. Table 5.3 Key changes in the revised TCP Code (Communications Alliance 2013) Key changes to CS/CH Sections in the revised TCP Code 2012 Tighter timeframes for acknowledging complaints and resolution (acknowledged within two days and resolved within three weeks). ISPs must inform customers of complaint outcomes. A new definition of ‘Complaint’ that requires ISPs where uncertain, to ask if their customers wish to make a complaint. All ISPs must implement the complaints handling processes stated in the revised TCP Code. ISPs must provide customers unique complaint reference number that allows them to track a complaint. An independent compliance committee, Communications Compliance (CC), will monitor the compliance activities of the industry. This includes monitoring individual ISPs on the customer service metrics and CS/CH benchmarking standards developed by this committee. Mandatory submission of code compliance statements to CC. Submit compliance report in a format required by CC against a list of customer service metrics. Comply with directions from CC consistent with code obligations. Provision of more and clearer information about products at point of sale in a ‘Critical Information Summary’ document. The enforcement actions against ISPs not complying with the code include the regulator directing the ISP to comply. If a direction is breached, the regulator can issue an infringement notice, seek civil penalties up to $250,000 in the Federal court or accept enforceable undertakings.

What was the individual vLISP managers’ response to these pressures? The regulatory managers in the top four vLISPs made changes to their organization-wide focus on customer service by placing higher accountabilities on staff for customer service, cultural change within their organization that embraces the concept that everything their staff did had the customer as their focus and increased focus on avoiding CS/CH problems arising rather than dealing with them afterwards. By responding to these

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pressures, the regulatory managers were able to repair their organizations’ customer service reputation. By introducing new CS/CH initiatives into their organizations, vLISP managers were able to create the perception of credibility within their external environment. Several authors (for example, Neilsen & Rao 1987;; Oliver 1991;; Jennings & Zandbergen 1995;; Tsai & Child 1997;; McLarney 2002;; Clemens & Douglas 2005) argue that organizations succumb to institutional pressures in order to obtain the social support of external stakeholders. It is through this social support that the top four vLISPs were able to improve their legitimacy. The regulatory managers of the top four vLISPs played a key role in influencing the responses to pressures placed on their organization. This notion is supported by Fineman and Clarke (1996) who highlighted that managers are ‘crucial mediators of stakeholder influence’. Other related studies (Martinez & Dacin 1999;; Mignerat & Rivard 2005;; Lawrence & Suddaby 2006) have also highlighted that organizational actors play a key role in influencing responses to institutional pressures. Figure 5.4 is a diagrammatic representation of the analysis of the institutional pressures and their role in influencing CS/CH practices of the top four vLISPs. In summary, customer service and complaints handling practices in the vLISP industry are developed through the collaborative efforts of central actors in the consumer association, the regulator, the industry ombudsman, the government department for broadband, the ISP industry association and the top four vLISPs. The increased regulatory activities, and the real threat of tighter regulation and continuous exposure to regulatory pressures combined with customer and competitive pressures in the recent past (2010/11) led to the top four vLISPs responding to institutional pressures, paying more attention to the stakeholders’ CS/CH concerns and acceding to their demands in addressing shortcomings in the old TCP Code. This led to significant changes in the revised code with a clear focus on achieving better CS/CH outcomes for consumers. The response to institutional pressures depended on who exerted the pressure and under what circumstances those pressures were exerted.

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Figure 5.4 External influences on CS/CH practices of vLISPs

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5.4

The role of institutional pressures in influencing improvements to customer service and complaints handling practices: An example scenario

In this Section a problem in relation to one key CS/CH area (Consumer Sales, Service and Contracts) of the old TCP Code is chosen for discussion. It describes evidence for institutional pressures and how they brought about explicit revisions to that CS/CH Section in the revised TCP Code. An example presents the results of implementing this new CS/CH practice (for Consumer Sales, Service and Contracts) in a national vLISP. Preliminary results demonstrate positive outcomes for customer service in comparison with past performance. 5.4.1 The problem At the outset, it is important to present the context of the issue by understanding the problem in relation to consumer sales, services and contracts. The complaints statistics in the tables below (Tables 5.4-5.6) show an increasing trend in complaints registered with the industry ombudsman. This trend is attributed in part to poor CS/CH practices in vLISPs.

Table 5.4 shows complaints recorded against ‘Consumer Sales, Service and Contracts. Such complaints data is a direct reflection of poor customer service. For example, in Table 5.5 against the category ‘Inadequate/Incorrect Information provided at the time of purchase of service’, there is a sharp increase over a four-year period (taking into consideration the proportion of complaints against the number of subscribers). Poor customer service invariably leads to increased complaints. As a result there are implications for the complaints handling performance of the providers. Table 5.6 provides a snapshot of complaints related to poor complaints handling practices involving Consumer Sales, Service and Contracts.

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Table 5.4 Complaints data on Consumer Sales, Service and Contracts (TIO 2012) Contracts Point of sale advice about products

2006/07 8779

2007/08 13026

2008/09 24255

2009/10 27262

Enforcement of contract terms

1757

2577

4918

6168

Customer denies all knowledge of contract’s existence Point of sale advice about coverage

133

1403

3976

4694

822

2079

3242

3837

Delay in processing termination request

1257

2381

4080

3818

Variation of contract terms Advice given about termination fees at the time when customer requests termination of service

1521 1026

2671 1542

3748 2045

3232 1560

Failure to provide copy of the contract

491

581

1330

1419

Impaired decision-making Sales tactics of telecommunications supplier Point of sale advice about contract termination fees Point of sale advice about cooling off periods Others Total

376 617

597 1167

976 1604

1149 1148

336

616

929

1113

375

719

925

879

658 18,148

1032 30,391

1786 53,814

1848 58,127

Table 5.5 Complaints data on Customer Service involving Consumer Sales, Service and Contracts (TIO 2012) Customer Service Incorrect or inadequate advice provided to customer Failure to action a customer’s request Discourteous treatment of customer by supplier’s staff Lengthy wait time to speak to supplier Customer is unable to contact their supplier Supplier has refused to deal with a customer’s nominated advocate Total

2006/07 10707

2007/08 20351

2008/09 38545

2009/10 55547

8590

14409

29586

22221

1215

3260

7316

6241

2294

6962

8342

4298

4003

7360

6194

2889

239

195

374

405

27,048

52,527

90,357

91,601

192

Table 5.6 Complaints data on Complaints Handling involving Consumer Sales, Service and Contracts (TIO 2012) Complaint Handling Failure to action undertakings made to resolve a customer’s complaint Failure to advise customer of the outcome to their complaint Failure to escalate a complaint upon request Failure to refer to TIO where customer remains dissatisfied Failure to acknowledge customer’s written complaint Failure to make a record of a customer’s complaint Charges imposed to itemisation of disputed bill/complaint handling Total

2006/07 3839

2007/08 7293

2008/09 34091

2009/10 43523

524

1705

8952

8637

1315

3242

8791

6178

17724

14012

8009

5598

1432

1983

4081

4500

412

543

2400

2940

28

43

71

113

25,274

28,821

66,395

71,489

In addition to all of the above TIO complaints data, the ACMA’s RTC inquiry report Section 7.3 (ACMA 2011) highlighted ongoing problem in relation to pre-sale information disclosure. It states the regulator’s expectations in relation to pre-sale information disclosure: Many consumers do not have sufficient information to form a proper understanding of their telecommunications product before they enter into a contract. This contributes to other problems such as bill shock and a disparity between what they expect from a product at the time of purchase and their subsequent experience of it. The current TCP Code does not meaningfully address the matter of consistent and comparable product disclosure requirements (ACMA 2011)

The report presents suggestions for addressing the point of sale concerns: As required by the regulatory policy underpinning the Telecommunications Act, the ACMA proposes to invite industry to develop a code rule requiring that service providers provide consumers with a critical information disclosure summary about a product/service that … is presented in an agreed format and be framed to help consumers to compare and assess different products (ACMA 2011)

Further, the report communicated the regulator’s conviction to further regulate the industry if it failed to deliver the intended outcomes (in this case in relation to pre-sales elements of the TCP Code): Industry agreement about consistent and meaningful disclosure of critical information should be achievable. If a code rule that met the ACMA’s objective was developed, the ACMA considers that consumer outcomes would be materially improved. If agreement was not possible, including about the content and format of critical information disclosure summaries of products within the sector, the ACMA would consider it to be necessary to determine an industry standard to ensure that improved product disclosure was provided to consumers (ACMA 2011)

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5.4.2

Comparison of the old and the revised TCP Code in relation to consumer sales, service and contracts

The revised TCP Code provides detailed information on ‘Consumer Sales, Service and Contracts’ which outlines the expectations in relation to customer service. For example, it specificies how and when products and services information are to be provided to the customer. A particular example is the new requirement for all vLISPs to provide two A4 pages of ‘Critical Information Summary’ at the point of sale. This is in sharp contrast to the requirements for customer information in the old TCP Code. The old TCP Code included a chapter on ‘Customer Information on Prices, Terms and Conditions’ with a specific sub-section devoted to providing information and another chapter on ‘Contracts’. In contrast, the revised TCP Code has a dedicated chapter on ‘Consumer Sales, Service and Contracts’ which outlines in greater detail how to, for example, provide customer information using a ‘Critical Information Summary’. See Appendices I and J for the Explanatory Statement of the TCP Code 2012 and a section from it on the ‘Critical Information Summary’.

The revised TCP Code provides prescriptive information to all providers on (i) information (Content) that should appear on each Critical Information Summary;; (ii) the point at which such ‘Critical Information Summary’ must be made available to customers;; (iii) customer accessibility to such ‘Critical Information Summary’ for example, via a website;; (iv) the length of such ‘Critical Information Summary’ (no more than two A4 pages with all mandatory contents included);; and (v) the use of simple and plain language for the ‘Critical Information Summary’ document and that it operates as a standalone document. Such a detailed prescription of what is acceptable in relation to Telecommunication offers (Section 4.1 of the revised TCP Code) did not exist in the old TCP Code. As a result many providers interpreted the old code in their own ways. The level of prescription in relation to the ‘Consumer Sales, Services and Contracts’ section of the ‘Critical Information Summary’ in the revised TCP Code directly addresses the nature of the complaints registered against categories such as point of sale advice. Several study participants also indicated this as an important outcome in the revised TCP Code. The following quote captures this sense of achievement: The revised TCP Code includes a summary offer provision. One of the problems that we've experienced in the ISP world and other services, is when customers buy a product without really understanding what it is, how it operates and they sometimes get a bad reaction down the track when they realise exactly what the product is or what it can or can't do

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against their perceptions. Now I'm not blaming the customer for that, not by any means. The failing has really been in the provision of information provided pre-sale. It's not been simple enough, it's not been clear enough to ensure that before the customer makes a purchase, they can firstly compare between providers and secondly, really understand what it is they're about to buy. This summary document, which is a simple instrument, is designed to make sure that before a customer buys, they have all of that vital information at their fingertips. So they're making an informed decision [P3]

Another important outcome is the proactive approach to avoiding complaints adopted by the revised TCP Code. Although the old TCP Code emphasized avoiding complaints, it was written to direct more focus on dealing with complaints. The new TCP Code places more emphasis on avoiding the complaints in the first place. Some key initiatives are described in the quote below: So let's starts with some of the pre-sale elements. The code includes a much strengthened regime around advertising content and the terms that can be used. So as to make sure that the advertising is always an accurate reflection of the offers being made. So if you remove any distance between the perception of what the customer might pick up as a result of seeing an advertisement, and the reality of what they receive if they act on that decision and buy the product, then you remove a major source of complaints. The cognitive dissidence argument [P3] If you improve the pre-sale information that's provided to customers as we've done through the summary of offer and other provisions, then you remove another source of complaint which comes around ignorance or lack of understanding about the actual nature of the product thereby [P3] If you put in place spend management tools, which means that the customer is better able to manage their expenditure and less likely to get an unexpectedly high bill, you remove another major source of complaints [P3] If you put better consumer protections around credit management, then those customers who they felt in the past weren't dealt with sensitively or appropriately on the credit management side, will also have fewer reasons to complain, and you take complaints away from that queue as well. There are numerous other examples [P3] The complaint handling process if you have a complaint handling scheme that operates as per the provisions of the new code, you then are resolving complaints more rapidly. You are doing a better job of keeping customers informed about the outcome of their complaint and you are providing fewer reasons why those complaints might not be resolved and the company might escalate it to the . So as I said, they are other examples, but they're some of the big ones [P3]

5.4.3

Preliminary evidence from a very large national ISP

This Section presents some preliminary evidence from vLISP [O7] which adopted and implemented the ‘Critical Information Summary’ requirement as detailed in the revised TCP Code. In response to one of my questions regarding the impact of the new TCP

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Code revisions and how they benefited [O7], one of its senior executives [P7] described the positive outcomes as improved customer service scores: Combined with the point of sale concerns and the presales concerns about what is it as a consumer you're buying, what are you signing up to before you actually walk out of the shop. The highlighted the need to improve that product disclosure information. We agree with that and we respond to that. We respond in a slightly different way. Rather than a detailed document we've come up with a one-page solution and we actually led the way there. My office is already at the marketplace now in advance to the code being finalised. Our experience is that those documents are being very well-received by our customers. They're helping them make a choice between what plans they should take from us. We offer them in all our categories so it's on wire line, wireless and broadband. We have over 150 of these documents. So customers are picking the right plan-based on what the content of the plan is and they're keeping these documents, taking them home with them. Then if they have any questions of our office after they've purchased the product or service, they ring us up and use that document. So we find that very beneficial [P7]

When asked how his organization gathered information on recent customer service initiatives, the introduction of one-page ‘Critical Information Summary’, [P7] stated that [O7] engaged an independent company to undertake a detailed customer survey with definitive objectives. Those objectives were to determine if (after implementing the decision to hand out the ‘Critical Information Summary’ to customers), customers received these summaries, whether they used them and the key moments at which they would value them the most. An independent company was engaged by [O7] to specifically assess: (i) whether customers were receiving the summaries and reading them;; (ii) how useful they were to customers in understanding their Internet service plan and bill;; (iii) whether the summaries helped customers with their understanding of their first bill (when it was received);; (iv) what customers expect to do in case they have any questions in the future (would they refer back to the summary of offer, for example?);; (v) how the summaries can be made more useful to customers;; and (vi) at what other key ‘moments of truth’ the summaries would be useful to customers. Due to privacy and confidentiality reasons the actual results of the survey administered by [O7] was not accessible. However, [P7] emphatically confirms that the results of that independent research survey were ‘very, very pleasing and clearly indicated that the Offer Summary document resulted in significant increase in positive customer satisfaction with O7’ (Email conversation with [P7] in April 2012). In summary, it is argued that increased collaboration and involvement between the top four vLISPs and other vLISP industry stakeholders (due to institutional pressures) resulted in revisions to the ‘Pre-sales’ aspect of the TCP Code on ‘Consumer Sales, Service and Contracts’.

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Such revisions were a direct response to address those factors that affected customer service and resulted in poor CS/CH outcomes in relation to the pre-sale information in the code. When revised CS/CH practices were adopted and implemented by [O7], which had the highest market share for Internet services, their independent survey showed that there was a significant increase in positive customer service compared to previous performance. The success of such outcomes for all vLISPs remains to be seen. However, [O7]’s experiences indicate that similar outcomes will be achieved because the revised CS/CH practice addresses the source of complaints with respect to the code’s pre-sales aspect. By including mandatory components in the code (the ‘Critical Information Summary’) the level of consistency of provision of information to customers at the point of service (pre-sales) has been assured. Regulatory pressure has intensified with the adoption of the revised TCP Code and the independent compliance committee (CC) will play an influential role in monitoring code conformance and determining the regulatory compliance with the code.

5.5

Conclusion

This Chapter established that institutional pressures dominate the manner in which CS/CH issues are addressed by vLISPs. In particular, regulatory pressures dominated the industry and resulted in the development of the revised TCP Code for delivering consistent CS/CH practices. Other pressures such as normative, mimetic and customer pressures also influenced CS/CH practices. The response to the pressure depended on who exerted the pressure and under what circumstances those pressures were exerted.

The five key factors influencing CS/CH in vLISPs are: (i) the TCP Code;; (ii) Penalties and code enforcement mechanisms;; (iii) Complexity of products and services;; (iv) Competition politics;; and (v) Organization culture and attitude regarding CS/CH practices. A key finding was that the CS/CH practices of the vLISP industry are institutionally derived practices developed through collaborative efforts of central 197

actors in various stakeholder agencies. The institutional pressures have intensified with the introduction of an independent committee for compliance (CC) that will monitor industry code compliance activities. All providers are required to submit mandatory compliance statements and also report against a list of customer service metrics developed by the CC. Such strong enforcement and monitoring activities will drive desired behaviour in the industry and demand that the vLISP players improve their CS/CH performance.

Using evidence from both data and academic literature on Emerging Organization Fields, Chapter 6 presents an argument that there are Emerging Organizational Fields comprising central institutional actors who influence the CS/CH practices of the vLISP industry.

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CHAPTER 6 EMERGING ORGANIZATIONAL FIELDS IN THE AUSTRALIAN VERY LARGE ISP INDUSTRY

You can analyse the past, but you have to design the future. -

6.0

Edward de Bono, 1933.

Chapter overview

In Chapter 5, I used a neo-institutional lens to critically examine the institutional pressures in the vLISP industry and the role they play in influencing the CS and CH practices of the industry. A key argument established in Chapter 5 was that the regulatory pressures combined with customer and competitive pressures played a pivotal role in bringing salient stakeholders together to revise CS/CH practices with an objective to improve the CS/CH performance of the vLISP industry. It was shown that the intensification of these pressures led to increased collaboration, interaction and cooperation between the top four vLISPs and other industry stakeholders. In this Chapter my focus is to critically examine the characteristics of collaboration and their broader implications for the industry’s CS/CH practices. This led to the investigation of two central questions regarding collaboration: What led to collaboration on CS/CH practices between the institutional actors in the very large ISP industry? What do the collaborative efforts of institutional actors in the very large ISP industry inform us about their role in influencing the industry’s CS/CH practices? The key arguments made in this Chapter are: x

Disparate organizations came together to address the CS/CH issues of the vLISP industry;;

x

Collective rationality among the top four vLISPs occurred to deal with the CS/CH issues and to demonstrate their genuine commitment to improve the industry’s customer service reputation;;

x

The central actors from various stakeholder agencies met frequently and fatefully and collaborated during various Field-configuring events (temporary 199

social gatherings that act as a platform for disparate organizations to come together and collaborate) to develop revised CS/CH practices;; and x

The deep interactions, information exchange and embedded collaborations between the institutional actors in the vLISP industry have resulted in the emergence of Organizational Fields comprising central actors from various stakeholder agencies who influence the CS/CH practices of the vLISP industry.

The research in this Chapter is also discussed in Vilapakkam Nagarajan (2013a, c). 4

6.1

Definition of Organizational Field

In Chapter 2, I reviewed the literature on Organizational Fields, issue-based Organizational Fields (DiMaggio & Powell 1991;; Fligstein 1991;; Hoffman 1999;; Scott 2001;; Wooten & Hoffman 2008;; Barley 2010) and various theoretical perspectives on Organizational Fields (Machado-da-Silva, Guarido Filho & Rossoni 2006). I settled on Scott’s (2001) definition of an Organizational Field as ‘a collection of varying types of organizations, their suppliers, customers, and regulators that are formed around a common issue’. The two key theoretical perspectives on Organizational Fields – ‘Field as the totality of relevant actors’ and ‘Field as a center of dialog and discussion on a focal issue’ – were discussed in Chapter 2 (Hoffman 1999;; Machado-da-Silva et al. 2006). In this Chapter the neo-institutional lens is used to: (i) critically examine and gain deeper insight into the collaborative relationships between the central institutional actors;; and (ii) make sense and meaning of dynamics of such collaborative relationships and how it influenced the revisions to the CS/CH practices (revised TCP Code) of the vLISP industry. A detailed review of expert institutional studies (DiMaggio et al. 1983;; Scott 2001;; Hoffman 2001;; Lawrence, Hardy & Phillips 2002;; Maguire, Hardy & Lawrence 2004;; Wooten et al. 2008) on collaboration and their role in Field emergence assisted me

4

Vilapakkam Nagarajan, Karthik (2013a), ‘How and Why Technology Based Service Organizations Act Together: Emerging Organization Fields in the Australian Internet Service Provider Industry’, Proceedings of 27th Australia and New Zealand Academy of Management (ANZAM 2013) Conference, December 4-6, 2013, Hobart, Australia, pp. 1-19. Vilapakkam Nagarajan, Karthik (2013c), ‘Functional Service Quality Practices of Australian Internet Service Providers: An Institutional Perspective’, Proceedings of International Conference on Internet Studies (NETs 2013), September 7-8, 2013, Hong Kong, China.

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in my reflection on key questions during the analysis of the research findings. Major questions that were investigated during the analysis phase are: x

When and why do Organizational Fields emerge?

x

What brought disparate organizations and central actors within those organizations to come together to address CS/CH issues?

x

How did collective rationality among the top four vLISPs occur to deal with CS/CH issues?

x

What events trigger the processes that drive Organizational Field evolution? and

x

What are the broader implications of the frequent and fateful interactions among central institutional actors of the vLISP industry on CS/CH practices?

I address these key questions in the subsequent Sections.

6.2

Chronology of events in relation to the poor customer service and complaints handling performance of the top four very large ISPs

When and Why do issue-based Organizational Fields emerge? To answer this question it is crucial to examine the chronology of events in relation to CS/CH issues and poor CS/CH performance of the top four vLISPs. This approach is consistent with previous studies on issue-based Organizational Fields (DiMaggio & Powell 1983;; Hoffman 1999;; Maguire et al. 2004;; Powell, White, Kopit & Owen-Smith 2005) that found that the Organizational Fields that evolve around issues and debates are a result of actors paying more attention to problems of collective rationality.

