The COVID-19 pandemic has placed more pressure on telecoms to ensure that their customers stay connected. However, along with this increased pressure for companies to deliver services has come an increase in requests from customers to receive relief on their payment terms, as well as a significant increase in unpaid customer debt. For this reason, the complex process of debt collections has come to the forefront. Unfortunately, not only have many telecom companies entered this time with outstanding debt already on the books, but they still lack the required infrastructure to perform collections functions efficiently.
Decades of Underinvestment in Infrastructure
The telecommunications industry experienced explosive growth during the late 1990s due to emerging technologies and widespread deregulation. During this time, telecoms focused solely on growing and retaining their consumer-base, leading many companies to simply write off their debt. However, increased competition and recession during the 2000s caused a nearly proportionate industry decline, during which time many companies couldn’t afford to improve their debt collections infrastructure. Combined with the fact that, compared to sales and marketing, investing in collections has always been on the back-burner for many organizations, many telecoms are now facing the challenges of today’s pandemic woefully unprepared.
Common Causes of Telecom Debt
Although the causes of telecom debt are evolving, the majority of debt can be attributed to just a few causes:
• Switching Companies
The high-competition years of the telecom industry created a buyers’ market, with many carriers coming up with incentives to steal customers from one another. These incentives took the form of cut-rate plans, and some even paid off any early termination fees from the former carrier. Because of this, it has become more commonplace for consumers to change carriers without paying off the outstanding debt owed to a previous provider.
• Transient Nature of Wireless Services
Unlike landlines that are attached to the wall of a permanent residence, the very nature and appeal of mobile phones is that they allow their users freedom to roam. However, this ability to move from one physical address to another is how many consumers simply and innocently lose track of some of their bills. Unfortunately, other consumers with less than honorable intentions use ever-changing addresses to cover their tracks for trails of debt.
• Surprise Bills
Unfortunately for many consumers, their outstanding debt stems from surprisingly high bills they receive from overextending their service. Many telecom contracts come with fine print that many consumers neglect to wade through. A contract violation can sometimes amount to a bill in the hundreds of dollars for an unsuspecting customer. Whether the decision not to pay is a moral objection due to feeling of being wronged, or simply the inability to pay a high amount they are unprepared for, either way, the bill stays unpaid. During the pandemic, many consumers are determined to stay in touch now, and decide to worry about the costs later.
• Changing Economic Circumstances
Unfortunately, now for many consumers, the pandemic has caused changing economic circumstances due to job loss. This could continue to escalate as the pandemic continues to impact the economy and cause further recession.
Challenges to Collecting Telecom Debt
Today’s climate presents unique challenges for telecoms as they try to collect debt:
• Threatening to Cut Off Service Is Not an Option
Just as changing companies is one of the most common causes of debt for telecom companies, it is also one of the reasons that companies cannot play “hardball” with their collection attempts. For one thing, the threat of turning off a customer’s service no longer carries any weight, as they will simply switch to another provider. Also, given today’s climate of extending compassion to those who have faced financial difficulties due to the pandemic, threats to cut off service at this time could be perceived as unsympathetic, and damage your company’s reputation.
• Difficulty Locating Customers
Because mobile phones allow their users portability from one address to another, it means your company is always trying to keep up with changes of address. For other telecom services, such as cable, many consumers change their residence and provider at the same time. Either way, your company spends valuable time and resources trying to track down payment. This trend will also continue to escalate as more and more consumers face relocating due to the pandemic.
• Restrictions on the Debt Collection Process
The Telephone Consumer Protection Act (TCPA) passed in 1991 put restrictions on the debt collections process. It limited the use of artificial or prerecorded voice messages, automatic dialing systems, and SMS text messages. It also required that all robocalls for telemarketing or informational purposes made to a wireless phone have the consumer’s express consent.
Collecting Telecom Debt
Although collecting telecom debt can be difficult, with the right approach, companies are able to recoup their debt while still retaining customers.
• Compliance and Training
Personnel collecting debt should be trained and certified to do so. They must be familiar with laws and regulations surrounding consumer data security as well as debt collection practices.
• Quick Response
Time is of the essence when collecting debt. Companies should quickly perform the following:
- • Ascertain if the debtor is deceased or bankrupt
- • Attempt to locate consumers with expired contact information
- • Work with vendors to attain the most recently reported address and credit scores
- • Immediately generate and mail demand letters
• Client Segmentation
The telecom industry is faced with the perpetual challenge a high volume of low-value consumer debt. For this reason, companies can optimize their time and resources by segmenting consumer portfolios based on validity of contact information or credit scores.
Work with a Telecom Debt Collections Company
At Credence Global Solutions, we offer best-in-class debt collection services for telecom companies. Our receivables management software solutions and experienced representatives give you the best possible financial outcome. Our services scale to meet your needs and work seamlessly with your operations. To learn more about how we can help your telecom company, contact us today.