SELF-REGULATION in the phone industry has failed and the government will step in to remove the ''confusopoloy'' where consumers are faced with confusing plans, bill shock and poor customer service.

The Australian Communications and Media Authority released a six-point plan yesterday, indicating the government is serious about using its new powers to manage the sector and enforce penalties.

The key recommendations in the draft report, Reconnecting the Customer, touch on the areas that most upset customers: clarity in pricing, advertising and comparison between providers; improved complaints management, tools for users to monitor phone usage; and amendments to the Telecommunications Industry Ombudsman Scheme.

There is pressure to remove language from plans such as ''cap'' and ''unlimited'' that is misleading and often incorrect.

Introducing the draft report, the authority chairman, Chris Chapman, said it was time to ''get rid of the paradox consumers were in the main happy with their products and services but significantly unhappy about their service provider''.

Complaints to the ombudsman have soared, reaching almost 209,000 in 2009-2010, almost double those received by the equivalent body in Britain, a country with 80 million phone subscriptions compared to 26 million in Australia.

Yet those who do complain to the ombudsman are only a small percentage of those who have problems with their carrier. Mr Chapman acknowledged there is low consumer awareness of the ombudsman. The Australian Communications Consumer Action Network recommends phone companies should give customers details for the ombudsman at the point of purchase, on websites and on bills.

The ACCAN chief executive, Teresa Corbin, said, ''if you don't know the TIO exists, you may as well have that right denied, so a right unknown is a right denied''.

Chris Woods spent three years trying to resolve problems with Vodafone after a billing mistake led to his incurring a bad credit record. He was rejected for a car loan two years after the problem occurred and the company apologised for its error. However, when he checked his credit rating again he was told he still had an outstanding account. Mr Woods said he did not turn to the ombudsman for help - ''I didn't have the energy or the time'' - but acknowledges that had he realised how long and arduous the process had been he might have done so.