Year 2009 The consumer association report on emerging consumer issues in the Internet industry (ACCAN 2012) discussed the increasing trends in complaints and stated that ‘In 2008, [the] Telecommunications Industry Ombudsman experienced a 50 per cent increase in complaints, up to 150,000 – its largest jump in 10 years’ (TIO 2012). The report stated that there was a growing perception that the communications industry was not consumer friendly. The 201

Minister for Broadband, Communications and Digital Economy at the time echoed these concerns when he stated that the TCP Code at that time did not live up to stakeholder expectations, was slow to respond to emerging consumer issues (arising from new technologies) and had inadequate enforcement mechanisms (TIO 2012). In October 2009, the Minister described rising complaints in the Internet industry as an ‘absolute shocker’ and threatened to legislate if there was no significant improvement in the industry’s CS/CH performance (ACCAN 2012). At the same time, customer service and complaints handling overtook billing and payment as the most prominent complaint issues in the second half of the year. Following this, TIO’s media release dated 23 October 2009 called on the industry to focus on customers (TIO Talks 2012): ‘The TIO 2008/09 Annual report found that biggest increase in complaints to TIO continued to be poor Customer Service and Complaints Handling’. Because of such an unprecedented increase in volume of complaints, TIO launched the Connect.Resolve campaign in which a monthly complaints statistics report along with recommendations for customer service improvements was sent to the ten largest providers in Australia (TIO 2012). Year 2010 In 2010, the consumer association published the results of an independent survey they commissioned

through

Galaxy

research

on

customer

experience

with

telecommunication services in Australia (ACCAN 2012). The profile of the problem peaked when it was found that close to 2.3 million customers were unhappy with the way their telecommunication provider handled customer service problems relating to their phone or ISP services over the past year. The report showed that one in two Australians had problems with their phone or ISP companies in relation to customer service and complaints handling. The survey found that two in three tried to have their problem dealt with by their ISP and one in three customers was not satisfied with the outcome of their complaints (ACCAN 2012). Such revelations fuelled the CS/CH performance debate across the industry. Another round of the Connect.Resolve campaign was launched by the industry ombudsman between 1 January 2010 to 30 June 2010 with the top ten providers (TIO 2012). This campaign highlighted a number of scenarios in relation to instances of poor customer service and complaints handling. More importantly, 2010 was also the year for TCP Code review (Communications Alliance 2013). The industry was under pressure from the regulator to address the

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CS/CH problems, particularly following the launch of the regulator’s RTC inquiry in 2010, which boosted the seriousness of the CS/CH issue. The timing of the code review and the regulator’s RTC inquiry coincided and served as a reminder for the TCP Code review working committee to take the review process seriously. This was an opportunity for the industry to collectively demonstrate its commitment to addressing systemic CS/CH issues and avoid tighter regulation. Year 2011 In 2011, customer service and complaints handling remained at the top of the list of ongoing concerns for Internet customers. As with previous trends, both customer service and complaints handling constituted a significant proportion of the overall complaints. The industry ombudsman’s annual report (TIO 2012) highlighted that among the top seven issues for new complaints, customer service and complaints handling accounted for close to 42 per cent of all complaints. Multiple issues were recorded under a complaint. For example, a customer complaining about a fault also complained about the lack of response from their provider about the fault. This led to two issues being recorded, one on customer service and the other on fault. The report also highlighted confirmed code breaches across a number of areas, including credit management, customer transfer, pricing, billing and complaints handling. The complaints handling issues alone constituted 49 per cent of the overall proportion of code breaches. The report concluded that the industry had failed once again to demonstrate improvements in code compliance. Further, systemic issues involving code breaches (between 1 July 2010 to 30 June 2011) found 35 per cent of those systemic issues related to point of sale matters. In 2011, the industry ombudsman as part of its ongoing investigation of industry-wide poor CS/CH performance, studied consumer resilience in relation to the vLISPs’ handling of customer complaints. The ‘Resilient Consumer’ project surveyed 500 consumers who had lodged their complaints to the TIO during the month July 2010 to August 2010. The survey results found that more than half (55 per cent) contacted their ISP five or more times before ringing the TIO, more than half (54 per cent) stated that they had raised their concerns with their ISP at least one month before contacting the TIO, and 31 per cent stated that they had made a complaint more than three months beforehand (TIO 2012;; TIO Talks 2012).

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Taken together, the analysis presented so far implies that in an environment where exponential growth in the Internet subscriber base for ISPs was occurring there was an urgent need to respond to the increasing volume of customer complaints.

6.3

Disparate organizations coming together to address customer service and complaints handling issues of the Internet industry

What led to disparate organizations and populations coming together? The ongoing poor CS/CH performance of the vLISP industry during the period 2008-2011 drove disparate organizations to come together to address the industry’s CS/CH issues. Several events unfolded during 2008-2011 that contributed to closer and more frequent interactions amongst the vLISP industry stakeholders. The ‘Trigger Events’ such as the regulator’s RTC inquiry, the rapid increase in Internet service complaints registered with the industry ombudsman, Ministerial intervention and consumer research reports highlighting poor CS/CH practices brought disparate institutional actors together for collective action. Such ‘Trigger Events’ culminated in industry-wide shock waves, particularly when the pressures from the regulator resulted in a real threat of tighter regulation. The next key question is: What do disparate organizations gain from their involvement with one another? The top four vLISPs faced the same destiny (a real threat of tighter regulation) and hence came together to respond to the pressures from the regulator, the industry ombudsman and government authorities (the regulator’s RTC inquiry, Ministerial intervention, direction from the regulator to incorporate their RTC inquiry recommendations into the revised TCP Code and industry ombudsman campaigns). The coming together of the top four vLISPs to collectively respond to the CS/CH concerns was both to appease as well as to demonstrate to external constituents the serious commitment of the top four vLISPs to resolve the industry’s CS/CH shortcomings. Such collective responses helped the top four vLISPs gain the social support of the external stakeholders. The quote below captures the industry’s preference towards co-regulation instead of direct regulation:

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Because I think that everyone would rather the opportunity to be the master of their own destiny rather than have it, you know, you'd rather do something than have it done to you. That's what the whole impetus behind self or co-regulation is, it's make rules that work for yourself, but then if they don't work you know somebody else that's going to come and make them for you [P4]

Given that the disparate organizations came together to address pertinent issues, it is essential to revisit the central actors who were intensely involved in the CS/CH debate and those that were concerned with the development/production of the revised CS/CH practices. The central actors involved in developing the CS/CH practices were identified by the ‘position title’ in their organizations. For example, in his investigation into Field emergence, Bourdieu (1990) showed that ‘Issues and debates bring together actors with shared interests, who can be viewed as a network or a configuration of relations between positions’ (Bourdieu 1990). The regulatory managers of the top four vLISPs, the regulator executive, the consumer advocate, the industry ombudsman executive, the ISP industry association executive and the government department for broadband executive were the central actors involved in developing CS/CH practices. These central actors ‘are those who have power and legitimacy, not just a passing interest’ (Stuart & Muzellec 2004). These actors engaged in the TCP Code review activities, were members of working committees on TCP Code review and board members of the ISP industry association, the regulator and the the industry ombudsman, and attended industry/consumer conferences to discuss CS/CH issues.

6.4

Collective rationality among the top four very large ISPs in dealing with customer service and complaints handling issues

DiMaggio & Powell (1991) showed that Organizational Fields emerge when ‘interacting actors begin to pay attention to problems of collective rationality’ (DiMaggio & Powell 1991). Signs of collective rationality among the top four vLISPs developed when serious attention was paid to the focal issue of poor industry-wide customer service and complaints handling performance. The top four vLISPs, the regulator, the government department for broadband, the industry ombudsman, the ISP industry association and the consumer association contributed to the debate on the focal issue and on how to address the CS/CH problems facing the industry. Since the reputation of the industry was at stake and as the threat of tighter regulation became imminent, the top four vLISPs came together to form relational links that did not exist before. This finding conforms closely with Wooten and Hoffman’s (2008) study which found that ‘Issues defined what the Field 205

was, drawing linkages that may not have been previously present’. The industry association executive [P3] gives an example of how relational links occurred as never before: Our Board meets every two months and there is discussion at that level about these issues. The working groups have met more than 100 times. The industry group that I run to craft positions, is meeting at the moment on a weekly basis, sometimes more than once a week as we get to the pointy end of the revision process. So it's been - since the code revision started in May 2010, those meetings have been regular over the last six months they've probably increased in frequency [P3]

Development of such new relational links is a clear indication of collective rationality among the top four vLISPs to deal with CS/CH issues faced by the industry.

6.5

The role of field configuring events in bringing institutional actors together

A growing body of literature (for example, Meyer 1982;; Meyer, Brooks & Goes 1990;; Meyer, Gaba & Colwell 2005;; Powell et al. 2005;; Lampel & Meyer 2008;; McInerney 2008;; Garud 2008;; Hardy & Maguire 2010) has investigated events/activities that triggered the processes that drive Field evolution. In this Section, I establish the argument that the Field Configuring Events (FCEs) precipitated increased CS/CH dialogue among the vLISP industry stakeholders. They acted as key venues for collaboration between the central actors and laid the foundation for Organizational Field emergence. I establish the above argument by: (i) explaining what FCEs are and by positioning them within the context of this research study;; (ii) highlighting the role of ‘Trigger Events’ as FCEs that brought actors together to build collective understanding and mobilize collective action;; and (iii) discussing the role consumer association annual conferences played in driving Organizational Field evolution. Lampel and Meyer (2008) define FCEs as ‘temporary social organizations such as tradeshows, professional gatherings, technology contests, and business ceremonies that encapsulate and shape the development of professions, technologies, markets and industries’. The FCEs are represented by people from diverse organizations who assemble periodically to develop industry standards, share and interpret information about new technologies and construct social networks. FCEs act as a platform to ‘transform a disparate set of organizations and individuals into a community of organizations that partake of a common meaning system’ (Lampel & Meyer 2008). In the context of this study, this implies that FCEs provided the central actors with opportunities to get involved in defining CS/CH practices and setting standards in 206

relation to CS/CH performance. Powell et al. (2005) state that ‘Fields begin as agglomerations of individuals, groups and organizations that meet sporadically at first, and then come into contact with increasing frequency’. Participant responses and study findings suggest that this notion is applicable to the vLISP industry. Table 6.1 highlights the defining characteristics of FCEs within the context of this research study (Lampel et al. 2008). The main FCEs in the vLISP industry were: (i) TCP Code review steering committee meetings;; (ii) TCP Code review working committee meetings;; (iii) consumer association annual conferences 2009-2011;; (iv) industry ombudsman board meetings;; (v) industry ombudsman campaigns;; (vi) the regulator’s RTC inquiry;; (vii) regulator consumer consultative forums;; and (viii) board meetings (for example, ISP industry association board meetings and industry ombudsman board meetings). Table 6.1 Defining characteristics of FCEs (Lampel et al. 2008) Defining characteristics of Field Configuring Events (FCEs) Actors assemble in one location to discuss pertinent issues FCEs have limited duration FCEs provide face-toface interactions FCEs include dramaturgical activities FCEs assist with collective sense making

FCEs generate reputational resources that can be deployed elsewhere

Description

FCEs such as the TCP Code review committee meetings, ISP industry association meetings, ISP industry association events, consumer association annual conferences and the industry ombudsman workshops assisted different stakeholders to assemble in one location to discuss CS/CH issues. These events triggered processes that drove Organizational Field evolution. For example, the TCP Code review working committee meetings were scheduled based on specific sections relating to the code. The meetings were held on certain number of days during the review period. The level of interaction intensified during this period. FCEs provided opportunities for vLISP industry stakeholders to have face-to-face interaction on CS/CH issues. The dramaturgical activities (such as heated debates amongst attendees) captured the attention of the regulator, the consumer association and sent a signal that the industry is addressing their concerns (for example, press releases on follow up action after the working committees have met and discussed CS/CH issues). FCEs provided an opportunity for ISP industry stakeholders to exchange and brainstorm information about ways to deal with CS/CH issues, address gaps in the code and engage in collective sense making. During the FCEs, the frequent interaction among actors who acted as agents of organizations they represented contributed to the Organizational Field evolution process. For example, during the ISP industry association meetings, the industry association in consultation with the top four vLISPs started running compliance training programs for the revised TCP Code. This provides opportunity for the top four vLISPs to attend such training programs and learn how to demonstrate compliance with the revised TCP Code. Such training programs can lead to the top four vLISPs adopting and implementing standard operating procedures to demonstrate code conformance.

The characteristics discussed in Table 6.1 above verify that FCEs acted as key venues for central actors to collaborate and find solutions to pertinent issues. It was not 207

possible to achieve such levels of collaboration in the absence of FCEs. For example, the meetings held at the ISP industry association engaged the top four vLISPs in discourses that shaped systems of meaning and action in relation to CS/CH practices. During these meetings various industry players focused on the production and dissemination of explanatory material about the revision of CS/CH practices. The FCEs helped the top four vLISPs to find a way to ‘cooperate and compete at the same time’ (Zilber 2007). The central actors from participating organizations were able to involve themselves with others during such FCEs because of the influential role they played within their organizations and the high visibility of their organizations in the marketplace. Table 6.2 revisits the profile of participating organizations that the actors represented. This is important to understand the strength of representation provided by these central actors during various FCEs and the strategic importance of their organizations in consumer protection policy formulation in the Internet industry. According to Meyer et al. (2005) FCEs such as industry forums and working groups/committees provide unique social spaces for institutional actors. Such events help ‘actors from diverse social organizations to assemble temporarily with the conscious, collective intent to construct an Organization Field’ (Meyer et al. 2005). For example, the TCP Code steering committee comprised an independent chair, two industry representatives, two consumer representatives, one regulator representative, an industry association CEO and a government department for broadband observer. The working/steering groups on the TCP Code provided excellent communication platforms for central actors to discuss CS/CH issues and engage in collective sense making (Garud 2008). The industry association executive’s [P3] view on this is: They do not sit down to plan how they will undertake their customer service, except in the environment in where they are able to meet and agree what the industry code should look like. So that’s their chief avenue for doing that [P3]

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Table 6.2 Strength of representation and strategic importance of organizations that the central actors represent [O]-Organization [P]- Participant [O1] [P1] [O2][P2]

[O3] [P3]

[O4] [P4] [O5] [P5]

[O6] [P6] [O7 ][P7] [O8] [P8]

Description A peak consumer association that represents consumers in the communications policy arena and works towards getting affordable, available and accessible communications for all Australians irrespective of where they live or work. The consultancy provides regulatory management services to the ISP Industry. Provided assistance to regulator by contributing to their commissioned report on RTC’s Reconnecting the Customer inquiry. Has assisted the consumer organization and vLISPs in their research. Helped industry association in TCP compliance training program. Covered a whole breath of industry on all sides in the TCP Code development. The industry association represents the peak industry body that has responsibility to undertake the self-incurred regulatory functions prescribed in the Telecommunications Act 1997. This involves creating, revising and maintaining codes, standards and guidelines under which the telecommunication sector operates. These are both technical and consumer related documents. This organization provides a collaborative environment in which vLISPs can work together on common issues of industry interest and formulate and create sensible solutions to regulatory and/or technical problems or challenges. This organization is heavily consulted on the NBN and operated eight working groups comprising more than 200 expert individuals from the industry who together have created much of the NBN’s original planning and design work. The regulator plays a key role in areas of co-regulation which have to do with TCP Code and code compliance. The organization [P4] represents is responsible for TCP Code enforcement and monitoring. The industry ombudsman is the independent dispute resolution body for the telecommunications industry. Where consumers are not able to resolve their complaints directly with their service provider, they have the right to approach this organization as an independent umpire for advice and assessment of their complaint. These are the top four national vLISPs in Australia. Their visibility in the marketplace reflects their history and involvement in the industry over many years. The top four vLISPs provide a range of communications services to customers including mobile, national and long distance services, Internet services, telephony services and Internet television. The regulatory managers of the top four vLISPs are board members of various stakeholder organizations and collaborate with them to develop consumer codes.

[O9] [P9] [O10] [P10]

The government department is the government agency responsible for the Telecommunications Act 1997 which regulates ISPs and carriage service providers. It also regulates content and broadcasting. Further, it regulates the way in which various industry practices and standards occur. They are primarily a policy department which sets the policy directions and relies on the regulator and the co-regulatory arrangements within the industry to regulate the day to day operations of vLISPs.

There are also critical events known as ‘Trigger Events’ which act as FCEs (Hoffman 1999;; Helfat & Lieberman 2002;; Garud 2008;; Hardy et al. 2010). The ‘Trigger Events’ in the vLISP industry were: (i) the regulator inquiry on CS/CH practices;; (ii) the industry ombudsman’s Connect.Resolve campaign;; (iii) the consumer association’s independent research reports highlighting ongoing poor CS/CH performance;; and (iv) ministerial intervention. New forms of debate on CS/CH emerged in the wake of the triggering events and redefined interaction patterns among vLISP industry stakeholders (Hoffman 1999). The ‘Trigger Events’ acted as FCEs because they: (i) provided social spaces for various institutional actors to come together;; (ii) led to increased interaction between 209

central actors of the vLISP industry;; and (iii) allowed actors to explore central issues to build collective understanding and mobilise collective action. [P10] describes the pressures such ‘Trigger Events’ placed on the top four vLISPs: I think there has been just simply the public and media outcry over the rising complaints that industry really are on the nose and they need to do something about it, so that's been a pressure I think the inquiry has been appreciating. I think also having on the actual steering committee has been another pressure because have been quite forceful in trying to push for various things and there's been a number of heated meetings … So I think there's been a number of things there that have put a lot of pressure on industry to do better [P10]

It is important to acknowledge that although the participants from different organizations came together in pursuit of a shared interest (namely, addressing CS/CH shortcomings), each participant and their organization might have a distinct way of addressing the CS/CH issues. This stresses just how important FCEs were in providing a platform for information exchange and interaction without which the group would find it hard to make sense of systemic problems and consensus on possible solutions. Hence, such events enabled the actors’ increased level of participation and helped to achieve consensus on the best way to address a particular customer service issue. Garud (2008) showed how conferences played an important role in setting the stage for activities that contribute to Organizational Field emergence. He found that some key conferences can help ‘link diverse participants together’ (Garud 2008) and engage them in collective discussions about pertinent issues. Hardy and Maguire’s (2010) study on persistent organic pollutants showed how the United Nations conference was used as a key venue to meet, discuss and report on developments in this area. Weick (1995), Lampel (2001) and Oliver & Montgomery (2008) found that formal and informal meetings in conferences/industry events provided opportunities that enable group sense making among active participants especially during times of uncertainty. A key conference that acted as FCE in the vLISP industry was the consumer association’s annual conference. For example, the 2010 conference had the explicit aim of achieving lively, dynamic dialogue between the industry, government and consumers to deal with customer service issues. The Industry met with consumer advocates and other telecommunications sector stakeholders and worked on developing innovative solutions to the endemic CS/CH problem areas (ACCAN 2012). The conference had special panels to discuss ‘Breaking through bad Customer Service’. There was also a forum on

210

‘Broadband + Customers’. The 2011 conference had a special industry panel on ‘Customer Service’ led by Group Managing Director, Strategy and Corporate Affairs for [O7] and Director of Government and Corporate Affairs for [O9]. Another workshop on ‘Complaints Resolution Futures’ was facilitated by the Information Commissioner and the NSW’s Information and Privacy Commissions in and included the Telecommunications Industry Ombudsman, the industry consultant and [O8] (ACCAN 2012). Such activities precipitated increased CS/CH dialogue among industry stakeholders and triggered the processes that drive Organizational Field evolution. Figure 6.1 below is a diagrammatic representation of all FCEs in the vLISP industry. I will now discuss the key collaborative group processes (Phillips et al. 2000;; Scott 2001;; Phillips et al. 2004;; Lawrence et al. 2006) that assisted the institutional actors of the vLISP industry to develop shared understanding and collective action to address shortcomings in their CS/CH practices. x

CS/CH problem identification: The Internet industry stakeholders gathered each other’s perspectives on CS/CH problems facing the industry. The actors’ previous experience in the industry, exposure to emerging CS issues and policy expertise played an important role in understanding the problem. The opportunity to meet in one shared location (for example, TCP Code review Working Committees) fast tracked the consolidation of problem understanding.

x

CS/CH meanings construction: The stakeholders’ discussion and evaluation of each other perspectives in various industry forums and committees helped them to draw conclusions on how to address CS issues. The sharing of divergent views on addressing CS/CH problems occurred in many forms such as email exchanges between participants, special discussion forums on CS and submissions to TCP code review discussion paper. This led to CS/CH meanings construction.

x

Resolving conflicting differences on how to address systemic CS issues: The frequent and fateful interactions between the institutional actors led to integration of their knowledge bases on CS/CH practices, helped to resolve conflicting differences and work productively to address CS/CH issues.

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Regulator Executive interacting with other stakeholders

Government department Executive interacting with other stakeholders

Ombudsman Executive interacting with other stakeholders

FIELD CONFIGURING EVENTS Consumer Association Annual Conference Industry Association Annual Conference Regulator RTC Inquiry TCP Code Review Working Committees TCP Code Review Steering Committees Ombudsman Connect.Resolve Campaign Regulator Consumer Consultative Forums vLISP Consumer Liaison Forums Industry Association Board Meetings Regulator Board Meetings Ombudsman Board Meetings Regulator consumer forums

The top Four Very Large ISP Executives interacting with other stakeholders

Consumer Association Executive interacting with other stakeholders

Industry Association Executive & ISP Industry Consultant interacting with other stakeholders

Figure 6.1 Field-configuring events in the vLISP industry (Communications Alliance 201

212

x

Development of shared understanding and collective action on addressing shortcomings in the CS/CH practices: The shared understanding through frequent interactions, cooperation, dialog and discussion on CS practices led to reasoned action on addressing CS/CH shortcomings in the TCP Code. This also meant vLISPs were able to advance their common interest which is to improve the CS reputation of the industry. For example, all ISPs are required to provide customers a ‘Summary of Offer’ document at the point of sale in the revised TCP Code 2012. The document provides an accurate description of products and services in an easy to understand language. This assists Internet customers to compare products and make informed decisions. The next Section critically examines the characteristics of collaborations and their broader implications on the industry’s CS/CH practices. It presents an argument that there are Emerging Organizational Fields in the vLISP industry.

