This week the Commerce Commission delivered on last month’s promise to deal with dubious practices in the telecommunications sector. It sent warnings to four telcos about practices which break Fair Trading laws. Spark, Vodafone, 2degrees and MyRepublic all got letters. They cover a range of misdeeds.
In a sense the Commerce Commission’s move dates to the famous 2006 speech when, then Telecom CEO Theresa Gattung said the industry uses confusion as its main marketing tool.
In a media statement commissioner Anna Rawlings says: “The complexity and range of goods and services offered by the industry means consumers can be easily confused about product offerings. Almost every New Zealander uses a mobile or fixed-line phone and broadband, so the telecommunications sector has the potential to have a significant impact on consumers. As we noted when announcing our 2017/18 priorities, the telco sector continues to generate a high volume of consumer complaints, despite previous compliance and enforcement work by the Commission”.
The commission listed specifics about how companies may have breached fair trade legislation:
- Promoted its 1Gbps service up to two months before it was available
- Said customers on its Gamer broadband service would not experience lag or latency when they could experience lag or latency caused by third party servers
- Said consumers’ rights of cancellation under the uninvited direct sales provisions of the Fair Trading Act ceased to apply once MyRepublic had commenced the service
- Made misleading representations about the price of its unlimited broadband plan, it failed to identify or adequately disclose the additional cost of a modem and its delivery
- Implied that Vodafone’s 2G network was about to close, when marketing Spark’s Skinny Mobile service
- Mislead customers in the promotion of 12 month broadband plans bundled with “free” goods or services. To get the “free” goods or services, consumers had to pay additional fees or to take additional services
- At times it would advertise a monthly headline price, but that price did not include the additional fees to be paid in order to receive “free” goods or services.
It seems this week’s move is just the start. The commission says it will continue to investigate the sector. Next up it plans to look at incorrect billing, failures to identify the subscription nature of mobile add-ons, incorrect calculation of broadband usage, unfair contract terms and representations concerning the nature and availability of internet services.
We’ve been here before. Last year Trustpower was fined $390,000 for being dishonest about the price and terms of its deals that bundled broadband with power. At the same time, Vodafone was pinged for false prices on invoices.