Australia’s largest mobile operator Telstra is considering cutting-off users’ mobile Internet services when data caps are breached to counter rising bad debts. According to Australian website SmartCompany, the so-called ‘app cap’ would affect all Telstra smartphone users – including the iPhone customers – barring them from accessing the web until the following month. As Telstra does not offer unlimited data plans, many smartphones customers have suffered ‘bill shock’ and have refused – or been incapable – of paying large bills. “We have had an increase in bad debt as customers’ expectation of what they purchase and what they get isn’t quite right,” Telstra CEO David Thodey said yesterday. “We have seen some bill shock through larger wireless data costs, and people say, ‘hey, what’s going on here?’ So there’s a lot of work to do in that area.” He noted, however, that most smartphone users rarely exceed their data allocations.

Speaking yesterday at the firm’s fiscal 2010 financial presentation, Telstra’s CFO John Stanhope said the company had about AUD364 million in bad debts for the year, a 44 percent increase from the previous year. He noted that up to AUD90 million of that has been “self-inflicted” by users who do not understand their contractual obligations and had refused to pay. Despite these setbacks, mobile service revenue was a bright spot for Telstra in an otherwise disappointing set of results. Fiscal 2010 net profit after tax fell by 4.7 percent to AUD3.88 billion (US$3.47 billion), on sales revenue which fell 2.2 percent to AUD24.8 billion. However, mobile services revenue grew by 5.9 percent, mobile data grew by 21.7 percent, and wireless broadband revenue increased by 34 percent.