6.6

Emerging Organizational Fields in the very large ISP industry

Two seminal studies on Organizational Fields, DiMaggio et al. (1991) on the Organizational Field of art museums and Hoffman (1999) on the issue-based Organizational Field of corporate environmentalism traced the evolution and the structuration of these two Organizational Fields. DiMaggio et al. (1991)’s criteria for studying the structuration of the Organizational Fields were: (i) increasing extent of interaction among organizations in the Field;; (ii) emergence of sharply defined interorganizational structures of domination and pattern of coalition;; (iii) increasing information load with which the organizations in a Field must contend;; and (iv) developing mutual awareness among participants of organizations that they are involved in a common enterprise. These criteria were discussed in detail in Chapter 2. My observation there was that these criteria were more suitable to studying mature Organizational Fields (being stable in nature). For studying Organizational Fields that are in the embryonic stages of development, several institutionalists (Hoffman 1999;; Phillips et al. 2000;; Lawrence at al. 2002) have used refined versions of DiMaggio and Powell’s (1983) criteria. Given that the objective of my study was to critically examine the characteristics of collaboration (using a neo-institutional lens) and their broader implications on the CS/CH practices of the vLISP industry, further review of 213

Organizational Fields literature was undertaken. Table 6.3 below summarises the levels in institutional analysis applicable to this study. Table 6.3 Levels in Institutional Analysis (adapted from Bjorck 2004) Level World System Societal Organizational Field Organization population Organization Organization sub system

Research context Australia Internet Service Provision Very large ISPs Top four very large ISPs in Australia Department of regulatory affairs in the top four vLISPs

Several scholarly studies on inter-organizational collaborations taking the institutional perspective were identified in the literature (Zucker 1983;; Meyer & Scott 1983;; DiMaggio & Powell 1983, Powell 1990;; Jepperson 1991;; Aldrich & Fiol 1994;; Powell, Koput & Smith-Doerr 1996;; Hardy, Lawrence & Phillips 1998;; Hardy & Phillips 1998;; Dacin, Ventresca & Beal 1999;; Hoffman 1999;; Lawrence, Hardy & Phillips 1999;; Lawrence 1999;; Phillips et al. 2000;; Hoffman 2001;; Lawrence at al. 2002). After reviewing various approaches used in this literature, the scholarly work on collaborations by Phillips et al. (2000) and Lawrence et al. (2002) was found to be a good fit for this study as it provided a solid foundation to: (i) examine the characteristics of collaborations involving industry practices;; and (ii) study the institutional effects of such collaborations involving industry practices. The criteria they used to study collaboration were: (i) increasing pattern of interactions among stakeholders;; (ii) representation arrangements;; (iii) information flow and the development of a mutual awareness that the central actors are involved in a common debate;; and (iv) involvement and embeddedness. I now discuss my research findings against these criteria (Lawrence et al. 2002). (i) Pattern of interactions: One aspect of the data analysis was to analyse the stakeholder interaction on CS/CH practices in the vLISP industry (discussed in Chapter 4 Section 4.6). Each interview participant provided insight into how frequently and with whom they interacted to discuss CS/CH issues. The analysis found that some interactions were more frequent than others. During the TCP Code revision interactions (both formally and informally) amongst all stakeholders increased considerably. The quote below captures the increased frequency of interactions between the Communications Alliance and other stakeholders of the vLISP industry:

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At the moment in the revision of that code, we've had six working groups charged with undertaking revisions of particular specific chapters of the code. They've met more than 100 times collectively. The major players have been on those working groups. The steering group has met about 20 times and and were represented on the steering group. The industry group that I run which are these - the less formal group that decides the industry position on all of the different issues, has been meeting on a weekly basis for more than a year [P3]

Using the definition from Lawrence et al. (2002) for depth and scope of interactions, interactions within the vLISP industry can be categorized as ‘deep’ or ‘shallow’. Examples of deep interactions include the top four vLISPs interacting with the Communications Alliance, the Australian Communications and Media Authority and the Telecommunications Industry Ombudsman to discuss CS/CH issues and the TCP Code revision. Shallow interactions occur when the Australian Communications Consumer Action Network interacts with the top four vLISPs (for example, to provide feedback on CS/CH issues). Table 6.4 shows the frequency and depth of interactions amongst vLISP industry stakeholders based on the study participants’ responses (where F means Frequent interactions at least once a month (formal/informal) and IF means Infrequent interactions on a needs basis (formal/informal). Table 6.4 Frequency of interactions among vLISP industry stakeholders in 2010/11 [P1- Consumer executive, P2-Industry Consultant, P3- Industry Association executive, P4- Regulator executive, P5- Ombudsman executive, P6- vLISP1 executive, P7- vLISP2 executive, P8-vLISP3 executive , P9-vLISP4 executive, P10-Government department executive] P1

P2

P3

P4

P5

P6

P7

P8

P9

P10

P1

-

IF

IF

F

F

IF

IF

IF

IF

F

P2

IF

-

F

IF

IF

IF

F

IF

F

IF

P3

IF

F

-

F

F

F

F

F

F

F

P4

F

IF

F

-

F

F

F

F

F

F

P5

F

IF

F

F

-

F

F

F

F

F

P6

IF

IF

F

F

F

-

F

IF

F

F

P7

IF

IF

F

F

F

F

-

IF

F

F

P8

IF

IF

F

F

F

IF

IF

-

IF

F

P9

IF

IF

F

F

F

F

F

IF

-

F

P10

F

IF

F

F

F

F

F

F

F

-

The regulator executive [P4] and the industry association executive [P3] shed light on the ongoing interactions they have with other stakeholders: 215

With the … the Department, we meet formally once a quarter, but informally we talk all the time. With , again we're part of working groups with them so there's an ongoing relationship there. are a member of our consumer consultative forum so we meet with them formally as part of that but also have ongoing informal discussion about any issue [P4] Our Board meets every two months and there is discussion at that level about these issues. The working groups have met more than 100 times. The industry group that I run to craft positions, is meeting at the moment on a weekly basis, sometimes more than once a week as we get to the pointy end of the revision process … since the code revision started in May 2010, those meetings have been regular over the last six months they've probably increased in frequency [P3]

The above quotes verify the increased frequency of interactions amongst the stakeholders during 2010-2011. Table 6.5 below provides an overview of key changes to interaction patterns of vLISP industry stakeholders in 2012 (when revised TCP Code was registered) compared to 2008 (when old TCP Code was registered) using both primary and secondary data sources (TIO 2012;; ACCAN 2012;; ACMA 2012;; Communications Alliance 2013).

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Table 6.5 Changes to interaction patterns/consultation of vLISP industry stakeholders on CS/CH practices (adapted from Maguire et al. 2004) Interactions patterns, consultation on CS/CH practices Interaction among Field members on customer service issues Arena for discussions on CS/CH issues Advocacy skills

Point of contact for government in understanding CS/CH issues Pattern of consultation on CS/CH issues

Year 2008 (Old TCP Code registered in 2008)

(Revised TCP Code registered in 2012)

The CS/CH issues drew attention of many stakeholders (for example, the ombudsman, the regulator and the consumer association). There was not much engagement among these stakeholders. The discussions was not an industry-wide discussion, instead it was more of an adhoc discussion among stakeholders in their board meetings and forums. The consumer advocates were more vocal about the CS/CH issues and that vLISPs were failing to meet customer expectations. They believed that the regulator was not able to address their concerns due to lack of clear enforcement mechanisms and penalties in the old TCP Code. The Minister’s department established ACCAN in 2008 funded by the Australian Government. ACCAN had communication with the regulator, the ombudsman and the ISP industry association. There was no collective engagement among various stakeholders and it was more adhoc consultations.

Frequent interactions (both formal and informal communication channels) on systemic issues and various chapters of the code occurred between 2010-11.

Prominent actors involved in discussion of CS/CH issues

Regulator, consumer association and the ombudsman.

Representation of community organizations on consumer issues

ACCAN was established and its role made clear – to make sure there were sufficient consumer safeguards to protect vulnerable consumers and make sure consumer issues are dealt with appropriately by the industry. There was no clear mechanism on code monitoring or enforcement to deal with CS/CH issues. There was no specific requirement for vLISPs to submit a compliance statement or disclose information about strategies they used to address systemic CS/CH issues.

Mandate to provide advice on CS/CH issues

Year 2012

Industry-wide discussion in conferences, TCP Code steering/working committees, regulator inquiry, ombudsman campaigns and the industry association board meetings. A dedicated peak consumer body ACCAN was established to advocate on behalf of the consumers. This peak body is funded by the Australian Government. It actively engaged with all stakeholders in 2010/11/12 and organizes annual conference that brings all stakeholders together to discuss pertinent issues. Regular contact with all industry stakeholders including the top four vLISPs occurred in conferences, special forums on CS and workshops in 2010/11/12. ACCAN sits on the regulator consumer consultative forum and bring to their attention issues that matter most to consumers. Collective engagement on CS/CH practices occurred in 2010/11/12 and is expected to continue because of specific measures introduced in the revised TCP Code (industry-wide engagement to address emerging consumer issues and mandatory compliance reporting to the independent compliance committee). All institutional actors identified in this study. There is ongoing commitment by these actors to engage among themselves on CS/CH practices due to additional obligations in the revised TCP Code. ACCAN has consumer advocacy councils and undertakes research into consumer issues in the industry (and obtains research funding from the government department for broadband). The top four vLISPs paid close attention to the recommendations of the research reports on improving their CS/CH performance. The Communications Compliance (CC) is an independent body responsible for monitoring code compliance. The committee reviews compliance reports submitted by vLISPs against a standard list of CS metrics developed by them. The committee will play a key role in engaging all vLISP industry stakeholders to review gaps in the code and have industry-wide input to deal with such gaps.

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(ii) Representation arrangements: Lawrence et al. (2002) studied the institutional effects of collaboration, where they view collaboration as a way to develop solutions for complex problems. Lawrence et al. (2002) define collaboration as ‘cooperative, interorganizational relationships that is negotiated in an ongoing communicative process and that relies on neither market nor hierarchical mechanisms of control’. Lawrence et al. (2002) further refine this definition to suggest that collaboration is more than inter-organizational relationships that are cooperative and state that cooperation could either be purchased or based on some form of legitimate authority. Such a definition is critical to understand vLISP industry stakeholder collaboration in relation to the development of CS/CH practices. The data analysis revealed that stakeholder relationships comprise elements based on both cooperation (between the Communications Alliance and the top four vLISPs) and the Australian Communications and Media Authority inquiry. For example, individual vLISP submissions to the Communications Alliance code issues paper highlight elements of both cooperation and authority to address systemic CS/CH issues (Communications Alliance 2013). Two examples are: vLISP [O7]’s submission document states that ‘[O7] has been a very active participant in Communications Alliance [CA] processes that pre-ceded the CA issues paper, particularly the first stakeholder meetings held on the 21 May 2010. [O7] will continue to work as one of the two nominated industry participants on CA steering group charged with managing the TCP Code review. Customer service is fundamental to everything we do … We see customer service as a differentiator in a competitive market and industry arrangements should encourage providers to compete on the basis of service’ (Communications Alliance 2013). vLISP [O9] adds: ‘We look forward to an opportunity to engage with the upcoming code review as it relates to matters that are fundamental to [O9] and its corporate ethos - the experience of our customers with their communication services and service provider’ (Communications Alliance 2013). In relation to cooperation through legitimate authority, the regulator [O4]’s submission to the industry association on the TCP Code review process states: ‘As part of the ‘Reconnecting the customer strategy’, I also announced the launch of a customer service inquiry. I expect that the inquiry will have particular relevance and synergy with the review of the CH chapter of the code’ and In this regard, I am also seeking the collective cooperation of the CEOs of the larger telecommunication companies in working towards an enforceable strategy for reducing complaints about CH and CS matters. These dialogues should enrich our understanding of the changes

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necessary to improve consumer outcomes’ (Communications Alliance 2013). The intense collaborations between institutional actors were brought about because of the top four vLISPs’ continuous exposure to regulatory pressures combined with customer and competitor pressures in 2010/11 thereby highlighting the role of institutional pressures in promoting collaborations (DiMaggio 1988;; Sharfman, Gray & Yan 1991;; DiMaggio et al. 1991;; Phillips et al. 2000). The outcomes of these collaborations have led to significant improvements in the revised TCP Code which include the establishment of an independent compliance committee to oversee code compliance activities, mandatory compliance attestations for large players certified by an external assessor, tighter timeframes for complaint acknowledgement and resolution, obligations to advise customers of complaint outcomes and the provision of clearer information about products and services at the point of sale. Hence, through collaboration, actors were able to review different aspects of the problem and ‘constructively explore their differences and search for solutions that go beyond their own limited vision of what is possible’ (Gray 1989). A vLISP regulatory manager [P6] describes the stakeholder collaboration and its benefits to both individual ISPs and the entire industry: Well look we do actually, there's a lot of common ground and common issues across the industry and that includes as well. Most of the times. So we do meet frequently on more of an informal basis. Yeah, look we do, across a number of issues. It's useful from our perspective because a lot of those other telcos are much better resourced. So we can benefit from a lot of the work they can do on some of these issues. But it also - we acknowledge and recognise that in numbers we have a better chance of getting a more favourable outcome on some of these issues [P6]

A vLISP executive’s [P7] comment on compliance mechanisms in the revised TCP Code highlights the active role the CEOs of the top four vLISPs will play in fostering compliance culture within their organization: This current code - the industry has committed to set up its own monitoring body called Communications Compliance. That body will be empowered to seek reports from all of the industry members about their compliance with that particular code. It will have powers to ask questions and investigate if necessary [P7] It's important to recognise that the bigger players, like us, will have to have a third-party assessment that their statement of compliance is reasonable against the Australian Standard for Compliance Programs. It's also important to realise that before we submits it, someone like our CEO has to put his name to it. So it's quite a high threshold before you assert you're compliant [P7]

Hence, a representation taking the form of a collaboration involving a new coalition where all organizations represented each other’s interest to other stakeholders unfolded in the vLISP sector. Table 6.6 summarises the collaborative activities and outcome of collaborations in the vLISP industry. 219

Table 6.6 CS/CH Collaboration in the vLISP industry (Phillips et al. 2000) The Issue the collaboration addressed

How it came about?

Actors involved

Level of involvement with one another

Outcome of collaboration (Examples)

Regulatory managers of four vLISPs, Consumer executive, Ombudsman executive, Regulator executive, Government department executive and Industry Association executive.

Evidence of high involvement with one another (deep interactions and co-operative relationship among actors, participation in code review working groups/steering committees on ‘Consumer Sales, Service and Contracts’ Chapter of the code, constant information flow between actors)

Mandatory ‘Critical Information Summary’ is a one or two page document which provides an accurate description of products and services in an easy to understand language. It also includes details such as pricing information, data charges, customer service information and how much customers need to pay if they end their contract early. This will allow customers to compare products and make informed decisions.


Evidence of high involvement with one another (deep interactions and co-operative relationship among actors, participation in code review working groups/steering committees on ‘Consumer Sales, Service and Contracts’ Chapter of the code, constant nformation flow between actors)

Applications to allow customers to track usage must be made available to customers.


Evidence of high involvement with one another (deep interactions and co-operative relationship among actors, participation in code review working groups/steering committees on ‘Billing’

ISPs need to provide their customers itemised bill if they ask for it. Bills must be easy to read and understand.

When it occurred?

(Examples) Lack of clear information about products and services at point of sale to customers led to numerous complaints about incorrect or inadequate information provided at the point of sale

Regulatory pressures combined with customer and competitor pressures.

Lack of tools to control spending


Intense collaborations in 2010 /11 led to collective action on CS/CH issues.


Lack of provision of clear information on billing to customers

Regulatory pressures combined with customer and competitor pressures. Intense collaborations in 2010 /11 led to collective action on

Usage notification to consumers when they have reached 50%, 85% and 100% of their data allowance.

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How it came about?

Actors involved

When it occurred?



(Examples) CS/CH issues.

Internet plan advertisements that confused customers (in the past the consumer have been caught out by the word ‘cap’ in their plans which was interpreted as maximum amount they need to pay when in fact it was referred to by the industry to a minimum monthly spend)


Poor complaint resolution procedures of vLISPs




Chapter of the code, constant information flow between actors) Regulatory managers of four vLISPs, Consumer executive, Ombudsman executive, Regulator executive, Government department executive and Industry Association executive.

Evidence of high involvement with one another (deep interactions and co-operative relationship among actors, participations in code review working groups/steering committees on ‘Consumer Sales, Service and Contracts’ Chapter of the code, constant information flow between actors).

ISPs cannot use misleading words in their advertising. For example, the term ‘Cap’ cannot be used in advertising unless it really means maximum amount customers have to pay for a certain period of time (usually on a monthly basis).


Evidence of high involvement as actors shared their individual expertise and knowledge deeply through their involvement with one another.

vLISPs must adopt complaint handling processes stated in the CH chapter of the code. Urgent complaints must be resolved within two days.

(Deep interactions and cooperative relationship among actors, participation in code review working

Non-urgent complaints must be resolved within 15 working days. Customers must be provided a unique complaint number to make it easier for them to track the progress of resolution of a specific complaint. vLISPs when proposing solutions to problems must ask customers if they are satisfied with the proposed solutions. If so, they have ten working days to implement

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How it came about?

Actors involved

When it occurred?



(Examples) groups/steering committees on ‘CH’ Chapter of the code, constant information flow between actors)

the proposed solution. If the proposed solution is taking too long or a customer is unhappy with the proposed solution the provider must tell customer how his/her complaint can be escalated. If a customer is not satisfied with how the provider handled their complaint and they believe they were not treated fairly, the provider must inform that customer can complain to the ombudsman.

Failure of vLISPs to address systemic CS/CH issues due to lack of strong compliance monitoring and enforcement

Regulatory pressures combined with customer and competitor pressures. Intense collaborations in 2010 /11 led to collective action on CS/CH issues.


Evidence of high involvement as actors shared their individual expertise and knowledge deeply through their involvement with one another (Deep interactions and cooperative relationship among actors, participation in code review working groups/steering committees on ‘Code Compliance and Monitoring’ Chapter of the code, constant information flow between actors)

Creation of independent compliance committee (CC) to monitor CS/CH performance of providers in complying with the code. Mandatory compliance attestations for large providers certified by an external assessor. Mandatory reporting requirements in a consistent format against a list of CS/CH metrics developed by CC. From September 1 2013, CC has started publishing (on their website) the names of providers that were required to lodge the compliance documents but failed to lodge them. The CC also published names of providers who have been referred to the regulator for further investigation.

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(iii) Information flow and the development of a mutual awareness that central actors are involved in a common debate: The data analysis found clear evidence of information exchange amongst vLISP industry stakeholders on CS/CH issues. In the vLISP industry most of the conversations have been in relation to CS/CH issues, particularly focusing on addressing the increasing number of customer service and complaints handling complaints. Several negotiations among the industry’s central institutional actors occurred during the TCP Code revision in 2010/11 involving prolonged discussions, draft proposals, counter proposals, public statements and media releases. Such interactions amongst actors were productive because of the thematic consistency focusing on the industry’s CS/CH issues (Kenis & Knoke 2002). Another key reason for information flow between the actors was the joint benefit that might otherwise prove too difficult for individual actors to achieve (for example, avoiding excessive regulation).

Using the Lawrence et al. (2002) criteria, information flow amongst stakeholders could be classified as unidirectional, bidirectional or multidirectional. According to Lawrence et al. (2002), unidirectional flow occurs ‘when one of the collaborating organizations learned from the other’, bidirectional flow occurs ‘when all collaborating organizations learned from each other’, and multidirectional flow occurs ‘when all collaborating organizations and the third parties learned from each other’ (Lawrence et al. 2002). There is evidence from the study data to suggest that some conversations were bidirectional while others were unidirectional or multidirectional. For example, the industry ombudsman forwards complaints data registered against a corresponding individual vLISP to assist that vLISP with their own root cause analysis of complaints, highlighting the unidirectional flow of information. The quote below illustrates this point: But more broadly we’ve also got this information and intelligence role whereby we actually supply providers on a monthly basis with detailed complaints data pertaining to their particular company complaints through our scheme, and really some of the complaint issues and areas of growth and trends that are coming out of those. We actually try and provide a great deal of data to the industry members, back to them, to assist in their own root cause analysis of what might be driving these complaints[P5]

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Bidirectional information flow occurred when all stakeholders exchanged information and learned from each other during the code review process: So in terms of the code of practice about complaint handling and customer service that generally the is developing, the steering committee which is supervising that work also has a representative from the Department … We're also feeding back to the Department all of the initiatives that we are doing to try and lead the industry in terms of improving its customer service [P7]

Multidirectional information flow occurred when the independent compliance committee (CC) and other stakeholders involved themselves in the regulatory compliance process. These information exchanges have led to the development of a mutual awareness that central actors are involved in a common debate. (iv) Involvement and Embeddedness: The stakeholders identified in this study worked collaboratively to discuss and act on CS/CH issues in the industry. Through collaboration various organizations were able to exchange information (multi-directional information flow) and learn from each other about their individual and collective experiences in relation to the CS/CH issues. This assisted in determining the best way forward to address such issues. The data analysis found high levels of involvement and deep interactions among actors evidenced by the formation of several working groups or committees on CS/CH (as discussed earlier in Table 6.6). Embeddedness is the ‘degree to which collaboration is enmeshed in inter-organizational relationships’ (Lawrence at al. 2002). Representation arrangements, broad interactions of vLISP actors with external stakeholders and multidirectional information flow discussed earlier are indicative of a high level of embedded collaborations (Powell et al. 1996;; Dacin, Ventresca & Beal 1999;; Phillips et al. 2000;; Lawrence et al. 2002). In sum, these findings on collaboration provide compelling evidence that the regulatory managers of the top four vLISPs have embarked upon an ‘Institutionalization’ project. Institutionalization refers to the ‘process by which a practice acquires legitimacy and achieves a taken for-granted status’ (Kshetri 2009). In technology oriented service industries such as ISPs it is beyond the scope of a single organization to find solutions to complex and multi-faceted CS/CH problems (due to factors such as rapid growth in Internet technologies, complexity of products and services).

