Mobile phone companies should be banned from using the term "cap" when advertising deals, a report recommends.

The Australian Communications and Media Authority released its draft report following a public inquiry into the telecommunications industry.

The report found that unexpectedly high bills, confusing phone deal information and bad customer service were behind increasing customer complaints about the telecommunications industry.

The report recommended improving advertising guidelines and product disclosure.

"Prohibit the use of terms that are known to be confusing for consumers, for example, using 'cap' when the advertised amount is the minimum monthly payment, not the maximum," the report reads.

It highlighted problems with the term "free" because in some cases the cost is imposed on the customer elsewhere, while it also urged companies be forced to back up their claims about network coverage and broadband speeds.

The report said mobile phone companies should be required to email or text their customers when they get to a nominated point of usage, so astronomically high bills do not present a nasty shock.

Phone customers told the inquiry they value having complaints resolved in a satisfactorily and timely way.

"Many told of making requests that were not acted on; receiving inaccurate, inconsistent or incorrect advice; and being unable to rely on promises or undertakings from their service provider," the report said.

"Often these matters start as straight-forward enquiries or requests but escalate as the matter remains unresolved."

In 2008/09, the Telecommunications Industry Ombudsman found billing issues generated the highest number of complaints.