A ruling at the Auckland District Court found Vodafone guilty of nine Fair Trading Act charges over its FibreX brand. Sentencing will take place later this year.
FibreX is the name used by Vodafone to sell services on its HFC (hybrid fibre-coax) network. The network operates in parts of Wellington and Christchurch as well as on the Kapiti Coast.
Vodafone took control of the HFC network when it acquired TelstraClear in 2012.
At the court, Judge Pippa Sinclair found the branding and advertising was liable to mislead customers into thinking FibreX was a fibre-to-the-home service.
An HFC network uses fibre in the street, but a copper coax cable connects each home on the network. Elsewhere in the world it is known as ‘cable’.
This is the terminology used by the Commerce Commission in its measuring broadband reports. The latest report shows Vodafone’s HFC max service has an average download speed of 672Mbps. This compares with an average of 840Mbps for UFB fibre max plans. Uploading is much slower on HFC than on fibre.
Vodafone advertised the FibreX brand widely. It could be found on billboards, on radio, in in-store promotions, online and in direct marketing.
The court case focused on the Commerce Commission’s argument that fibre means fibre to the home and that this idea was planted in the minds of customers during the advertising campaigns.
Judge Sinclair agreed. She rejected Vodafone’s claim that customers would understand FibreX meant the service was fibre-like.
Commerce Commission chair Anna Rawlings says this case reinforces the importance of clear marketing to consumers.
“Businesses must take care to ensure that their description of the products and services they are offering is clear and unambiguous and is not liable to mislead their customers into thinking that they are getting something different from what is on offer. They must not operate under the assumption that consumers will make further enquiries to find out exactly what is being offered to them,” she says.
A report by Chris Keall in the NZ Herald quotes a Vodafone spokesperson saying the company has not ruled out an appeal.
Vodafone issued an apology to customers confused by the marketing.