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The collaboration helped develop solutions to CS/CH problems by bringing together actors who were: (i) central people in the organizations they represented;; (ii) had similar backgrounds and orientations to CS/CH problems that needed to be addressed;; and (iii) had policy expertise to contribute to the development/formulation of effective CS/CH solutions. The deeply embedded collaborations between the central actors have led to the emergence of Organizational Fields. Emerging Organizational Field 1 comprises actors from the Australian Communications and Media Authority, Department of Communications,

Telecommunications

Industry

Ombudsman,

Australian

Communications Consumer Action Network, Communications Alliance and the top four vLISPs. Emerging Organizational Field 2 comprises an actor from the Communications Alliance and the regulatory managers in the top four vLISPs. The notion of multiple Organizational Fields comprising diverse institutional actors is supported by previous studies on Organizational Fields (DiMaggio et al. 1983;; Scott 1995;; Hoffman 2001;; Rankine 2008;; Zhao 2011). Field membership/constituency in the identified Emerging Organizational Fields is based on the analysis and findings in relation to the interaction patterns of actors who participated in CS/CH debates and those who were deeply involved in the development/review/revision of CS/CH practices. Emerging Organizational Field 1 comprises central actors who actively participate in the CS/CH debate and the development/review/revision of the TCP Code. Emerging Organizational Field 2 comprises central actors responsible for the implementation of CS/CH practices. Figures 6.2 and 6.3 are diagrammatic representation of Emerging Organizational Fields in the vLISP industry. It is acknowledged that the Emerging Organizational Fields ‘represent potential networks of organizations rather than already established networks or federations of organizations’ (Gray 1985). In such issue-based Emerging Organizational Fields, the regulatory managers of the top four vLISPs along with other stakeholders currently experience periods of flux. This is because the norms (what constitutes acceptable action) and relationships are yet to be well defined (Fligstein 1997;; Hoffman 2001;; Davis & Marquis 2005;; Zietsma & Winn 2005). The logical question that follows is: How does boundary creation occur in fledgling Fields?

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Figure 6.2 Emerging Organization Field 1 in the Australian vLISP industry (Adapted from Hoffman 2001)

Figure 6.3 Emerging Organization Field 2 in the Australian vLISP industry (Adapted from Hoffman 2001)

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In Emerging Organizational Fields the boundaries are under construction. According to Delbridge & Edwards (2007) ‘the concept of “boundaries” limits the Field to a recognised set of organizations engaged in a similar function or in related endeavours that together shape Field activity and definitions’. During this early period of Organizational Field emergence, the central actors identified in the Emerging Organizational Fields participated in CS/CH activities, for example, special discussion panels on customer service, contributions to the revised TCP Code, engagement in board meetings with various stakeholders and participation in consumer policy forums. The boundaries of the Emerging Organizational Fields in the vLISP industry will be shaped by the actors from the focal organizations involved (position title), characteristics of the actors (membership) and their relations (frequency of interactions among actors and their activities in relation the CS/CH practices) (Lawrence & Suddaby 2006). The next key question is: What is the role of future Internet technologies in fuelling ongoing collaboration between institutional actors of the vLISP industry? The importance of ongoing collaboration between Organizational Field members on CS/CH practices will continue to gain attention as new technologies proliferate the Internet market and providers have to cope with both technological as well as customer service issues. Future Internet technologies in Australia such as the National Broadband Network (NBN) involve rolling out the Fiber-to-the-node (FTTN) technology (NBN 2013). The NBN roll out is expected to be completed by the end of 2019 (LNP 2014). In FTTN technology, Fiber gets rolled out to a cabinet in the street and from the street to customer premises the existing copper connection is used. Sparsely populated areas receive services through fixed Wireless and Satellite (NBN 2013). Customer service and complaints handling will be seen as important in an NBN era because of convergence in services, costs of customer switching and the multitude of services provided over the broadband platform (health, education and retail) (NBN 2013). The following quote provides a participant perspective on the significance of customer service in the context of future NBN services: So the National Broadband Network … So we’re actually talking about people not owning their own networks. There will be one network provider … and then there’ll be retail service providers which means that people are then very much competing not on the product that they’re offering … but customer service. So customer service actually comes to the front as being the most important thing in differentiating your services [P1]

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Some of the main CS issues in an NBN environment are: (i) the need to educate consumers on what the network is expected to deliver;; (ii) providing clear procedures for customers to follow if they face difficulties with the equipment they use;; and (iii) providing clear pathways for customers to be able to follow up with the right provider to resolve their concerns. This is particularly important because in an NBN environment there is scope for different services from different providers. (One provider might provide IPTV, other voice service and another one data connection.) Such complex problems call for a greater need for collaboration from central institutional actors in the vLISP industry. Participant [P5] provides a detailed description of the challenges NBN environment will bring for consumers: The first I think is that consumers are actually going to need to be educated on precisely what this network’s going to offer them, … what it’s going to mean for them and what it’s going to look like at their premises. ..The second is that the NBN and the hardware that’s going to go into people’s houses, it’s going to need to be extremely clear to consumers what they need to do if there is any difficulties with that infrastructure, if there are any difficulties with the equipment, there needs to be clear pathways for them to be able to follow up with the right provider [P5]

Therefore future development in Internet technologies will fuel ongoing collaboration between the institutional actors of the vLISP industry. There is also potential for increasing collaboration due to the CS/CH challenges such new technologies bring to the industry. In the next Section I consolidate my arguments and provide an account of the relationship between CS/CH practices, factors influencing CS/CH performance and the Emerging Organizational Fields identified in this study.

6.7

Relationship between customer service/complaints handling practices, CS/CH and Emerging Organizational Fields

Chapter 4 identified the five key factors that influenced CS/CH in the top four vLISPs. They are: (i) the TCP Code (its ability to deal with emerging or new consumer issues);; (ii) Penalties and enforcement mechanism in the code (regulatory compliance with the TCP Code);; (iii) Competition politics (providers excelling in customer service pressuring other providers to lift their game);; (iv) Complexity of products and services (vLISPs’ ability to deal with customer service issues when marketing new products and services has implications on CS/CH performance because of complaints that may arise);; and (v) Organization culture and attitude towards CS/CH practices (senior management attitudes to

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customer service and if they view investment in customer service as a cost factor or a profit factor). Wooten and Hoffman (2008) state that ‘Field must be seen, not as containers for the community of organizations, but instead as relational spaces that provide an organization with the opportunity to involve itself with other actors’. The institutional actors of Emerging Organizational Field 1 influence the CS/CH practices of the vLISP industry through the TCP Code development and review. The CS/CH practices when adopted and implemented in the top four vLISPs have implications for CS/CH performance. There is a link between the actors in the Emerging Organizational Field and the factors that affect CS/CH performance. The actors in Emerging Organizational Field 2 influence the adoption of CS/CH practices and the level of compliance with the TCP Code for their respective organizations. The actors from Emerging Organizational Field 2 respond to competitive pressures from other providers which in turn influence their CS/CH practices and their subsequent CS/CH performance. The actors of the Emerging Organizational Fields are actively involved in determining CS/CH practices, their implementation, monitoring and enforcement and agreeing to acceptable levels of CS/CH performance-based on the TCP Code.

6.8

Conclusion

In this Chapter, I investigated when and why Organizational Fields emerge. The research findings were studied against the key literature on Organizational Fields. A detailed study of the chronology of events that brought into the limelight the poor CS/CH performance of the top four vLISPs explained the reasons behind disparate organizations coming together. The interplay of regulatory pressure and normative, mimetic and customer pressures forced the top four vLISPs to collectively respond to external stakeholder demands. The field configuring events acted as key venues for central actors to engage in CS/CH deliberations. Analysis using Organizational Field emergence criteria such as pattern of interactions among stakeholders, representation arrangements, information flow, involvement and embeddedness identified two emerging Organizational Fields in the vLISP industry. There was increased frequency of interactions between institutional stakeholders using 229

both formal and informal communication channels. Representation arrangements based on elements of cooperation and authority were evident during stakeholder efforts regarding CS/CH issues. There were unidirectional, bidirectional and multidirectional information flows between collaborating organizations as they learned from each other. The deep interactions, representational arrangements and information exchange indicated high levels of embedded collaborations. The outcome of such collaborations resulted in key improvements in the revised TCP Code particularly in areas relevant for customer service and complaints handling. It was established that Emerging Organizational Fields in the embryonic stages of development comprise the central institutional actors who influence the CS/CH practices of the vLISP industry. The actors in the identified Emerging Organizational Fields are actively involved in determining CS/CH practices, their implementation, monitoring and enforcement and agreeing to acceptable levels of CS/CH performancebased on the TCP Code. The Emerging Organizational Fields have the potential to transform into mature Organizational Fields and inform future CS/CH practices. In Chapter 7, I identify the key Field level characteristics that will play an influential role in fuelling further Organizational Field development. I also discuss the need for longitudinal study of Emerging Organizational Fields to inform future CS/CH practices.

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CHAPTER 7

DEVELOPMENT OF EMERGING

ORGANIZATIONAL FIELDS AND ITS IMPLICATION FOR FUTURE CUSTOMER SERVICE AND COMPLAINTS HANDLING PRACTICES

An efficient and responsive consumer protection regime is a vital element of our telecommunications landscape, particularly—as many … have observed—as Australians increasingly rely on telecommunications technology to support all of their work and everyday activities … The telecommunications industry is a fast changing and exponentially growing sector. Its co-regulatory framework in which industry, government and consumer groups work in partnership has to be equally dynamic. It cannot be always playing catch up;; it has to be able to move with the times. -

The Hon. Malcolm Turnbull, Minister for Communications, Speech to Australian Parliament on February 11, 2014 regarding Telecommunications Legislation Amendment (Consumer Protection) Bill 2013

7.0

Chapter overview

In Chapter 6, I critically examined the collaborations between institutional actors in the vLISP industry on CS/CH practices. That examination shows that the regulatory managers of the top four vLISPs embarked upon an ‘Institutionalization’ project. Two Emerging Organizational Fields (one focused on developing CS/CH practices and the other on their adoption and implementation) were identified. It was established that the actors of the Emerging Organizational Fields were actively involved in developing CS/CH practices, its implementation, monitoring and enforcement and thereby agreeing to acceptable level of CS/CH performance. The success of the regulatory managers of the top four vLISPs in addressing CS/CH shortcomings during the TCP Code revision demonstrates that through collaboration

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they succeeded as a collective body in influencing the external stakeholders towards developing a co-regulatory consumer protection framework with stringent enforcement measures as opposed to having a prescriptive regulatory framework. In this Chapter I argue that the collaborations will continue to intensify because of: (i) the continuous exogenous shocks that the top four vLISPs are exposed to (for example, constant regulatory changes and imminent technological growth);; (ii) ongoing pressures from external stakeholders to address new and emerging customer service issues;; and (iii) the ongoing need for collaboration on customer service for future Internet services such as the NBN where convergence in services, costs of customer switching and multitude of services provided over the broadband platform all require the top four vLISPs to cooperate with each other to address new and emerging customer service challenges. Such ongoing collaborations will fuel further Organizational Field development. If the regulatory managers are successful in their endeavours to move from an ‘Embryonic’ stage to a ‘Mature’ demonstrable Organizational Field, they will become central to CS/CH policy making on future directions for the provision of Internet services in Australia. In particular, the discussion regarding further Organizational Field development focuses on three key characteristics at the Field level that will continue fuelling Organizational Field development (Clegg 1989;; Fligstein 1991;; 1997;; Hoffman 1999;; 2001;; Scott 2001;; Wooten & Hoffman 2008). Firstly, there is a role for ‘Power’ of regulatory managers of the top four vLISPs in fuelling the Organizational Field development. Secondly, Organizational Field development needs ongoing commitment from the regulatory managers of the top four vLISPs and the ISP industry association executive in the Emerging Organizational Field 2. Thirdly, the notion of legitimacy within the Emerging Organizational Field 2 is important for regulatory managers in the top four vLISPs to maintain good relationships with Organizational Field members and to engage with them to influence CS/CH practices. There is also a role for emerging institutional entrepreneurs such as the CEO of [O8] in shaping Emerging Organizational Fields because of [O8]’s achievements (indicated by its customer service excellence awards) and its customer service reputation within the vLISP industry. A longitudinal study of the Emerging

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Organizational Fields over the next few decades will contribute to: (i) an understanding of the structuration of Organizational Fields in the vLISP industry;; and (ii) an assessment of the implications such Organizational Field developments bring to the Australian Government’s consumer protection policy formulations and directions for the provision of future Internet services in Australia. These arguments are discussed in detail in the subsequent Sections. The research in this Chapter is also discussed in Vilapakkam Nagarajan (2013b). 5

7.1

Influential role of central actors in fuelling Organizational Field development

The central institutional actors identified in the Emerging Organizational Fields 1 and 2 are involved in developing and revising CS/CH practices because of the influential role they play within the vLISP industry. Boxenbaum and Battilana (2005) found that industry practices are influenced by Organizational Field members who have the power, legitimacy and resources to work towards designing solutions to problems identified in industry practices. In the Australian vLISP industry there is a role for the ‘Power’ of regulatory managers of the top four vLISPs to fuel the Organizational Field development. Previous studies on ‘Power relations’ within Organizational Fields (for example, Lukes 1974;; Pfeffer 1981;; DiMaggio 1988;; Clegg 1989;; Fligstein 1991;; 1997;; Oakes, Townley & Cooper 1998;; Beckert 1999;; Hoffman 1999;; Lounsbury & Glynn 2001) provide insights into the power relationships and how they shape Organizational Field development. For instance, Phillips et al. (2000) showed how dominant members of the Organizational Fields used their formal authority, resources and discursive legitimacy to develop the Field’s structures and practices. Another study, on the Organizational Field of corporate environmentalism, revealed that Organizational Fields become ‘arenas of

5

Vilapakkam Nagarajan, Karthik (2013b), ‘A study of Australian Internet Service Provider Industry Stakeholder Collaboration: Implications for Functional Service Quality Practices’, Proceedings of International Conference on Internet Technologies and Society (ITS 2013), 29 November- 1 December, 2013, Kuala lumpur, Malaysia, pp. 15-24.

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power relations where constituents compete over the definition of issues and the form of institutions that will guide organizational behaviour’ (Hoffman 1999). ‘Power’ in the context of this research study indicates the degree to which an actor or an Organizational Field member is able to influence the CS/CH practices and the CS/CH outcomes of the vLISP industry. The influential role played by the industry’s institutional actors is well captured in many interview participant responses. In particular, the responses highlighted the ‘Power’ role of the vLISP’s regulatory actors who occupy key positions within their organizations and brought a wealth of regulatory and Internet technology expertise to the CS/CH debate. For example, vLISP executive [P6], the industry representative chair of the TCP Code review committee, has constant interactions with the government department [O10] which consults with [P6] on CS/CH practices. vLISP executive [P7], a code review working committee member, provides expert knowledge on regulatory policy issues, chaired the Industry Association Consumer Issues Reference Panel (CIRP) and was also involved in the governance arrangements of the industry ombudsman. [P3] from the ISP industry association is extensively involved in planning and design of new technologies and advocates on behalf of the industry both in the public arena and in the political sphere. vLISP executive [P8] has close to forty years experience in the telecommunications industry and is a current board member of the coalition of competitive carriers (CCC) and the industry ombudsman. vLISP executive [P9] works closely with the regulatory department of [O9] and provides expert advice on broadband consumer issues. These actors were influential and key informants for the development/revision of CS/CH practices.

7.2

Ongoing commitment of regulatory managers of the top four very large ISPs in fuelling Organizational Field development

Given that the Organizational Fields are in their ‘Embryonic’ stages of development, the regulatory managers belonging to the Emerging Organizational Field 2 need to establish and demonstrate ongoing commitment to Organizational Field development (Hardy 1994;; Maguire et al. 2004). Cooper-Hakim and Viswesvaran (2005) define commitment as ‘the willingness to persist in a course of action’.

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Fligstein (1991) showed that the key factor in Organizational Field development is the external environment in which the managers work and the determination if they were continually being subjected to pressures which change the direction of their efforts. In the context of this research study, the Emerging Organizational Field 2, comprising regulatory managers of the top four vLISPs and the ISP industry association executive, is subject to continuous exogenous shocks such as regulatory changes, ongoing pressure from the

regulator/Communications Compliance

(CC) committee on

code

conformance, new technologies and emerging consumer issues that introduce unknown challenges. This necessitates the vLISP regulatory managers to stay committed to a collective course of action in addressing the CS/CH challenges. The sample quote below captures the ongoing pressures (through regulatory interventions) to which the top four vLISPs are subjected: The ACMA will very closely monitor its progress and will not hesitate to communicate to industry the need for further change, if that need arises.… The ACMA obviously stands ready to use its powers of investigation and enforcement if participants choose not to comply with these new code obligations (which include an obligation to report their compliance performance to the industry’s new compliance monitoring body, Communications Compliance.) (ACMA 2012) The code comes against the background of the rollout of the NBN and is a good example of forward-looking and evidence—based engagement in a converged world (ACMA 2012)

In the past, the actors in the Emerging Organizational Field 2 committed themselves to address the CS/CH issues through the TCP Code review process and genuinely made an effort to improve the CS/CH performance within their organizations using mechanisms such as internal structural changes, increased accountability of staff on customer service, participation in the regulator’s RTC inquiry and increased attention to findings in consumer research reports. They have also demonstrated a collective course of action in addressing compliance issues in the revised TCP Code through inclusion of strong compliance enforcement mechanisms. Several improvements to the TCP Code (discussed in Chapter 5.3) were achieved because vLISP regulatory managers were committed to collaboration with various stakeholders to come up with ‘practical and logical’ solutions that would work towards addressing the source of the CS/CH related complaints. Such a finding is in close conformity with Campbell’s (2006) and Fligstein’s (2001) findings that when communication extends beyond managers themselves and includes other actors such as 235

the regulator, the ISP industry association and government authorities, organizations tend to listen to other stakeholders and appreciate their concerns. They are also genuinely committed to collaborate with stakeholders to find the best practical solutions to problems. Hence, ‘Patterns of interaction affect how actors perceive their situations’ (Campbell 2006). The ‘collaborative problem solving’ approach used by the Organizational Field members through discussion and dialogue leading to improved learning and knowledgesharing demonstrates that CS/CH issues require input from all institutional stakeholders in order to find acceptable solutions. Furthermore, when the top four vLISPs and ISP industry association (actors in Emerging Organizational Field 2) interact on a more frequent basis, they develop a long-term view of their interests leading to increased commitment among Organizational Field members (Hannan & Freeman 1984;; Galaskiewicz 1991;; Staw 1997;; Streeck 1997). The ISP industry association [O3] has demonstrated its commitment to the new initiatives in the revised TCP Code and has started educating its members on the revised TCP Code requirements. For example, in consultation with the top four vLISPs, [O3] started running compliance training programs, which focus on how its members can demonstrate compliance with the revised TCP Code. Such compliance initiatives are an indication of [O3]’s ‘commitment’ to foster a compliance culture within the industry and achieve CS/CH improvements. In sum, the ongoing interactions and collaboration on CS/CH practices between the top four vLISPs can lead not only to better outcomes for customers, but also to the creation and adoption of standardized CS/CH practices by the regulatory managers of the top four vLISPs (Lawrence, Hardy & Phillips 2002). That in turn can lead to the creation of institutions (Lawrence at al. 2002). Barley and Tolbert (1997) define institutions as ‘socially constructed templates for action, generated and maintained through ongoing interactions’. The institutions consist of ‘cognitive, normative and regulative structures and activities that provide stability and meaning to social behaviour’ (Scott 1995). In the Emerging Organizational Fields of the Australian vLISP industry the ‘Institutions’ are in the making. Such a notion is defined by Lawrence et al. (2002) as Proto-institutions. Lawrence et al. (2002) define Proto-Institutions as ‘new practices, rules and technologies that transcend a particular collaborative relationship and may become new institutions

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if they diffuse sufficiently’. Therefore, Proto-institutions are the first step in the processes of creation of ‘Institutions’. Lawrence, Hardy and Phillips (1999) argue that ‘a practice is not simply doing something once, but doing it repeatedly in a certain way due to some system of rewards and punishments’ (Lawrence et al. 1999). For example, new mandatory practices such as the provision of a ‘Critical Information Summary’ at the point of sale (a result of stakeholder collaborations) benefits the industry by ensuring a proactive approach to complaints avoidance. The consumers also benefit because they are enabled to make informed decisions about products and service before they purchase. In the study of the vLISP industry, the implementation of complaints handling processes stated in the revised CS/CH practices requires the top four vLISPs to develop and implement a Complaints Management System for managing, monitoring, recording and reporting customer complaints. In terms of the rules, the terms and conditions stated in the TCP Code specify the obligations of vLISPs in implementing various sections of the code and demonstrating conformance to it.In the vLISP industry, the new practices (for example, complaints handling processes stated in the revised TCP Code’s ‘Critical Information Summary’) at the moment are narrowly diffused and weakly entrenched, but those practices have the potential to become widely institutionalized through repeated interactions among regulatory managers of Emerging Organizational Field 2. This can result in the development of common understandings about those practices. Once ‘Institutions’ develop they act as forces (Regulative Institutions, Normative Institutions and Cognitive Institutions) that can exert pressure on the top four vLISPs to adopt similar CS/CH practices. The Institutions ‘are encoded in rules and routines. These rules and routines are enabled and reproduced through actions undertaken by the individual actors’ (Burns & Scapens 2000). Such Institutions form inside an Organizational Field and hence vLISPs in the same Organizational Field are subjected to the same Institutions and adopt similar CS/CH practices (DiMaggio & Powell 1983).

7.3

Legitimacy of organizational action by very large ISPs

The legitimacy of organizational action by regulatory managers in the Emerging Organizational Field 2 is also an important factor in fuelling Organizational Field

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development. It is through legitimacy that regulatory actors of the top four vLISPs seek active support from external stakeholders, advance their collective interests and influence CS/CH practices. Suchman (1995) defines legitimacy as a ‘generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs and definitions’. Suchman’s study showed that ‘legitimacy affects not only how people act towards organizations, but also how they understand them. Thus, audiences perceive the legitimate organization not only as worthy, but also as more meaningful, more predictable and more trustworthy’ (Suchman 1995). Further, Suchman (1995) illustrates the importance of social legitimacy for large organizations and states that ‘organizations that … lack acceptable legitimated accounts of their activities are more vulnerable to claims that they are negligent, irrational or unnecessary’ (Suchman 1995). Legitimacy is gained by the top four vLISPs if the constituents believe that the organizations ‘share their values’ (Hill & Jones 1992;; Suchman 1995;; Ulhoi 1995). For example, a vLISP which adopts a ‘Beyond Compliance’ approach acquires the social support of external stakeholders who share a similar perspective towards the adoption of improved CS/CH practices. The constituents such as the Australian Communications and Media Authority, Telecommunications Industry Ombudsman and Australian Communications Consumer Action Network support vLISP organizations not because they provide favourable exchanges, but mainly because the vLISP organization is responsive to their individual or collective interests (Mitchell, Agle & Wood 1997;; Scott 2001;; Bansal & Clelland 2004). When vLISP organizations adopt practices proposed by their constituents and engage their constituents in reforming CS/CH practices through the code review process, they are seeking social support from their external constituents. The actions of the regulatory actors of the top four vLISPs are approved as being legitimate if the external constituents feel that their concerns have been genuinely addressed. For example, it is seen as an appropriate action for a vLISP to change their billing system or complaints handling system in response to a huge spike in complaints about their billing (bill shock) and complaints about poor complaints resolution process. By addressing such concerns vLISPs ‘will benefit from constructive relations with consumers, regulators and other industry players substantially improving their prospect of success’ (Hooper & Rocca 1991).

