Opinion: The importance of understanding RCP regulation

retail & consumer protection regulation

 

By Andrea Faggiano, Giancarlo Agresti, Giulia Strusi, Richard Swinford and Gregory Pankert from AD Little’s TIME practice

Telecom players dedicate significant resources to complying with retail & consumer protection (RCP) regulation, having created complex horizontal processes and tools spanning several departments.

Despite this, the complexity of the subject and the continuous flow of new rules often translate into unwise actions, which are eventually punished by regulatory institutions.

RCP regulation is vast and defined by multiple institutional bodies

Our analysis of differences and commonalities across geographies reveals that granularity and weight of RCP regulation differs greatly between countries, as both institutional attitude and market players’ behaviour influence it.

However, regulation triggers and worst and best practices tend to have similar patterns, even across countries.

Telecom operators invest significant resources in RCP regulation

To comply with RCP regulation, telecom operators have created complex horizontal processes and tools.

This translates to direct compliance costs equivalent to 1–2 percent of revenues.

Complying with RCP regulation implies overseeing all phases of the customer’s journey.

Consequently, all functional departments within telecom operators’ organisations are involved (sales & marketing, customer care, legal, regulatory and public affairs, networks & IT).

As a common result, knowledge and resources are dispersed across several departments, which tend to be specialised according to the customer’s journey phase, but miss the big picture with regulation and the possibility of elaborate mitigation or advocacy actions.

RCP regulation is the outcome of an endless cycle – related risk can be only partially mitigated

RCP regulation is the outcome of an “endless” cycle that starts with new use cases generating new obligations, which, if unmet, lead to customer complaints and eventually the introduction of new regulation.

RCP rules can arise at any moment in this cycle: reactively to complaints, or preventively to pre-empt the rise of new, potentially unfair cases.

The triggers of RCP regulation can be grouped into three clusters: commercial practices, unwanted situations impacting customers and unavoidable regulation.

The largest portion of RCP measures in place are somehow the result of telecom operators’ actions and/or underestimation of the potential risk of certain decisions.

There is space for telecom operators to improve the management of RCP regulation and reduce its risk and impact, by treating retail and consumer protection as part of the broader customer satisfaction strategy; assessing local regulation against the global retail and consumer protection framework; monitoring local and regional commercial practices and assessing them against recurrent triggers and best practices; and developing extensive knowledge of own customers’ needs and frequent complaints.

Telecom operators can better leverage customer protection practices to improve their competitive positioning and image

RCP regulation can have disruptive impact on telecom business in terms of revenue losses, cost increases or both.

It is fundamental to carefully evaluate the benefits sought through new commercial practices versus the risk costs associated with new regulation (value at risk).

Some telecom operators have identified rising concerns from their customers early and turned them into differentiating actions that helped to improve the company’s image.

Examples include developing internal processes and tools to manage and solve customers’ issues, and implementing consumer education campaigns on specific hot topics.

A management challenge: how to design an RCP regulatory plan

Operators willing to design a structured approach to RCP regulation management should follow these five key pillars:

  • Developing awareness and harmonized internal knowledge related to RCP regulation, including anticipating unexpected situations and turning complaints and regulatory concerns into opportunities
  • Continuous analysis of customers’ needs and complaints to identify, anticipate and manage issues
  • Proactiveness and optimization of internal customer management organization and processes
  • Communication and collaboration with external stakeholders
  • Careful assessment of the risk of future regulation, including identifying upcoming regulatory risks; avoiding traps and being aware of recurrent triggers; and continuous monitoring of all competent bodies regarding new rules and measures

Ultimately, as RCP regulation may be the result of unwise behaviours or just unavoidable, telecom operators should carefully understand how it is introduced and applied in their own local markets.

We offer three key takeaways for operators: ensure knowledge of risks, triggers and practices to prevent unnecessary regulation in the future; review consistency of objectives; and avoid over-fighting against inevitable regulation.

 

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