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So far, it has been argued that the influential role of central actors, ongoing commitment of regulatory actors in the top four vLISPs and the legitimacy of their organizational action all contribute to further Organizational Field development. The next Section discusses the role of institutional entrepreneurs in shaping Emerging Organizational Fields of the vLISP industry.

7.4

The role of institutional entrepreneurs in shaping Emerging Organizational Fields

A number of studies conducted in the past have highlighted the role of institutional entrepreneurs in the development of Organizational Fields (Aldrich & Fiol 1994;; Fligstein 1997;; Colomy, 1998;; Oakes et al. 1998;; Lawrence, Hardy & Phillips 1999;; 2002;; Scott & Lane 2000;; Maguire et al. 2004). DiMaggio (1988) defines institutional entrepreneurs as ‘organized actors sufficiently resourced with an ability to see an opportunity to realize interests that are highly valued’. Other scholars (Hoffman 1999;; Garud, Jain & Kumaraswamy 2002;; Williamson & Cable 2003;; Greenwood & Suddaby 2006;; Lawrence & Suddaby 2006) view institutional entrepreneurs as strategic and opportunistic, interest driven and calculative. Institutional entrepreneurs can be individuals and/or organizations (Maguire et al. 2004). The actors who act as institutional entrepreneurs undertake purposeful action to structure their institutional context (Lawrence et al. 1999). Maguire et al. (2004) states that ‘Emerging Fields present would-be institutional entrepreneurs with relatively unconstrained spaces in which to work and a wide range of disparate materials from which they might fashion new institutions’. DiMaggio and Powell (1983) and Fligstein (2001) argue that uncertainty in the institutional order of Emerging Organizational Fields provides opportunities for strategic action by institutional entrepreneurs. In the vLISP industry, organizations such as [O8] show signs of becoming institutional entrepreneurs because: (i) they contributed to raising awareness of systemic CS/CH problems through their involvement in industry and consumer forums;; (ii) led new ways of promoting customer service excellence within their organization through organization-wide commitment and accountability for customer service;; (iii) publicized customer service measurement tools such as NPS (Net Promoter Score) at

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industry/consumer events and called on the industry to adopt the NPS tool to measure customer service continuously;; (iv) other vLISPs took note of [O8] and their customer service achievements (for example, vLISP [O9] reviewed the NPS tool promoted by [O8] and adopted it within their organization to improve customer service performance);; (v) started promoting a ‘Beyond Compliance’ culture in the industry on adopting and implementing better CS/CH practices (they did this through their press releases and discussions during consumer association annual conferences and ISP industry association activities);; and (vi) proactively alerting other vLISPs to the political consequences (tighter regulation) of poor customer service reputation of the industry. The quote below captures the attitude of a vLISP that adopted [O8]’s customer service measurement tool: I have seen a copy of an internal memo that circulated, which was an analysis of and what it was doing in relation to its customer service and it’s clear that they, I think, were looking to see if they could learn anything from what we did and the way we operated in order to apply it to their own business … - I think there are people now, more and more companies looking at this NPS because we’ve given it a fair bit of publicity. We quite happily will go out there and talk about it and we’re quite happy for the rest of the industry to lift its game [P8]

My other argument is that the commitment of the emerging institutional entrepreneur such as the CEO of [O8] will further develop the Organizational Fields. Previous studies (Aldrich & Zimmer 1986;; DiMaggio et al. 1988;; Van de Ven & Garud 1989;; Choi & Shepherd 2004;; Garud 2008) have found that actors who educate and raise awareness about issues among other stakeholders have greater commitment to becoming institutional entrepreneurs in the Emerging Organizational Fields and developing such Organizational Fields. Other studies (for example, Shane & Venkatraman 2000) found that organizations that provide superior service (such as [O8] which has won many customer service excellence awards) over others have greater commitment to become institutional entrepreneurs and develop such Organizational Fields. Fligstein (1997;; 2001) showed that institutional entrepreneurs who possess certain social skills and have a good reputation within the industry have the capacity to shape Emerging Organizational Fields. He defines social skills as ‘the ability to motivate cooperation in other actors by providing those actors with common meanings and identities in which actions can be undertaken and justified’ (Fligstein 1997). Social skills enable institutional entrepreneurs to motivate cooperation of other actors by providing them with common identities and

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meanings. Common identity emerges through interaction and making collective sense on CS/CH issues (Weick 1995). Meaning refers to ‘the interpretations, understandings and shared beliefs that are produced and processed through social action’ (Zilber 2007). I argue that emerging institutional entrepreneurs such as the CEO of [O8] who has received numerous awards for achieving customer service excellence within his organization [O8] has the potential to shape the Emerging Organizational Fields because of: (i) the unique position their organization occupies in the industry ([O8] has built a strong customer service reputation over time and this reputation helped them to act credibly on CS/CH issues and call on other players to adopt their customer service approach);; (ii) the social skills of [O8]’s CEO (high self-esteem);; and (iii) the opportunities for [O8]’s CEO to act as an Institutional Entrepreneur in developing innovative solutions to complex CS/CH problems demanded by emerging customer service challenges. As a result [O8] can influence the CS/CH practices of the industry in ways that ‘privilege their own skills and resources’ (Maguire et al. 2004). One example of a different approach towards CS/CH performance used by [O8] is captured by the quote below: We’ve found that if you push the responsibility for dealing with a complaint back to the customer service department that’s dealing with the customer, we get a better result. Not only that, instead of having a small elite group of people that are full bottles on the regulatory environment and complaint handling, you spread that amongst your whole customer service team. So they have accountability not just for the phone call they’re on today, but to make sure that there isn’t another phone call tomorrow [P8]

Having discussed the factors that will fuel Organizational Field development in the vLISP industry, the next Section focuses on the importance of studying Emerging Organizational Fields in the long-term.

7.5

Development of Emerging Organizational Fields to inform future customer service and complaints handling practices

Grafstrom (2006) draws our attention to the significance of studying the development of Emerging Organizational Fields. Such a notion is important because studying the development of Emerging Organizational Fields is fundamental to informing future customer service practices. It is acknowledged that the vLISP industry is not as mature as other long-standing industries such as manufacturing or museums. However, the

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findings on collaborations discussed in Chapter 6 and in the earlier Sections of this Chapter provide compelling evidence that if the collaborations are viewed in the long-term, they have the capability to develop further the Emerging Organizational Fields identified in this study. Such a notion is supported in the previous literature (For example, Hannan & Freeman 1977;; Kraatz & Zajac 1996;; Scott, Mendel & Pollack 2000;; Lawrence et al. 2002;; Maguire et al. 2004). The ongoing collaborations between the institutional actors will continue to contribute to better outcomes for consumers in the vLISP industry. This is because when all institutional stakeholders of the vLISP industry collaborated and engaged with each other frequently and fatefully on a focal issue to improve CS/CH practices and the CS/CH performance of the industry, noticeable progress was made towards the development of customer-oriented CS/CH practices that contribute to a better customer experience. (Preliminary evidence from a vLISP [O7] on improved customer service performance after implementing a new customer service practice in the revised TCP Code was discussed in Chapter 5.) A key question is: How will the development of Emerging Organizational Fields influence solutions to customer service issues developed for future Internet services such as the NBN? By belonging to an Organizational Field, the members have demonstrated that they are committed to developing standardized and evidence-informed customer service practices that deliver desirable customer service outcomes. I established in the earlier sections that the institutional environment of the top four vLISPs presents a consistent requirement on the top four vLISPs to review their customer service performance. Further, their customer service performance levels are required to be endorsed by the independent compliance committee and external stakeholders. In the new NBN telecommunication landscape, NBN & Co will be selling access to the NBN network to ISPs at a fixed price regardless of the ISP’s size. ISPs will have to sign NBN Co’s wholesale broadband agreement. By signing up to it, ISPs agree to the standards defined in its service terms and conditions and Customer Service Guarantee (CSG). Failure to meet these terms and conditions will result in enforcement actions by the Australian Communications and Media Authority.

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The NBN era will create a level playing field for all players as they share the same infrastructure. As the Emerging Organizational Fields develop, the inter-organizational relations between Organizational Field members will continue to strengthen collaborations and this will have a potent influence on vLISP organizational actions for customer service. For example, when there is an immediate customer service issue involving customers of several vLISPs (such as customers experiencing slower speeds for Internet based video on demand services, problem transitioning customers to the Fiber network while maintaining customer service levels), the Organizational Field provides a rich contextualized space for all actors to develop collective understanding and decide on solutions to such problems. The actors of the Organizational Fields would be able to take a proactive and forward-looking approach with regard to developing customer service solutions. As a result the era of playing catch-up in relation to addressing a customer service issue is likely to fade and be replaced with an era where the emphasis will be on developing, adopting and implementing standardized customer service solutions/practices developed by the Organizational Field members that align with customer expectations and the times.

7.6

Longitudinal study of Emerging Organizational Fields identified in this research

Several authors in the past have conducted longitudinal studies on the development of Emerging Organizational Fields and structuration of the Organizational Fields (for example, DiMaggio & Powell 1991;; Lawrence 1999;; Lawrence & Phillips 2004;; Child, Lu & Tsai 2007;; Lounsbury & Crumley 2007;; Wijen & Ansari 2007). All these studies support the notion that Emerging Organizational Fields represent an interesting area of study for institutional researchers to understand how actors engage in institutional work leading to the creation of ‘Institutions’. Studying the Emerging Organizational Fields identified in this study and their transformation into ‘Mature Organizational Fields’ over the next few decades will be critical to informing future CS/CH practices and to take an evidence-based approach towards developing CS/CH practices that deliver desirable consumer outcomes (Horsley & Gerrand 2011). Furthermore, such Mature Organization Field(s) exert ‘powerful forces’ on individual

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vLISP organizations and influence the ‘structure and behaviour’ of the organization (DiMaggio et al. 1991). Table 7.1 below summarises longitudinal studies conducted in the past on development and structuration of Organizational Fields. A key question to consider: What opportunities does longitudinal study of Emerging Organizational Fields provide to understand development of Organizational Fields as well as inform future CS/CH practices? A longitudinal study from 1960 to 1993 by Hoffman (1999) on the issue-based Organizational Field of corporate environmentalism in the U.S. chemical industry showed that several phases occurred during the development of a Field from ‘Emerging’ to ‘Mature’ stages. It took several decades for the structuration of the Field. The Field developed through various stages (Stage 1:1962-70, Stage 2:1971-82, Stage 3:1983-88 and Stage 4: 1989-93). Stage 1 represented the Emerging Organizational Field as: (i) the legal institutions were weak;; (ii) very few environmental cases were filed in federal courts;; and (iii) environmentalism was highly contested and only promoted by few environmentalists while denied by the chemical industry. The Organizational Field became ‘Mature’ in Stage 3 and environmentalism became a ‘Normative Institution’ (Hoffman 1999). The Emerging Organizational Fields of the vLISP industry provide a number of opportunities (see Table 7.2 below) for institutional researchers to conduct Organizational Field level analysis on the institutional work of actors in the creation and adoption of the ‘Institutions’.

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Table 7.1 Longitudinal studies conducted in the past on development and structuration of Organizational Fields (DiMaggio et al. 1991;; Scott 2001;; Leca, Battilana & Boxenbaum 2008) Organizational Fields studied Environmental protection Money management practices Climate change Nueva cuisine

Socially responsible fund Temporary work agencies HIV/AIDS advocacy Whale watching Grammy Awards in U.S. music industry

Study approach and key findings Child, Lu and Tsai (2007) studied Emerging Organizational Field of environmental protection in China. It was a longitudinal and historical study over a 30-year period. The study revealed role of critical events in influencing institutional environment. Lounsbury and Crumley (2007) studied Emerging Organizational Field of money management practices in the US mutual fund industry. The study highlighted how innovative practices emerged through close interaction and negotiations between Field-level actors. Wijen and Ansari (2007) studied Emerging Organizational Field of climate change using a qualitative approach. The study focused on the institutional arrangements that enable actors to become institutional entrepreneurs. It discussed the use of collaboration to solve problems of collective rationality. Svejenova, Mazza and Planellas (2007) study of Emerging Organizational Field of the nueva cusine. The study adopted a qualitative longitudinal analysis using interviews and secondary data sources. The study found that actors reputation and dissemination of information through presentations and publications helped spread ideas within the Emerging Organizational Fields. Markowitz (2007) studied Emerging Organizational Field of socially responsible fund using qualitative approach. The study found that Institutional Entrepreneurs use different tactics (Example Framing) to develop a specific identity in Emerging Organizational Field and influence the Fields structure and practices. Koene (2006) studied Emerging Organizational Field of temporary work agencies in Netherlands using qualitative approach (case study). They discussed the institutional context and its influence on the dynamics of institutional change. The study specifically highlighted the role of high/low pressures on the Emergence of Organizational Fields. Maguire, Hardy and Lawrence (2004) studied Emerging Organizational Field of HIV/AIDS advocacy in Canada. The study showed the political struggles that occur in Emerging Fields and how actors with legitimacy and individual characteristics are able to shape the Field. Lawrence and Phillips (2004) studied Emerging Organizational Fields of whale watching in British Columbia. The study revealed how new relationships are formed in Emerging Fields. In particular, the study found that the strategies of institutional entrepreneurs in Emerging Fields are likely to be more emergent that intended. Anand and Watson (2004) studied using a qualitative approach the structuring Field of Grammy Awards in the U.S. music industry. The institutional entrepreneurs in the Field used several tactics to mobilize collection action.

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Greenhouse gas emissions control Longitudinal study of Emerging Fields Forensic accounting U.S radio broadcasting industry Non-profit consumer watchdog

Levy and Egan (2003) used qualitative approach on the Emerging Organizational Field of controlling greenhouse gas emissions. The study showed the power relationships between Field members and the role it played in building alliances. Fligstein (2001) calls for longitudinal studies on Emerging Organizational Fields to understand how crisis and external jolts assist institutional entrepreneurs in shaping Field level activities. Lawrence (1999) qualitative study of Emerging Organizational Field of forensic accounting in Canada highlighted the institutional strategies used by actors and its role in shaping institutional structures. Leblebici, Salancik, Copay and King (1991) conducted qualitative study of Emerging Organizational Field of US radio broadcasting industry. The study discussed institutional entrepreneurs role in shaping Emerging Organizational Fields. It found that the inconsistency in the social order and conflicts at the micro and meso levels as enabling conditions for entrepreneurial activities. Rao (1998) conducted a historical case study on the Emerging Organizational Field of non-profit consumer watchdog organizations. The study discussed the institutional entrepreneurial activities in Emerging Organizational Fields and how institutional entrepreneurs assemble resources to legitimate new form and shape the prevalent institutional order.

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Table 7.2 Opportunities to study the development of Emerging Organizational Fields and its implication on future CS/CH practices (DiMaggio et al. 1991;; Lawrence at al. 2002;; Wooten et al. 2008;; Rankine 2008) Development of Emerging Organizational Fields in the What will this inform? vLISP industry Actors who occupy dominant position in the Field using Identify the role of ‘Power’ in institutional entrepreneurship context. Understand how collaboration as a form of Institutional entrepreneurship actors in the vLISP industry who act as institutional entrepreneurs marshal resources and power to occupy dominant position in the Field. How do institutional entrepreneurs use capital to shape practices Identify the type of capital (Economic, Social, Cultural) that institutional in the Emerging Organizational Fields? entrepreneurs use to shape CS/CH practices in Emerging Organizational Fields. How can collaborations lead to new CS/CH practices and Understand the role of collaborations in developing new CS/CH practices, motivate Institutionalization of those practices? adoption of new CS/CH practices and institutionalization of those practices. How do dominant members of collaboration influence outcomes The Field level conditions that create opportunities for Institutional entrepreneurs to of collaborations? realize their interests. To understand how institutional entrepreneurs use their formal authority and discursive legitimacy to influence the outcomes of the collaborations. Ongoing collaboration and its role in structuration of Understand how ongoing collaborations can lead to creation of ‘Institutions’ and Organizational Fields structuration of Organizational Fields. Institutional pressures influence on collaboration Identify how various institutional pressures interplay among each other and promote collaboration in the vLISP industry. Institutions development and diffusion in Organizational Fields Distinct set of practices vLISP actors engage in creating Institutions (Lawrence & Suddaby 2006) and how Regulative, Normative and Cognitive Institutions develop and diffuse within the Organizational Fields. Institutional pressures and their role in spreading new CS/CH Which institutional pressures are more effective in spreading a new CS/CH practice? practice How does institutionalization of new CS/CH practices occur Understand the processes of institutionalization of CS/CH practices within the top within vLISPs? four vLISPs.

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7.7

Conclusion

In this Chapter I showed that the influential role of central actors (power), ongoing commitment of regulatory actors in the top four vLISPs and legitimacy of organizational action by their regulatory actors would fuel further development of Emerging Organizational Fields. I highlighted the role institutional entrepreneurs will play in shaping the Emerging Organizational Fields. It was argued that the Emerging Organizational Fields over a period of a few decades have the potential to transform into Mature Organizational Fields. Previous longitudinal studies on Organizational Field development were discussed. I identified the opportunities this provides for a longitudinal study of the development of Emerging Organizational Fields in the vLISP industry and the associated development of CS/CH policy in the Australian Internet industry. I used example scenarios to demonstrate how the development of Emerging Organizational Fields will influence solutions to customer service issues developed for future Internet services such as the NBN. Studying such Emerging Organizational Fields now and in the future has the potential to contribute to the knowledge base on consumer protection (CS/CH) practices relating to how future policy developments will occur in the Australian vLISP industry and to take an evidence-informed practice approach towards developing CS/CH practices that deliver desirable consumer outcomes.

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CHAPTER 8 CONCLUSION

8.0

Research overview and summary of findings

This study examined the institutional forces that operate in the vLISP industry in Australia and analysed their role in influencing the industry’s customer service and complaints handling practices. The main research question I investigated was: How do institutional forces influence the customer service and complaints handling practices of very large Internet Service Providers in Australia? To answer this research question, it was necessary to examine the personal viewpoints of the vLISP industry stakeholders to understand the institutional influences on their customer service and complaints handling practices. Further, it was essential to investigate the following sub-questions: x

Sub-question 1: What are the perceptions and attitudes of key institutional actors in external agencies (the regulator, the ombudsman, the government department for broadband, the ISP industry association and the consumer association) on the CS/CH practices of vLISPs in Australia?;;

x

Sub-question 2: What is the role of external stakeholder pressures in influencing the CS/CH practices of vLISPs?;;

x

Sub-question 3: What are the perceptions and attitudes of regulatory managers in vLISPs on CS/CH practices and the key institutional pressures that influence those in the vLISP industry?;;

x

Sub-question 4: What is the level of interaction of individual stakeholders with one another in relation to CS/CH practices?;;

x

Sub-question 5: What role do such interactions play in influencing the CS/CH practices of the vLISP Industry?;;

x

Sub-question 6: What institutional pressures influence the CS/CH practices of the vLISPs in Australia?;; 249

x

Sub-question 7: What led to collaboration on CS/CH practices between the institutional actors in the very large ISP industry?;; and

x


I examined the research approaches that will support the investigation of the above questions. It became clear that a qualitative methodology was most suitable because of the need to obtain participant perspectives about institutional influences on customer service and complaints handling practices of the vLISP industry. After a detailed examination of the research methods suited to collecting such participant perspectives, the semi-structured interview was chosen because it provided the flexibility to explore issues with participants as and when they arose. Purposive sampling was chosen because it was necessary to include the participants and organizations who were able to provide the right perspectives required for this study. In sum, qualitative research was conducted using eleven interviews with senior vLISP industry executives from ten vLISP industry stakeholder organizations. The interview data was analyzed using thematic analysis and data coding techniques were adopted for ensuring a systematic approach to data analysis. Eight major categories and five major themes emerged from the data analysis. Key findings that emerged from the data analysis were critically examined and analyzed using a neo-institutional framework (DiMaggio & Powell 1983;; Lawrence, Hardy & Phillips 2002). I now discuss the answers to the research questions and the conclusions I have drawn from the results of this research. In this study, it was established that customer service and complaints handling were the top two Internet service issues in the vLISP industry. The key customer service and complaints handling issues that the institutional stakeholders of the vLISP industry raised revolved around contactability, receiving incorrect and inaccurate information about products and services, failure to follow up on complaints, failure to action undertakings, failure to resolve complaints swiftly and increased focus on improving 250

internal complaints handling mechanisms rather than avoiding the causes of complaints in the first place. Several factors underpin the poor CS/CH performance of the vLISPs. They are: (i) the inability of the old TCP Code to deal with emerging consumer issues;; (ii) the complexity of products and services;; (iii) the rapid increase in growth rates of services;; (iv) lack of strong enforcement and monitoring in the old TCP Code;; (v) increased focus on technical aspects of services as opposed to customer service and complaints handling;; (vi) customer inability to understand new technologies and how best to utilize them;; (vii) lack of commitment of senior management in vLISPs to prioritise customer service;; (viii) failure of vLISPs to engage in activities that broaden understanding of consumer affairs;; and (ix) failure to focus on avoiding complaints arising rather than having to deal with them. The analysis revealed that the customer service and complaints handling practices defined in the co-regulatory TCP Code was developed by the central actors in the consumer association, the regulator, the industry ombudsman, the government department for broadband, the ISP industry association and the top four vLISPs. These actors were involved in development, review and revision of the TCP Code. The key agencies that influence customer service and complaints handling practices of the industry are the Australian Communications and Media Authority, the Telecommunications Industry Ombudsman and the Communications Alliance. My investigation into the factors that influence the adoption and implementation of improved customer service and complaints handling practices in the top four vLISPs identified five key factors. They are: (i) the TCP Code and its ability to deal with emerging or new consumer issues;; (ii) the penalties and enforcement mechanism in the code (or regulatory compliance with the TCP Code);; (iii) the complexity of products and services (the top four vLISPs’ capacity to deal with customer service issues while selling new products and services has implications on their CS/CH performance because of complaints that arise);; (iv) competition politics (providers excelling in customer service pressuring under-performing vLISPs to improve their CS/CH performance);; and (v) organization culture and attitude towards customer service and complaints handling practices (vLISP senior management attitudes towards prioritizing customer service is based on whether they view investment in customer service as a profit factor as opposed to a cost factor).

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The ongoing poor customer service and complaints handling performance of the vLISPs in the period 2008-2011 and their inability to address systemic CS/CH issues not only raised serious concerns for consumer protection among external stakeholders, but also had a detrimental effect on the customer service reputation of the industry. A series of actions by external stakeholders such as the regulator’s inquiry into CS/CH practices, the industry ombudsman’s campaigns and ministerial intervention occurred. Together, increased regulatory activities, collective pressure from external constituents and the real threat of tighter regulation created an environment which forced the top four vLISPs to act on systemic CS/CH issues and demonstrate their genuine commitment to improve the industry’s customer service reputation. An issue-based coming together of the institutional actors occurred as a direct response to the collective pressures placed on the top four vLISPs by multiple constituents (for example, the consumer association, the regulator, the industry ombudsman and government authorities). This led to increased engagement, collaboration and negotiations between the regulatory managers of the top four vLISPs and external stakeholders in recent times to address shortcomings in the customer service and complaints handling arena. The central actors from various stakeholder agencies met frequently and fatefully and collaborated during various Field-configuring events (FCEs) (for example, TCP Code review working committee meetings) to develop revised customer service and complaints handling practices. The engagement between various stakeholders occurred using both formal and informal communication channels. These FCEs brought the central institutional actors together to build collective understanding and mobilize collective action on customer service and complaints handling issues. The FCEs acted as key venues for collaboration between actors and laid the foundation for Organizational Field emergence. The deep interactions, embedded collaborations and information exchange between the institutional actors of the vLISP industry resulted in significant improvements to the customer service and complaints handling practices in the revised TCP Code. The significant changes include the establishment of an independent compliance committee to oversee code compliance and enforcement, mandatory compliance attestations for large players

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certified by an external assessor, tighter timeframes for complaint acknowledgement and resolution, obligations to advise customers of complaint outcomes and the provision of clear information about products and services at the point of sale. The extensive evidence of collaborative work by the central actors during the TCP Code review demonstrates the need for industry wide input to address complex and multi-faceted customer service and complaints handling problems. Further, it confirms that the central actors identified in this study were active agents in informing the customer service and complaints handling practices of the vLISP industry. A range of institutional pressures – regulatory, customer, mimetic (competitive) and normative – influenced the customer service and complaints handling practices of the top four vLISPs. Regulatory pressure was imposed by the Australian Communications and Media Authority through enforcement actions and the regulator’s inquiry into the industry’s customer service and complaints handling practices. This led to increased commitment from the top four vLISPs to address customer service and complaints handling shortcomings in the old TCP Code. Normative pressure was imposed by the Communications Alliance and this led to development of standardized customer service and complaints handling practices that deliver desirable customer service outcomes. Mimetic pressure was imposed by a vLISP [O8 in this study] that received numerous customer service accolades resulting in other vLISPs mimicking its practices. Customer pressure came through customers complaining directly to the Australian Communications and Media Authority, the top four vLISPs and the Australian Communications Consumer Action Network about their repeatedly poor customer service experiences. Additionally, customers sharing their poor customer service experiences on social media also exerted pressure on under-performing vLISPs. The intensification of the pressures (through regulatory interventions, industry ombudsman campaigns, regulator inquiry report recommendations and ministerial intervention) and the interplay between the institutional pressures (regulatory pressures combined with customer and competitive pressures) led to the top four vLISPs paying more attention to the external stakeholders’ demands for improved customer service and complaints handling and acceding to them by addressing the shortcomings in the old TCP Code (for example, directives from the Australian

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Communications Media Authority to the vLISPs to incorporate ACMA inquiry recommendations into the revised TCP Code). This helped vLISPs to repair the industry’s customer service legitimacy, avoid excessive regulation and influence consumer protection policy directions. Hence, the institutional pressures had a potent conforming influence on the customer service and complaints handling practices of the vLISP industry. Regulatory pressure was the dominant pressure in influencing the attitude of the regulatory managers of the top four vLISPs to improve their customer service and complaints handling practices. The adoption and implementation of new customer service and complaints handling practices within vLISPs was influenced by the institutional pressures (regulatory, normative, mimetic and customer) they were exposed to, the regulatory managers’ perceptions of institutional pressures and their organizational culture and attitudes towards customer service and complaints handling practices. The regulatory managers’ responses to the institutional pressures depended on who exerted the pressure and under what circumstances those pressures were exerted. Using Organizational Field criteria (DiMaggio & Powell 1991;; Lawrence, Hardy & Phillips 2002) it was shown that there are two Emerging Organizational Fields (one focused on customer service and complaints handling practices formulation and definition and the other on the adoption and implementation of customer service and complaints handling practices) in their ‘embryonic’ stages of development. Emerging Organizational Field 1 comprises external stakeholders and the top four vLISPs. Emerging Organizational Field 2 comprises the industry association actor executive [P3] and regulatory managers in the top four vLISPs. The actors of Emerging Organizational Fields 1 and 2 are actively involved in determining customer service and complaints handling practices, their implementation, monitoring/enforcement, reporting and, as a result, agreement to achieve acceptable levels of customer service and complaints handling performance. Taken together, the discussion presented so far shows that the customer service and complaints handling practices of very large Internet service providers are institutionally derived practices.

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Given that the top four vLISPs are exposed to continuous exogenous shocks due to regulatory developments and technological growth, there is an ongoing commitment by regulatory managers of the top four vLISPs to express their collective interests in regulatory arrangements, address emerging customer service challenges, maintain good relationships with external stakeholders and seek their active support to influence customer service and complaints handling practices. The intensification of collaboration amongst the actors to handle customer service challenges both now and in the future (NBN 2013) will fuel further Organizational Field development. Such Organizational Field development will inform future customer service and complaints handling practices and consumer protection policy arrangements for the vLISP industry. This necessitates the longitudinal study of the Field development from its ‘emerging’ to ‘mature’ state to understand the institutional work central actors engage in, and the creation of institutions and structuration of the Organizational Field. The significance of the study of these Emerging Organizational Fields and their development contributes both to the understanding of the structuration of Organizational Fields in the Australian Internet industry as well as to the assessment of the implications such Emerging and Mature Organizational Fields bring to Australian Government consumer protection policy formulations and its directions for Internet services in Australia.

8.1

Achievement of the research objectives

There were five research objectives for this study. A rich description of vLISP industry stakeholders’ perceptions and attitudes regarding the development of customer service and complaints handling practices, the key agencies that influence the customer service and complaints handling practices of the industry and the role of the central actors from various stakeholder agencies in influencing the customer service and complaints handling practices of vLISP industry were discussed in Chapter 4. The institutional pressures the external agencies exerted on the vLISP industry were described in Chapter 5. Further, the institutional pressures that operate in the vLISP industry and the role they played in influencing the development

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and review of customer service and complaints handling practices was critically examined through analysis of participants’ responses using the literature in institutional pressures in Chapter 5 (DiMaggio & Powell 1983;; Oliver 1991). The identification and description of the role of the consumer association, the regulator, government authorities, the telecommunications industry ombudsman and the ISP industry association in influencing the customer service and complaints handling practices of vLISPs and the institutional pressures to which the top four vLISPs are subjected meant research objective 1 was met. Development of a detailed understanding regarding the regulatory managers’ perceptions and attitudes with respect to customer service and complaints handling practices, institutional pressures that existed in the vLISP industry and the institutional pressures that influenced the customer service and complaints handling practices of the industry addressed research objective 2. Discussion of data analysis findings in Chapter 5 illuminated the institutional pressures (regulatory, mimetic (competitive), normative and customer pressures) in the vLISP industry that played a role in influencing the customer service and complaints handling practices of the industry. The argument was also made in Chapter 5 that the vLISP industry’s customer service and complaints handling practices are institutionally derived practices developed through the collaborative efforts of the central actors interviewed in this study. It was discussed there how the increased collaboration, co-operation, dialogue and discussion on addressing customer service shortcomings in the old TCP Code occurred as a direct result of the regulatory pressures combined with customer and competitive pressures. Analysis of the top four vLISPs’ responses to addressing customer service and complaints handling shortcomings in the old TCP Code revealed how such responses were conditioned by the institutional pressures. Further, that chapter also described how the top four vLISPs’s responses to the institutional pressures were dependent on who exerted the pressure and under what circumstances the pressures were exerted. Thus, research objectives 3 and 4 were achieved. It was established in Chapter 5 that the regulatory pressures combined with customer and competitive pressures played a pivotal role in bringing various vLISP stakeholders together during the TCP Code review in 2010-2011 to address customer service and

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complaints handling shortcomings in the old TCP Code. It was described how increased collaboration, interaction between the top four vLISPs and other industry stakeholders occurred to modify customer service and complaints handling practices. Chapter 6 analyzed the collaborative efforts of the vLISP industry stakeholders using the neo-institutional theory of the Organizational Field. It was discussed how the vigorous collaborations amongst the institutional actors led to emergence of Organizational Fields. How the actors of the Emerging Organizational Fields actively influenced the development and review of the customer service and complaints handling practices and their subsequent implementation in the top four vLISPs was also explained. Chapter 7 argued that there is potential for Emerging Organizational Fields to mature over time to inform future customer service and complaints handling practices. Further, the implications for customer service and complaints handling performance of the ISPs and Internet consumer protection policies were also discussed. Thus, research objective 5 was met.

8.2

Contribution to body of knowledge

This research makes several theoretical and empirical contributions. These contributions are described below. 8.2.1

Contribution to the literature on Internet industry customer service and complaints handling practices

This research links and integrates literature from service quality, neo-institutional theory and the Internet industry by examining multi-stakeholder perspectives to understand the role of institutional forces in influencing the customer service and complaints handling practices of the top four vLISPs in Australia. As far as I am aware, to date, no prior study has examined the institutional perceptions in relation to customer service and complaints handling practices of the top four vLISPs in Australia. This study provided a rich description of perceptions and attitudes of external agencies and regulatory managers of the top four vLISPs respecting customer service and complaints handling practices and the institutional influences on the development, adoption and implementation of vLISP industry’s customer service and complaints handling practices.

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The study analyzed the stakeholder interactions including identification of key stakeholder agencies, the central actors in the vLISP institutional environment and differences in the influences of vLISP industry stakeholders on adoption and implementation of customer service and complaints handling practices. Very few studies in the Australian context examine personal viewpoints of vLISP industry stakeholders to understand how and why the top four vLISPs respond to external stakeholder demands. There is scant literature on the integration of institutional perspectives in understanding the effectiveness of vLISP industry co-regulatory practices and vLISP industry perspectives to understand how institutional pressures influence their customer service and complaints handling practices. This study showed that both institutional and organizational factors influence the adoption, implementation and decision making on customer service and complaints handling practices. The power of neo-institutional theory as a useful lens through which to view and analyse the institutional influences on the vLISP industry practices has been demonstrated through this empirical study. Thus, it addresses an apparent gap in the current literature. 8.2.2

Contribution to literature on institutional pressures, strategic responses to institutional pressures and organizational behaviour

The most striking finding to emerge from this study is that customer service and complaints handling practices of very large Internet service providers are institutionally derived practices. The institutional pressures played a pivotal role in bringing the top four vLISPs together to address shortcomings in the customer service and complaints handling practices of the industry. In particular, the study showed that institutional pressures influenced vLISP organizational actions thereby providing fruitful insights into the institutional factors that drive vLISP organizational actions. The significance of the institutional pressures in influencing organizational action in relation to customer service and complaints handling was studied through various actors’ perspectives by reflecting on and analysing their actions in dealing with such pressures. An important empirical finding was that there is an interplay between institutional pressures that influenced the top four vLISP organizational actions. This is an area

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that has not been studied before yet it is important to understand what drives organizational actions on customer service improvements. Using a qualitative approach, this thesis has contributed to providing valuable insight into how institutional pressures drive actors’ actions and attribute meaning to such actions. The regulatory managers’ perspectives on the role of institutional pressures in influencing their customer service and complaints handling practices identified their active role in influencing the responses taken to such pressures. Further, it shed light on how institutional pressures from salient stakeholders were perceived and interpreted within their organizations and the role organizational culture played in making improvements to their existing customer service and complaints handling practices. Such a finding is consistent with Gunningham and Rees (1997) who argue the equal importance of institutional factors (in addition to market factors) in determining the fate of a particular co-regulatory initiative. As a result, these findings contribute to the existing literature on the manager’s role within organizations in perceiving, interpreting institutional pressures and deciding appropriate responses to institutional pressures. Further, contribution to the literature on institutional pressures also occurs by examining the external stakeholders that exert institutional pressures on the top four vLISPs and how such pressures influence customer service and complaints handling practices. This is important given the scant literature on external stakeholders that exert institutional pressures on the top four vLISPs and their role in influencing the industry’s customer service and complaints handling practices. 8.2.3 Contribution to Emerging Organizational Fields literature The study established that the customer service and complaints handling practices of the vLISP industry are institutionally derived practices based on collaboration among various vLISP industry stakeholders. An evidence-based approach was used to understand and explain how and why institutional actors of technology based service organizations such as ISPs act together. This thesis identified and discussed the role of the central actors in the vLISP industry, their relationships with each other and how they collectively influence the customer service and complaints

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handling practices of their industry. Detailed analysis of collaboration of institutional actors of the vLISP industry was conducted using an institutional perspective. A significant contribution arising from this study is the identification and discussion of Emerging Organizational Fields comprising the central actors in the vLISP industry (Chapter 6). These Emerging Organizational Fields have the potential to develop into Mature Organizational Fields and inform future customer service practices and consumer protection policies in the Australian Internet industry (Chapter 7). Such Mature Organizational Fields can exert ‘powerful forces’ on individual vLISP organizations and influence the ‘structure and behaviour’ of the organization (DiMaggio & Powell 1991). This study identified opportunities to conduct longitudinal studies of Emerging Organizational Fields in the Australian vLISP industry (Chapter 7). This contribution also enables comparison studies in the future both within Australia and internationally to study institutional influences on Internet industry practices. Further, country specific studies such as this one provide useful and detailed insights as it describes how future research studies outside Australia can employ a neoinstitutional lens to study similar technology based service industry practices. In Australia, research focused on studying emerging industries using institutional theory is still very limited (Truscott 2007) although some studies have been conducted (for example, Clegg, Rhodes & Kornberger 2007). This study is a step forward towards filling this void. 8.2.4

Methodological contribution to understanding institutional influences on technology based service industries

The qualitative nature of this study provided opportunities to develop an in-depth understanding of the customer service and complaints handling practices explored with the vLISP organizational actors. The importance of using a qualitative approach to understand institutional forces has been emphasized by institutional theory researchers (for example, Lawrence, Hardy & Phillips 2002;; Suddaby 2010). Institutional theory studies have been dominated by quantitative studies which are focused on measuring outcomes of institutional process (Hinings & Tolbert 2008;; Suddaby, 2010).

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Suddaby (2010) states that ‘institutional theory has largely failed to retain methodologies that are consistent with their need to attend to meaning systems, symbols, myths and the processes by which organizations interpret their institutional environments. Methodologically, if we are to take seriously the ideational aspects of institutions, we need to move, however slightly, away from strictly positivist research and incorporate interpretivist methods that pay serious attention to the subjective ways in which actors experience institutions.’ This research is the first study in the Australian context to capture personal viewpoints of institutional actors who influence the customer service and complaints handling practices of the vLISP industry and provided an opportunity for those institutional actors to reflect on their past actions in response to various pressures exerted on the industry and their organizations. This understanding is fundamental to achievement of appropriate customer service and complaints handling outcomes for consumers, which are based upon shared understandings of the stakeholder expectations of each other in relation to the development, adoption and implementation of customer service and complaints handling practices of the vLISPs. There is a methodological contribution arising from this study because it uses an interpretivist qualitative approach (using thematic analysis and ideas from grounded theory) to investigate institutional influences on the top four vLISPs through various actors’ experiences of institutional forces. Through detailed discussion of the research procedures and data analysis conducted in this study, this research has demonstrated that the interpretivist qualitative approach is a valid and reliable methodological framework. The research procedures can indeed be replicated by another researcher to achieve similar results and conclusions.

8.3

Limitations of this research

This research focuses on the vLISP industry in Australia and one aspect of Internet service provisioning, namely, functional service quality. It is important to acknowledge that Internet service quality is a combination of both technical as well as functional service quality. Although much of the debate in the Internet industry has been due to its poor customer service and complaints handling performance (which was the focus of this study), technical service quality has equal importance and cannot be ignored. Hence,

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holistic research needs to be considered to assess the overall service quality and performance of the Internet industry. It is acknowledged that the perspectives of minority groups (such as the small and medium sized ISPs) have been ignored in this research as: (i) they serve less than twenty per cent of the residential Internet subscriber base;; (ii) they are not involved in the development of customer service and complaints handling practices;; and (iii) they are not members of the ISP industry association. Hence, much of the discussion on industry engagement and collaboration to deal with customer service issues is irrelevant for this group. Future quantitative studies are essential to examine the influence of external stakeholder pressures on the actual customer service and complaints handling performance of the top four vLISPs.

8.4

Future research opportunities

Several interesting ideas arise from this research for future work. 8.4.1

Longitudinal study of the Emerging Organizational Fields of the very large ISP Industry

A longitudinal study of the Emerging Organizational Fields identified in this study will provide valuable insights into the institutional strategies used by the central actors to shape current and future broadband consumer protection policies. Such studies are important because they inform the development of future consumer protection policies that have implications not only for the functioning of the ISP industry as a whole, but also on its customer service reputation. A longitudinal study over the period of the next five to ten years will be conducted following the completion of this study. The main objective will be to study further institutional work that actors engage in and their role in the creation of ‘institutions’. There is also an opportunity to study institutional entrepreneurs amongst the actors of these Emerging Organizational Fields and the possible implications such institutional entrepreneurship may have for the shaping and maturation of the Organizational Fields. Maguire, Hardy and Lawrence (2004) state: ‘The characteristics of Emerging Organizational Fields make them an important area for the study of institutional entrepreunership’. By studying Emerging Organizational Fields in the vLISP industry over the next five to ten years, it is possible to understand the role of institutional entrepreneurs in 262

shaping the Organizational Fields. This will inform our understanding about the role of institutional entrepreneurs in shaping future customer service practices and consumer protection policies in the Australian Internet industry. 8.4.2 Institutional pressures and decoupling A quantitative study to understand the role of institutional pressures on the customer service and complaints handling performance of the top four vLISPs will be conducted in the future. The qualitative findings from this thesis will inform the development of this quantitative research. Another area for future investigation is to study the institutional pressure that is most effective in spreading new customer service practices and decoupling (DiMaggio & Powell 1991;; Scott 2001;; Boxenbaum & Jonsson 2008). Some potential questions would include: (i)

Which pressure (regulatory, normative or mimetic) is more effective in spreading new customer service practices in vLISPs?;;

(ii)

Do very large ISP organizations decouple if they experience strong coercive pressure to implement a new customer service practice? What is the relationship between decoupling and regulation?;;

(iii)

Do very large ISP organizations engage in less decoupling if there is stringent regulation involving customer service and complaints handling practices?;; and

(iv)

How do the power relationships of regulatory managers influence their desire to decouple if they experience strong pressures from ISP industry stakeholders? 8.4.3 Institutionalization of customer service practices

An important area of future study could aim at understanding the level of institutionalization of new customer service practices at the inter-organizational and intra-organizational levels (Tolbert & Zucker 1996;; Hirst 2010). At the interorganizational

level,

the

processes

of

institutionalization

(Habitualization,

Objectification and Sedimentation) proposed by Tolbert and Zucker will be studied. This would provide an important insight into the extent of institutionalization of new 263

customer service practices by vLISPs and their impact on customer service and complaints handling performance. Some potential questions are: (i)

What is the extent of institutionalization of new customer service practices in the very large ISP industry?;;

(ii)

To what extent do the diffusion and institutionalization of new customer service practices occur in individual very large ISPs?;;

(iii)

What is the impetus for the diffusion of a new customer service practice within a very large ISP organization?;; and

(iv)

How do regulatory managers of very large ISPs institutionalize new customer service practices within their organizations?

8.5

Implications and conclusion

The research findings from this study encourage vLISP organizations to consider a balanced approach to delivering both functional and technical service quality. There is a need for ongoing collaboration with relevant ISP industry stakeholders both to manage each other’s expectations of the other and to develop and incorporate customer service and complaints handling practices in their organizations with a view to improving their customer service and complaints handling performance. The study findings provide valuable information for the regulator, government department for broadband and the industry ombudsman to develop an understanding of what institutional forces are likely to drive the changes required to enhance customer service improvements in areas where vLISPs under-perform. By understanding the perceptions and attitudes of different stakeholders and institutional pressures to which vLISPs respond favourably, appropriate mechanisms both for code enforcement and continuous customer service improvement can be developed by the regulator and the government department for broadband to ensure such mechanisms drive the desired behaviour in the vLISP industry. The study findings assist the consumer association to gain a better understanding of the role and influence of the regulator, the government department for broadband and the industry ombudsman on vLISPs’ organizational customer service and complaints handling practices and the type of pressures the vLISP managers respond to.

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By taking an institutional perspective, the power of neo-institutional theory as a useful lens to analyse the institutional influences on the vLISP industry practices has been demonstrated throughout this empirical study. The most striking finding to emerge from it was that the customer service and complaints handling practices of the top four vLISPs are institutionally derived practices. Further, the study established that institutional pressures (regulatory, normative, mimetic and customer pressures) from the external stakeholders (Australian Communications and Media Authority, Telecommunications Industry Ombudsman, Communications Alliance, Australian Communications

Consumer

Action

Network

and

the

Department

of

Communications) resulted in an increase in frequent and fateful interactions and collaboration between all the vLISP industry stakeholders. This has resulted in important revisions to the TCP Code, particularly in relation to customer service, complaints handling and code compliance sections of the code. The institutional pressures had a potent conforming influence on the customer service and complaints handling practices of the top four vLISPs. This study has demonstrated that ongoing stakeholder collaborations on customer service and complaints handling practices and stringent enforcement mechanisms are crucial to addressing any new and emerging customer service issues that may be relevant for current and future customer service practices and consumer protection. The study identified two Emerging Organizational Fields in the Australian vLISP industry. One focused on TCP Code development and the other on TCP Code adoption and implementation in vLISPs. The significance of a longitudinal study following the development of the Emerging Organizational Fields in the vLISP industry identified in this thesis lies in its potential to enhance our understanding of the Field maturation process, structuration of the Organizational Fields and the role of institutional actors in shaping the Organizational Fields. Fundamental evidence has emerged from this research and looks promising for all vLISP industry stakeholders, particularly customers. This is that when all vLISP industry institutional actors collaborate and engage with each other frequently and fatefully based on a common goal to improve the industry’s customer service and

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complaints handling practices and subsequent customer service and complaints handling performance, there is noticeable progress towards development of customer-focused customer service practices. Such approaches will contribute to better customer service experiences (ACMA media release 2013). The importance cannot be understated of the institutional actors continuing to work with each other closely over the coming years to pursue this common goal, managing each others’ expectations of the customer service and complaints handling performance of the vLISP industry (in the light of rapid technological growth such as the NBN) and enhancing ISPs’ customer service practices with a view to provide desirable customer service outcomes to customers. This thesis has provided the solid foundation that is required for future research and long-term study of the development of the Organizational Field in the vLISP industry and what that means for the development of customer service and complaints handling practices for the future.

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Appendices Appendix A – Consent form for interview Appendix B – Information letter for interview Appendix C – Illustrative questions for interviews Appendix D – Ethics approval letter from the University of Western Sydney Appendix E – External stakeholder pressure on CS/CH practices: Discussion of evidence from vLISP Industry Appendix F – Actors’ role in creating, maintaining and disrupting institutions Appendix G – Confirmed code breach statistics in TIO’s annual report Appendix H – Direct quotes from study participants Appendix I – Telecommunication Consumer Protection Code: Explanatory Statement Appendix J – TCP Code 2012 for consumer sales, service and contracts Appendix K – Strategic responses to pressures in the Australian Very Large ISP Industry

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Appendix A

Participant Consent form for interview

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Appendix B

Participant Information letter for interview

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289

290

Appendix C

Illustrative questions for interviews

291

External Stakeholders (the consumer association, the ombudsman, the ISP industry association, the regulator and the government department for broadband) Can you please describe the main objective of your organization and your role in this organization? In your view, what are the key agencies that influence (CS/CH) practices in the ISP industry? With regard to CS/CH, what are your views on the performance of the Australian very large ISPs for Internet services? In your view, what are the main factors that very large ISPs consider when it comes to improving the level of service provided to ISP customers? What role does your organization play in influencing CS/CH Practices of Very Large ISPs? Are very large ISPs facing increasing pressure from external agencies such as the regulator, the ombudsman, the industry association, the consumer association, government department and other ISPs that excel in customer service to constantly review their customer service/ complaints handling performance? Was there noticeable improvement in CS/CH performance of very large ISPs through campaigns by the regulator and the ombudsman? Please provide some example cases? How frequently do very large ISPs network with other external entities such as TIO, ACMA, ACCAN, Government department and Communications alliance to discuss CS/CH issues? What are the main issues they discuss in relation to CS/CH? Can you please give an example scenario where external entities such as TIO, ACMA, Communications Alliance, ACCAN and Government department have exerted pressures on very large ISPs to improve their CS/CH practices/performance and in what ways did they respond to such pressures? What led to the Reconnect Customer Inquiry by the ACMA? What role did TIO, ACCAN, Very large ISPs, ACMA, Government department and Communications Alliance play in this inquiry? In your view, how do the top four vLISPs demonstrate conformance to the TCP Code? Have you seen any evidence of superficial conformance to the code? Does the revised TCP Code address CS/CH shortcomings in the old TCP Code? Do pressures from external stakeholders influence the CS/CH practices of the top four vLISPs? If so, please provide some example cases.

292

Illustrative Interview Questions: Very Large ISP Organizations Please describe various services provided by your organization and your role in the organization. In your view, what are the key agencies that influence (CS/CH) practices in the ISP industry? What challenges does your organization face in dealing with CS/CH issues on a daily basis? What are the key factors that influence improvements to the level of service provided to your customers? What formal/informal networks are you/ your organization a part of with other very large ISPs? What are the main issues you discuss in relation to CS/CH with other very large ISPs? What role do external agencies such as the industry association, the ombudsman, the regulator, the government department and the consumer association play in influencing your CS/CH practices? How do you network with other external entities such as ACMA, TIO, Communications Alliance, Government department for broadband and ACCAN? Does your organization face increasing pressure from external agencies to constantly review your complaints data in relation to customer service and complaints handling issues and improve your complaints performance? How do you deal with this? Please give some example cases. Why did ACMA launch Reconnecting the Customer Inquiry? What role did you play in this inquiry? How do you demonstrate conformance to the TCP Code? What role does ACMA play in code enforcement? Is the revised TCP Code with new CS initiatives a result of pressure from external stakeholders which led to major modifications to the code? What type of pressures is your organization exposed to? Have these pressures led to improvement in existing CS/CH Practices in your organization? Under what circumstances do you conform to such pressures? Please give some examples. In your view, what are the main factors that other very large ISPs consider when it comes to improving the level of service provided to ISP customers?

293

Appendix D

Ethics approval letter from UWS

294

295

Appendix E

External stakeholder pressure on CS/CH practices: Discussion of evidence from vLISP industry

296

Sample evidence of pressure through the ombudsman’s Connect.Resolve campaign in the vLISP industry is provided in this section. 2E.

External stakeholder pressure on CS/CH practices: Discussion of evidence from vLISP Industry

Sample evidence: TIO Connect.Resolve Campaign As highlighted in Section 2.2, the TIO Connect. Resolve campaign started in January 2009 aimed at improving the CS performance of vLISPs. The reports published as a part of this campaign was analyzed to understand how vLISPs responded to the pressure arising from this campaign. The Connect.Resolve campaign report published in August 2009 shows some interesting trends. The report states ‘the number of complaints about customer service matters to the TIO increased by 1.8 per cent during the campaign, compared with a 46 per cent rise in 2007/08. Further the report states ‘The stablilisation shows our collaborative approach with service providers has been effective, but they need to continue their efforts to prioritise customer service’ (TIO 2012). Throughout the campaign, ISPs received monthly complaints data about their customer complaints to the TIO, as well as examples of consumer ‘voices’ so they could have a better understanding of which CS areas needed improvement, and further develop their CS processes (TIO 2012).

2E.1

An analysis of Connect.Resolve campaign statistics for very large ISPs:

The TIO Connect. Resolve campaign report (TIO 2012) classifies customer service complaints into several categories as stated below (refer Tables E-1 and E-2) a. [O9] interviewed in this study (Internet Services) In June 2009, the proportion of complaints relating to customer service was 33.6 per cent up from 32.7 per cent in January 2009. The overall complaint numbers for [O9] for second part of 2009 was 14 per cent lower than the first half of the year. From January to June 2009 TIO received 19,914 compared to 17,112 from July to December 2009. Variation from January 2009 for customer service was + 42.1 per cent and + 20.2 per cent for complaints (TIO 2012).

297

Table E-1: The Connect. Resolve complaints statistics (Customer service) for [O9] (TIO 2012) Category

July 08Dec 08 41.8%

Jan 09Jun 09 51.5%

Jul 09Dec 09 62.4%

Comments

Failure to action request Lengthy wait time

31.8%

32.7%

25.9%

10.4%

5.6%

3.2%

Discourteous

8.6%

6.5%

6.3%

Unable to contact

7%

3.3%

2%

Refusal to deal with advocate

0.3%

0.4%

0.3%

Reasonable decrease in proportion of complaints Significant decrease in the proportion of complaints Observable decrease in proportion of complaints Significant decrease in the proportion of complaints Small proportion among overall customer service issues

Incorrect/ inadequate advice

Significant increase in the proportion of complaints

Table E-2: The Connect. Resolve complaints statistics (Complaints handling) for [O9] (TIO 2012) Category

July 08Dec 08 37.8%

Jan 09Jun 09 48.3%

Jul 09Dec 09 55.6%

13.7%

10.9%

7.9%

Failure to advice outcomes

12.5%

12.7%

13.8%

Failure to refer to TIO

15.2%

11.9%

7.1%

Failure to assist

12.5%

8%

3.1%

Failure to acknowledge written complaint Failure to record complaint

5.1%

4.6%

7%

3.1%

3.6%

5.2%

Failure to action undertakings Failure to escalate

Comments Significant increase in the proportion of complaints Observable decrease in overall complaints Minor increase in overall complaints Significant decrease in the proportion of complaints Significant decrease in the proportion of complaints No observable decrease in complaints No observable decrease in complaints

The above statistics demonstrate significant improvements in some areas relating to customer service and complaints handling indicating a response to pressure from ombudsman. b. [O7] interviewed in this study (Internet Services) From January 2009 to June 2009, [O7]’s overall complaint numbers dropped by 1.7% compared to the previous six months. [O7]’s combined CS and CH issues as a percentage of their overall complaints made up 37.3 per cent of all complaint issues. There was a reduction in complaints for [O7] in the second half of 2009. TIO received 298

62,541 between January to June 2009 compared with 58,597 in the second part of the year (TIO 2012). Refer Tables E-3 and E-4. Table E-3: The Connect. Resolve complaints statistics (Customer service) for [O7] (TIO 2012) Category

July 08- Dec 08 35.5%

Jan 09-Jun 09 43.6%

Jul 09-Dec 09 56%

31.8%

34.3%

28%

Lengthy wait time

11.1%

8.5%

4.9%

Observable decrease in complaints

Discourteous

10%

7.5%

7.6%

Decrease in complaints

Unable to contact

11.2%

5.6%

3%

Significant decrease in complaints

Refusal to deal with advocate

0.4%

0.5%

0.5%

No observable decrease in complaints

Incorrect/ inadequate advice Failure to action request

Comments Significant increase in complaints Observable decrease in complaints

Table E-4: The Connect. Resolve complaints statistics (Complaints handling) for [O7] (TIO 2012) Category

Jan 09-Jun 09 54.2%

Jul 09-Dec 09 61.9%

Comments

Failure to action undertakings

July 08Dec 08 42.1%

Failure to escalate

12.9%

11.4%

8.4%

Failure to advice outcomes

12.2%

10.5%

10.3%

Failure to refer to TIO

13.4%

10.4%

7%

Failure to assist

11.6%

4.9%

2.1%

Failure to acknowledge written complaint Failure to record complaint

4.5%

4.9%

5.9%

Noticeable decrease in complaints No significant decrease in complaints Decrease in overall complaints Significant decrease in complaints Increase in complaints

3%

3.6%

4.1%

Significant increase in complaints

Increase in proportion of complaints

299

2E.2

Proportion of Customer Service & Complaints Handling issues (%) among overall proportion of complaints

a.

[O9] (Internet Services)

Table E-5: Connect.Resolve campaign monthly complaints statistics (Customer service and Complaints handling) between Jan 2009 to June 2010 for [O9] (TIO 2012) Month

Combined Customer Service & Complaints Handling

All Issues

Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10

1860 2090 2447 2318 2364 2450 2614 2278 2201 2080 1945 1710 1579 1615 1731 1504 1769 1756

5680 6390 7519 7086 7087 7272 7439 6476 6366 6227 5803 5240 5176 5251 5657 4910 5579 5021

Proportion of Customer Service & Complaints Handling issues (%) 32.7 32.7 32.5 32.7 33.3 33.6 35.1 35.1 34.5 33.4 33.5 32.6 30.5 30.7 30.5 30.6 31.7 34.9

Table E-5 suggests that there has been a steady proportion of CS/CH issues between January 2009- April 2009 and then an increasing trend after this period. The period between January 2010 to March 2010 shows a steady increase in the proportion of CS/ CH issues. The lowest proportion of CS/CH issues was 30.5 per cent in January 2010. The highest proportion of complaints recorded was 35.1 per cent in August 2009.

300

b.


Table E-6: Connect.Resolve campaign monthly complaints statistics (Customer service and Complaints handling) between Jan 2009 to June 2010 for [O6] (TIO 2012) Month


Combined Customer Service & Complaints Handling 186 202 218 200 246 195 244 224 194 172 144 118 91 120 128 73 108 88

All Issues

618 670 725 642 720 588 743 633 571 508 452 372 301 366 399 271 369 305


From Table E-6, it is clear that the proportion of CS/ CH issues was steady at 30 per cent between January 2009- March 2009 and increased after this period. The highest proportion in CS/ CH issues was noticed in August 2009 (35.3%) and the lowest proportion was recorded in April 2010 (26.9 per cent) showing improvements in service levels (TIO 2012).

301

c.


Table E-7: Connect.Resolve campaign monthly complaints statistics (Customer service and Complaints handling) between January 2009 to June 2010 for [O7] (TIO 2012) Month


Combined Customer Service & Complaints Handling 7994 8067 8884 7886 8020 8268 9441 8925 9408 8363 7793 6426 5629 6416 6802 5759 6279 6391

All Issues

21366 22082 24793 22101 21418 22150 25405 23651 24894 22928 21833 18150 16567 18376 19704 16258 17260 16964


From Table 2E-7, the proportion of CS/ CH issues was over 32 per cent during the entire campaign period. The lowest proportion of complaints was recorded in January 2010 (33.9 per cent) and the highest proportion of complaints was recorded in September 2009 (37 per cent).

Overall observations: The analysis provided above demonstrate significant improvements in some areas related to CS and CH during the campaign period for [O7] and [O9].While the campaign targeted the ten very large ISPs, the campaign report for all ten very large ISPs was not available on the TIO website for all periods (January 2009-June 2009, July 2009December 2009, January 2010-June 2010, July 2010-December 2010). My aim was to compare a particular ISP’s CS and CH statistics during the campaign period to check for any noticeable improvements in their CS/CH performance. [O7] and [O9] (top two 302

vLISPs) together impact the industry CS/CH performance as a whole as together they have close to 55 per cent of the residential Internet subscriber base in Australia (ACCAN 2012). In areas where the vLISPs showed decrease in complaints and CS issues, it is clear that they have responded to the pressures from the TIO. Such noticeable improvements can only occur if the vLISPs fine-tune their CS/CH processes to reflect improvements in the level of service provided to customers. In areas where there were no noticeable improvements, the vLISPs would come under considerable pressures from external stakeholders such as the ombudsman to incorporate not only the recommendations from the ombudsman campaign into their CS/CH practices but also review CS/CH practices of market leaders who excel in CS (such as [O8]). This notion is relevant as [O8] has received numerous CS excellence awards and sits on the ombudsman board. In the past [O8] called on under-performing vLISPs to lift their game. For example, the [O8]’s manager commenting on industry performance in 2011 stated ‘Consumers simply want a better experience when dealing with companies. If we don’t lift our game as an industry then theses regulatory responses will gain further traction. [O8] welcomes growing public awareness about the level of TIO complaint numbers as an effective way to keep the industry on their toes. It is easy to see who the leaders are and who is falling behind. Last year we saw a drop in complaints and we work hard to ensure the numbers improve year on year’.

303

Appendix F

Actors’ role in creating, maintaining and disrupting institutions

304

Table F-1: Actors role in creating, maintaining and disrupting institutions (Source: Lawrence & Suddaby 2006) Distinct set of practices actors engage in creating institutions Advocacy

Comments Forming associations that formally represent the constituents of the organizational Field. Their main role is to lobby for resources, promote agendas and attack existing legislation. It allows less powerful institutional actors to actively shape their institutional environment and acquire legitimacy.

Defining

Constructing rule system that provides identity, define boundaries of membership within a Field.

Constructing identities

Establish identities within the Field. The identities help describe the relationship between an actor and the Field in which the actor operates. This usually involves constructing professional identities by engaging with professional groups outside the organization (normative aspect of institutions). Inter-organizational connections through which practices become normatively sanctioned and form the relevant peer group with respect to normative compliance and monitoring. Groups of actors construct normative networks that provide the basis for new institutions. The type of interaction involves actorField, norm-Field and actor-actor that lead to institutional formation. Actors trying to create institutions can use the existing sets of taken-for-granted practices and associate the new with the old in some way that eases adoption. This occurs through mimicry.

Construct normative network Mimicry Theorizing

This involves naming of new practices so they might become part of the cognitive map of the Field.

Educating Distinct set of practices actors engage in maintaining Institutions

This involves educating actors in skills and knowledge necessary to support new institution. Comments

Enabling

Creation of rules that facilitate and support institutions. This might mean creating new rules needed to carry on institutional routines required to ensure institutional survival. This involves ensuring compliance through enforcement, auditing and monitoring. This occurs through policing (sanctions and inducements). This is done by establishing coercive barriers to institutional change. Deterrence refers to threat of coercion to inculcate the conscious obedience of institutional actors. This involves maintaining institutions by providing for public consumption of positive and negative examples that illustrate normative foundations of an institution. This involves infusing the normative foundations of an institution in to participants day to day routines (Training, Education). Comments

Policing Deterrence Valorizing and demonizing Embedding and routinizing Distinct set of practices actors engage in disrupting Institutions Disrupting institutions Disrupting institutions Disrupting institutions

x

Actors disrupt institutions by redefining, reconfiguring, problematizing and manipulating the social and symbolic boundaries that constitute institutions. Disrupting institutions occurs through disconnecting sanctions/rewards from set of practices or rules (courts exercising coercive power). Disrupt institutions by undermining core assumptions and beliefs. Cost of moving away from taken-forgranted practices, rules, maintaining institutions, if the cost is removed, facilitating new ways of doing this, which disrupts institutions.

Maintaining institutions involves supporting or repairing the social mechanisms that ensure compliance;; and

x

Deinstitutionalization according to Oliver (1992) is ‘the delegitimation of an established organization practice as a result of organization challenges to or the failure of organizations to reproduce prevailing legitimated organizational actions’.

305

Appendix G

Confirmed code breach statistics in TIO’s annual report

306

TCP Code categories and breaches along with the most common clauses in the code breaches for various code categories is provided in this section. The TIO during formal investigation records ‘confirmed breaches’ against ISP industry consumer code (TCP Code) where the evidence indicates that code breach has occurred. The ISPs are given an opportunity to respond with evidence and its version of the story to ensure there is a fair process in place to deal with code breaches. The TIO annual report for 2009/10 included several code breaches involving the TCP Code. Of all the codes the ‘Complaints Handling Code’ occupied 54 per cent of the overall proportion and was very high compared to other code breaches (TIO 2012). Tables G-1 and G-2 shows the TCP categories and code breaches in proportion against each category. Table G-1 TCP Code categories and breaches (TIO 2012) Code category Complaint handling code Billing code Credit management code General rules code Prices, terms and condition code Customer transfer code

TCP Code breaches 2009/10 54% 18% 14% 7% 5% 2%

The 2009/10 TIO annual report included the ten most common clauses in the code breaches for various code categories (TIO 2012). Complaints clauses occupied half of the code breach clauses highlighting the industry failure to deal with customer complaints (Table 2G.2). Table G-2 TCP Code types and clauses (TIO 2012) Code Type

Clause

Complaints

9.1.1(f) Supplier must record, monitor and action undertakings made to resolve complaints.

Complaints

Billing

9.1.1(d) suppliers must provide their complaint handling department with adequate resources. 9.2.5 Wherever possible, complaints must be resolved at first contact if not, within 30 days or as soon as reasonably practical. 6.4.1 Supplier must ensure and demonstrate billing accuracy.

General rules Billing

3.2.1 information given to customer must be accurate, relevant, current and timely. 6.4.2 customer must be able to tell whether or not their bill is accurate.

Complaints

9.2.6 suppliers must provide customers with timeframe updates regarding the time needed to investigate complaint. 7.4.10 (a) suppliers must suspend credit management activity on genuinely disputed debts.

Complaints

Credit management Complaints Credit management

9.1.1(e) suppliers must keep appropriate records regarding the complaints they receive. 9.3.4 suppliers must have and use credit control measures to help control their customer’s expenditure.

307

Appendix H

Direct quotes from study participants for major categories

308

Table H-1 Direct quotes from study participants Category

Quotes from interview participants

TCP Code development and code issues

We work with to establish codes, codes that we - and we will indicate to as the industry body where we think their existing codes aren't adequate or where we think their needs to be new rules. So we have an ongoing relationship there and generally we will say we think you should do this. They will say, hmm, maybe not. We will say we want you to do this. They'll say okay. You know, it's a negotiation and it's quite constructive and focused on an outcome [P4]

Code review

Regulatory compliance with the code

I think that a Code is still an imperfect beast. It always will be because it's brought together by a series of people and it's a negotiation and consensus isn't always achieved on every point. I think this one is better than the last one on those points [P4] In the last 18 months I think has significantly increased its member education activity. I think that's great. I know that they - in conjunction with the new Code they've already started running industry education events which is something I think was missing from last time around. I think that particularly smaller providers would really need that. Many of them may not even know there is a Code. They need someone to reach out to them and say this is it [P4] The draft Code at the moment, the industry participants who have been involved are reasonably enthusiastic about it … something like 25 different participants from industry have been involved in drafting the Code. So it's been a process that's involved a lot of consultation, negotiation, input from industry. So I think industry as we mentioned before, recognise that they prefer to have a Code than direct regulation. So they've put a lot of effort and energy into it [P4] With individual providers we often work with them. Our objective is for them to achieve compliance with the existing rules. If we meet with - we notice a provider's got a spike in their complaints. Our first instinct and our first action is to talk to them and to say are you aware of this? Do you know what the problem is? Is it going to continue? What are you doing about it? The if it doesn't work we might try more formal actions and then we might go into an enforcement [P4] There's a number of factors we take into account when we're maybe assessing compliance. The is certainly one of them and the biggest one of those. We also have individual consumers may say look, this has happened. We might hear that a few times and then we think, alright, that's something to be delved into. So they're all things that trigger our interest and then we would then talk directly to the provider and perhaps formally require them to provide us with documents or evidence about how they're meeting their obligations [P4] We are the enforcement body but we see that industry has obligations and responsibility to comply with the code. We're encouraging that anything it can do to get its - to put the pressure on its members to demonstrate compliance, proactively demonstrate by reporting or any of those sorts of things, that's terrific. Ultimately if we're aware of noncompliance it's our role to enforce [P4] I mean what the has said to industry and publicly is, this is where we want you to get with your Code. We have doubts that you'll get there but try. If you don't we'll go ahead and make some direct regulations. So there's, you know, we've got an obligation under the Telco Act to give industry the first opportunity. Then if that's not successful we can apply direct regulations [P4] Twofold. Firstly, we have the sort of day to day operational dealings via the individual consumer complaints where our complaint handlers work with their complaint handlers to try and resolve the problem that we’ve got in front of us [P5]

Stakeholder interactions on CS/CH practices

The Ombudsman would have a periodic meeting with the CEO and myself in my role, I would probably meet with probably four times a year I would say. That can be for different reasons but there is a pretty open and good working relationship there [P5]

309

Category

Quotes from interview participants Well clearly in the last couple of years there has been a lot of discussion about the development of all the policy arrangements around the national broadband network and the Department has played a key role in that. We have been appearing as a key participant in those discussions. In that sense we have a pretty good relationship with the Department. The Department is also involved in some of those other activities that I spoke about. So in terms of the code of practice about complaint handling and customer service that generally the is developing, the steering committee which is supervising that work also has a representative from the Department sitting on that, as it does from consumer organization. So the Department is playing an active role in observing what is going on in terms of that process. We're also feeding back to the Department all of the initiatives that we are doing to try and lead the industry in terms of improving its customer service. We're also seeking to work with the Department about changes to the policy regime given the changes to the market[P7] The other agency is the . I've spoken about the code of practice in respect to consumer protection with complaint handling and advertising and Bill Shock. That code has been extensively reviewed and we have played a leading role in that. We are on the steering committee. My manager is the head of Regulatory on the steering committee and is representing the industry at the peak level of that review. Our organization has been involved in all these sub-groups, the working groups that have been developing the various chapters. There's been a chapter on complaint handling, a chapter on billing, a chapter on credit management, a chapter on sales and service and a chapter on compliance. has been represented in all of those. We're engaging with the but also with the rest of the industry on those issues [P7]

Key agencies that influenced CS/CH practices of the vLISP Industry

Easily a couple of times a week. It’s a bit of both. With the CCC we have quarterly formal meetings and we have an AGM. We have fortnightly, what we call board meetings. So the board members will meet every fortnight by telephone but it’s a broad [church] so we’re quite happy to invite other people along to those audio conferences but they’re primarily designed for the board members to meet and then because of our informal networks we’re sending emails to each other all the time and phone calls on occasions as well [P8] But the next biggest influence after the customer I think is the regulator so in this space it’s the and they haven’t had a strong track record for being a very strong enforcer and recently because the complaint numbers are going up so high obviously because an organization like ours, a consumer organization - so consumer organizations are playing some part in it we’re making a lot of noise about how many complaints there are. We’re raising the media profile of the issue. Then it becomes an issue for the Minister so then the Minister is on the record for saying, well, complaints have to come down;; I will regulate if they don’t and then, of course, the regulator starts to think well, maybe we need to do a bit more in this space because they’re listening to the political winds. So they run this inquiry, the Reconnecting the Customer inquiry but that’s the first time that a regulator’s ever run an inquiry in that space. The Government has an influence about customer service because - and influence on the providers because it sets up the regulatory framework in the first place but after that it seems to be very much hands-off. It’s up to the regulator to implement that regulatory framework [P1] On the one hand you’ve got the … the regulator and as the enforcer of the industry codes. You’ve got I guess the department which creates the policy settings and develops the policy direction for the industry … The , so while we are an industry funded scheme, we are independent and we are really there to try and resolve your individual consumer complaints and also to highlight some of those systemic issues we’ve got coming through. Then you’ve got other stakeholders, for example, your , which is responsible for developing the codes. There are some quite distinct roles there in the code regulatory space and I think really each agency, as well as I think interacting and inter-relating well together, also has a slightly different touch point with the providers [P5] Well obviously one of the key agencies is the … Ombudsman, primarily from a complaint handling but clearly also from a customer service. So where a supplier - an ISP - fails to satisfactorily deal with a customer's concerns about service, then that customer has the right to have their matter escalated to the . The ombudsman is empowered to make

310

Category

Quotes from interview participants decisions that are binding on the ISP in certain guidelines. Secondly, the ombudsman clearly is then able to make decisions about complaints that are of a systemic nature and make recommendations and findings against individual CSPs and ISPs about systemic breaches. In that sense it can look at individual transactions but look at a broader number of transactions and seek to change, modify and influence a supplier's policies and procedures. Lastly, the ombudsman has a role in articulating to the general community and to the consumer body at large the performance of the telecommunications industry in respect of complaint handling and trends in complaints and issues that give rise to complaints. In that public forum it provides increased awareness about where the industry is not delivering adequate service. Therefore, there is a consequential focus on poor performance [P7] That leads then to the second agency which is the . It is the peak telecommunications regulator and that body has a role to look at complaint handling and customer service at a macro level. It is currently conducting a public inquiry into customer service and complaint handling. It has issued a series of reports, including a final report indicating that the industry's performance is inadequate in terms of delivering necessary levels of customer service to the community. The is in part relying upon the information … over the last couple of years showing significant increases in complaints being escalated to that body so it's basically using - in part only - the data to generate the basis for its inquiry. The is also then highlighting and focusing on the performance of industry self-regulation [P7]

Pressures from external agencies

Regulator RTC Inquiry

This then leads you through to the third key agency which is the . is the industry body geared to articulate and develop industry codes of practice and it has for a number of years developed codes of practice in respect of relevant customer service issues. The key customer service code it has at the moment is the Telecommunications Consumer Protection Code. As I indicated earlier, the in terms of their public inquiry have come to the conclusion that the current consumer protection code is inadequate. They have formally made that statement and have requested the to develop a revised code which is designed to address the issues raised in the public inquiry report. Now has been proactively developing a revised code over the last 12 months or so and it is currently in the process of finalising that code. We expect that code will be submitted to the in early February and we're hopeful that a revised code will be registered by the . That code itself has a specific chapter on complaint handling and has regard to the Australian standard perspective on complaint handling [P7] Look I think the more pressure the more effective, but many times we've found that they know that we're drawing our conviction from the stats. The more that that's sort of building up a solid case, that's obviously more influential. I think [P4] Because I think that everyone would rather the opportunity to be the master of their own destiny rather than have it, you know, you'd rather do something than have it done to you. That's what the whole impetus behind self or co-regulation is, it's make rules that work for yourself, but then if they don't work you know somebody else that's going to come and make them for you [P4] Well it was seen as particularly good timing because we knew that the Code review would take some time. had said that they were going to do it in chunks. We at the time of launching the inquiry said our inquiry is going to be focused on customer service and complaint handling. So leave that chapter to last. Then the things that we learn through the inquiry we can feed into that chapter of the Code review. As things worked out the timing was all pretty good in terms of the Code review was going on at the same time as the was I guess gathering a body of evidence and doing some deeper thinking about the issues underpinning complaints and customer service issues [P4] That's all been fed through the Code and was fed through the process as it went along. So we maintained a foot in both camps. We were able to take the learnings from one and put it into the other. As things turned out, there's really, really only five big areas that the Code needs to improve on. I mean they are big areas and it remains to be seen whether the Code will meet the requirements of the RTC, but in essence the knew there was a Code review but thought it was the opportunity - everybody's thinking about how we change the rules.We're going

311

Category

Quotes from interview participants to lift the game a little bit by doing - by putting some real muscle behind what's going on in the industry, why it's going on and what are the best ways to solve it [P4]

Ombudsman Connect.Resolve Campaign

I know the connect.resolve campaign took place, I know that there was feedback to providers. I'm sure the providers listened to that..I know that the major campaigns and improvement programmes that we've seen, like the Project New in , has been driven bottom up from throughout the business. Not just in response to any ..advice from the . has made a commitment which is being driven by its CEO to put a lot of resource into the various elements of that Project New, which are all designed to improve the customer experience[P3] We saw that campaign simply as a brand awareness campaign and what we saw as a result of it was that it drove complaints up. So for us, I mean - industry wasn’t consulted with that campaign, the management, as they’re entitled to, decided that they wanted to run that campaign and we saw a spike in complaints following it [P8] They were selling their services. They were trying to increase demand. The gets paid for every complaint regardless of whether or not the ISP is at fault. The ISP pays the bill. The consumer doesn’t pay the bill. So there’s a zero cost to the consumer and the possibility that they’ll get something for nothing if they complain [P8]

312

Appendix I Telecommunication Consumer Protection Code: Explanatory Statement Source: Communications Alliance (2013) Website:

313

Source: Communications Alliance (2013) Website:

TELCOMMUNICATIONS CONSUMER PROTECTIONS CODE (C628:2012) EXPLANATORY STATEMENT Introduction This is the Explanatory Statement for the revised Communications Alliance Telecommunications Consumer Protections (TCP) Industry Code (C628:2012) (the Code). This Explanatory Statement outlines the purpose of the Code and the factors that have been taken into account in its revision. The Code is to replace the C628:2007 Telecommunications Consumer Protections (TCP) Industry Code published by Communications Alliance in September 2007. The Telecommunications Act 1997 (Cth) (the Act) encourages self-regulatory processes. Communications Alliance has been at the forefront of these processes and has worked closely with suppliers, regulators, the Telecommunications Industry Ombudsman (TIO) and consumer groups to develop industry codes of practice that promote the efficiency and growth of the telecommunications sector and provide appropriate protections for residential and small business consumers of telecommunications services in Australia. Background The existing TCP Code (C628:2007) was developed in 2007, and was the result of a consolidation of six individual codes into one single code. It is accompanied by the Telecommunications Consumer Protections Industry Guideline (G631:2007), designed to aid in interpreting the Code rules and to provide examples of how a supplier may choose to comply with the rules of the Code. Under the provisions of the existing Code, the 2007 Code and the Guideline were subject to review 2 years from the date of the Code being registered by the ACMA. The existing Code was registered in May 2008 and, accordingly, a review of the Code began in May 2010, leading to a decision to revise the Code. The revision was conducted through a Code Revision Steering Group comprised of an independent Chair, representatives from the regulators, industry, consumer groups and an observer from the Department of Broadband, Communications and the Digital Economy (DBCDE). In addition, six Working Committees – each made up of industry and consumer representatives – were appointed to revise individual chapters of the existing Code and to report to the Steering Group. The revision of the Code and Guideline coincided with the Reconnecting the Customer public inquiry undertaken by the Australian Communications and Media Authority (ACMA). Many of the recommendations made in the ACMA’s Reconnecting the Customer final public inquiry report (published in September 2011) have been incorporated into the revised Code. As a registered Code, the ACMA may direct any carriage service provider or business supplying goods or services for use in connection with the supply of a listed carriage service to comply with the TCP Code. The Code is enforceable by the ACMA. Current regulatory arrangements

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Section 112 of the Act outlines the intention of Parliament that the telecommunications industry develops industry codes relating to telecommunications activities. Section 113 lists examples of the matters that may be dealt with by the development of an industry code. The list includes the areas covered by the existing (and revised) Code. The Telecommunications (Consumer Protection and Service Standards) Act 1999 (Cth) requires carriers and carriage service providers to enter into and comply with the TIO Scheme. This scheme is an avenue of last resort for the handling of end-user complaints about carriage services. Subject to the consent of the TIO, this Code confers powers on the TIO to handle complaints about matters arising under the Code. The existing Code sets out community safeguards in the areas of:

Customer information on prices, terms and conditions

Consumer contracts

Billing

Credit management

Customer transfer

Complaint handling

Code administration and compliance

Why current regulatory arrangements are inadequate Industry and consumer groups believed that the existing TCP Code did not adequately address a variety of old and newly-arisen consumer issues and that action was needed to improve customer satisfaction and thereby reduce customer complaint volumes. In addition, the commencement of the new Australian Consumer Law (ACL) (i.e. Schedule 2 of the Competition and Consumer Act 2010) on 1 January 2011 suggested an alignment of the obligations under the ACL and the TCP Code would be beneficial. The existing Code Administration and Compliance Scheme (CACS) was deemed to be inadequate in achieving compliance. It applied to only a limited number of industry participants (i.e. Telstra, Optus, VHA, Powertel and AAPT, as only those organizations are signatories to one or several Codes), it has not been used in the past and no monitoring or reporting activity has been undertaken in the past few years. (Communications Alliance will withdraw the CACS upon registration of the revised TCP Code.) In September 2011 and as a result of the Reconnecting the Customer public inquiry the ACMA found that the existing Code is not operating to provide appropriate community safeguards or otherwise operating to regulate adequately participants in the telecommunications industry to which it applies. The ACMA therefore issued a notice under subsection 125(1) of the Act requesting that Communications Alliance, as the association that developed the existing TCP Code, address those deficiencies within 150 days of the notice, i.e. by early February 2012. How the Code builds on and enhances the current regulatory arrangements The revised Code will provide additional protection for consumers in their dealings with the telecommunications industry and ensure outcomes that should improve the customers’ telecommunications experience. Existing provisions have been tightened and/or made clearer and new obligations have been added to the revised Code. The revised Code builds on the structure of its predecessor (and simplifies it) but takes a different approach in that it stipulates desired consumer outcomes which are to be achieved through specified supplier actions (i.e. as laid out in more detailed code provisions). The revised

315

Code also uses simpler language and places additional emphasis on accessibility of information for all consumers in their dealings with the telecommunications industry. Due to its new approach of consumer outcomes and supplier actions in combination with simplified language, maintaining a separate Guideline has been deemed unnecessary and the existing Guideline will be withdrawn upon registration of the revised Code. What the Code will accomplish The revised Code will further enhance existing community safeguards via the introduction of new requirements on suppliers. Simplification of language and of the Code’s structure will assist suppliers in interpreting and implementing Code rules and will also allow interested consumers to more easily understand their rights and obligations. An introductory statement to the Code sets out the key commitments of suppliers to consumers and provides a brief summary of each of the Code’s chapters. These benefits are also targeted at further reducing the numbers of complaints made to suppliers and the TIO. Anticipated benefits to consumers In addition to the aforementioned increased accessibility of the Code itself through a simplified language, structure and the inclusion of an introductory statement, consumers are anticipated to benefit from the various enhanced requirements in the Code, in particular from:

Advertising o

provision of more and clearer information about products – before the point of sale – the ‘Plan Essentials’ summary of offer document

o

additional provisions around unit pricing information in advertisements and the content of advertising

o

stronger controls on telecommunications product advertising and the phase- out of the term ‘cap’ for non-hard-cap plans;;

Billing o

a reduced back-billing period

o

a widening of billing provisions to also apply to pre-paid services

o

a right to free-of-charge historic billing information for 24 months

o

additional bill content and itemisation provisions, including the total amount of the bill for each of the two previous billing periods for included value plans

Expenditure management tools o

Financial hardship o

mandatory voice/SMS and data usage notification requirements, incl. requirements around usage information delay

increased obligations on suppliers concerning customers who experience financial hardship

Transfer o o

clarifications of informed consent in the context of changing suppliers requirements around post-customer-transfer notifications

o

provisions covering customer transfers resulting from mergers

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Complaint handling o

a streamlined definition of complaint to exclude initial fault and service calls (unless they are lodged as a complaint)

o

tighter timeframes for complaint acknowledgement and resolution

o

obligations to advise customers of complaint outcomes

o

a more explicit promotion to customers of the alternative dispute resolution services offered by the TIO

o

the obligation for suppliers to give customers a unique complaint reference number or identifier, to make it easier to track the progress of resolution of a specific complaint

Compliance o

the creation of a strong new independent body – Communications Compliance – to monitor the performance of suppliers in complying with the Code

o

the obligation for Communications Compliance and industry to develop metrics within 6 months of TCP Code registration and for suppliers to report against those metrics

o

mandatory compliance attestations (for large suppliers certified by an external assessor)

Anticipated benefits to industry It is anticipated that industry will benefit from the clarification of obligations in the revised Code as well as the alignment of the Code with the new ACL. Importantly, it is also anticipated that the tightened and new provisions of the Code will increase customer satisfaction and, as a result, increase customer retention, reduce bad debt and customer management costs. Increased accessibility to the Code will also benefit industry customer service and regulatory staff. Anticipated costs to industry Industry participants will incur initial and ongoing costs in relation to compliance with this Code. These will include (but are not limited to) significant costs associated with the introduction of additional pre-sales information provision requirements, the realisation of voice/SMS and data usage notifications and changes to bills and billing systems as well as the complaint handling processes. New suppliers will need to ensure that compliance with the Code is built into their processes and systems. Delayed Implementation Several of the improved consumer protections included in the Code require a substantial industry-wide investment and change in suppliers’ procedures and systems before they can be implemented. These changes to suppliers' processes and systems will take considerable time, effort and resources, so a reasonable transitional period before implementation was considered necessary to ensure that suppliers have sufficient time to develop and implement the required processes and systems and so e comply with the provisions of the Code when it takes effect. Clause 1.5 of the Code provides that some Code rules will only take effect at differing points in time after registration by the ACMA and therefore the Code will be implemented in a number of stages. Immediately upon registration the Code will become effective with the exceptions of:

317

For the purposes of Chapter 9, the Code Compliance Framework will not commence until that date which is 6 months after the date of registration of this Code with ACMA.

The obligations under clause 4.1.2, Summary of Offer, will not commence until that date which is 6 months after the date of registration of this Code with the ACMA.

The obligations under clause 4.2.5, Standard Charges in Advertising, will not commence until that date which is 8 weeks after the date of registration of this Code with the ACMA.

The obligations under clause 5.3.1 (n), relating to the provision of the total amounts of each of the two previous Billing Periods, will not commence until that date which is 6 months after the date of registration of this Code with the ACMA.

The obligations under clause 6.5.2, Usage notifications, will not commence until: o

in respect of clauses 6.5.2(a) and (b), Internet data and mobile data, that date which is 12 months after the date of registration of this Code with the ACMA, and

o

in respect of clause 6.5.2(c), mobile voice and SMS, that date which is 24 months after the date of registration of this Code with the ACMA or 1 March 2014, whichever date occurs later.

The notification regimes covering mobile voice and SMS services have a longer maximum implementation period (24 months) than applies to data usage notifications. This reflects the fact that the system change requirements to enable the notification capability for mobile voice and SMS are typically more complex than for data services, and many smaller providers will take time to be able to comply with this element of the Code.

318

Appendix J

TCP Code 2012 for consumer sales, service and contracts Source: Communications Alliance (2013) Website:< www.commsalliance.com.au>

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320

321

322

323

Appendix K

Direct Quotes for strategic responses to institutional pressures by the top four vLISPs in Australia

324

Table K-1 Strategic responses to institutional pressures by the top four vLISPs in Australia Strategies

Acquiescence

Compromise

Tactics used

IMITATE

BALANCE

Avoidance

CONCEAL

Defiance

CHALLENGE

Manipulation

CO-OPT

Sample quote from interview transcript I have seen a copy of an internal memo that circulated, which was an analysis of and what it was doing in relation to its customer service and it’s clear that they, I think, were looking to see if they could learn anything from what we did and the way we operated in order to apply it to their own business. I had a conversation with some staff who also claim … - but they claimed that they were using NPS as well a … I think there are people now, more and more companies looking at this NPS because we’ve given it a fair bit of publicity. We quite happily will go out there and talk about it and we’re quite happy for the rest of the industry to lift its game [P8] I think they generally have a very strong network of professional contact, both within forums like and and other sort of technical forums. There's a lot of standards forums which those groups sort of interact. I think outside of that, too, I mean we're aware of a number of professional networks. Obviously people when we have a teleconference and things they know each other and have professional respect. Oftentimes these people go from one company to the other and back and forth, so they've had experience in different companies. So I think there's strong networks there [P10] I think it's probably both. I think as you say, and it's been pointed out many times, that there weren't many signatories to the Code, why is that? The other thing I suppose is that you've got this Code and you've got the obviously that's obviously supposed to be a penalty because each provider pays for the cost of the complaint handling but there seemed to be a suggestion that people were, some players were happy to accept the cost of complaints and the cost of code compliance as a cost of doing business. So they were happy in fact to take those penalties. So the question is were those penalties enough to dissuade them from having that behavioural stance, and that's sort of what these inquiries are looking at in some ways. I think your question about whether the Code itself was a proper co-regulatory mechanism … I think we haven't seen that level of commitment from industry until recently. I think with the recent TCP Code though they've really started to take it seriously and I think one of the big criticisms of the original code as you say is not many signatories but, also, what was the compliance mechanisms? If people were going to breach the Code well what was the penalty [P10] Well obviously there's some commonality in their responses because they are commercial players in the same environment. So you'd be surprised if they had a completely disparate set of points of view. I think most of them don't want to see the go away and try to write a standard, because it will tend to be inflexible. It will take a long time to do and it won't necessarily reflect all of the commercial realities that it needs to in terms of how you need to operate in the market to actually meet your customer's needs. So it's not surprising that they would prefer to be masters of their own destiny to some extent, if you like, by being able to put in place these measures of defining an industry code, which they have a strong hand in drafting [P3] I think to be fair, the spent a lot of time consulting both with industry and with other key stakeholders and they had a very good process of consultation. They had a round of engagement workshops with industry before they even started their inquiry. They had, as I said before, a series of public hearings involving a range of stakeholders who all put in submissions. They sought a large amount of information and data from participants so they used their powers to seek information from us prior to starting their inquiry. Then they had a fairly detailed draft report that came out and highlighted areas of concern. I think to be fair to the that process was pretty robust and I

325

Strategies

Tactics used

Sample quote from interview transcript think the general findings in the draft report have now flowed through to their final report. In a macro sense I don't think there are any real surprises. The issue is, I suppose, some of their suggested solutions. One of the ones that we grappled with was the concept that we ought to embrace unit pricing in our advertising. Similarly to what had happened in the grocery industry, we felt that the objective there was - that the advertising industry was putting out was leading to confusion and leading to consumer dissatisfaction, hence increased complaints and poor perceptions of customer service. The was saying you need to improve the quality of your advertising. The pricing arrangements - the unit pricing - we thought were only going to achieve that problem in part. We've had a fairly detailed and robust discussion both inside the industry but also with the about how we should respond to that [P7]

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customer service and complaints handling practices

customer service and complaints handling practices

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