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Commerce Commission to retail telcos: behave, or else

Commerce Commission to retail telcos: behave, or else

Broadband marketing and sales tactics need to be cleaned up.

Tristan Gilbertson (Commerce Commission)

Tristan Gilbertson (Commerce Commission)

Credit: Supplied

The looming withdrawal of copper-based telecommunications services has prompted the Commerce Commission to urgently canvass views on misleading marketing.

In an open letter, the regulator proposed new marketing principles aimed at reducing consumer confusion about their broadband technology options.

However, telecommunications commissioner Tristan Gilbertson also made it clear the commission was prepared to force the issue if service providers did not play ball.

The letter follows complaints from consumers as well as from providers that consumers are receiving incomplete, confusing or potentially misleading marketing information.

Chorus is beginning to to progressively withdraw the old copper network from 1 September and Spark is already removing public switched telephone network (PSTN) connections.

Concerns include that consumers are not aware of alternative service options available to them when transitioning, that they have been pressured to immediately move to alternative services even when copper and the PSTN are not scheduled to be withdrawn from their area, and that marketing materials are confusing when it comes to performance of alternative technologies, Gilbertson said.

Alternatives technologies include fibre, hybrid fibre-coaxial cable, wireless broadband and mobile.

The performance data issue has been festering for some time as major retail telcos such as Spark and Vodafone marketed wireless broadband as an alternative to fibre.

Late last year, fibre company Chorus responded, pushing the commission to make wireless ISPs disclose their true performance information.

“We have examples of people being told they need to move now because Chorus and Spark are in the process of withdrawing their copper or PSTN service when withdrawal isn’t even scheduled yet, and marketing materials are making claims about the performance of alternative technologies that don’t reflect real world performance,” he said. 

Telecommunications user organisation TUANZ said it believed the commission's open letter sent a strong message to providers that things needed to improve.

“We've been carrying out our own independent investigations into the marketing practices of telecommunications providers around technology options for their broadband and phone services in general and based on our early findings are in strong support of the Commission’s letter," TUANZ CEO Craig Young said.  

"Any moves to improve the ability of consumers to understand the performance of alternative technologies compared to the service they receive prior to switching, is well needed.”

ComCom said it wanted to work with the industry to develop "meaningful marketing principles" to ensure consumers received the information they needed and to put all operators on a level competitive playing field.

“We expect retail service providers (RSPs) will bring their marketing conduct into line with these principles as quickly as possible, so that consumers on copper-based services can make informed decisions about the alternative telecommunications services best suited to their needs," Gilbertson said. 

"Our preference is for the industry to turn these into a retail service quality code through the Telecommunications Forum (TCF), but we are prepared to protect consumers with a binding commission code if this doesn’t happen.”

The TCF, which also said it supported ComCom's effort, is a body made up of most of New Zealand’s telecommunications providers to represent the industry’s interests.

“Although the Commerce Commission already has a copper withdrawal code in place that applies to Chorus, this technology transition has many moving parts and involves dozens of retail providers who offer telecommunications services to New Zealand homes and businesses," TCF communications director Andrew Pirie said.

"There is merit in ensuring consumers have access to the information they need to make informed choices and that all these retailers are competing on a level playing field.”

Gilbertson said the matter was urgent and that the commission’s preliminary view was that the Commission will formalise these principles within 60 days of final guidelines being issued. 

Gilbertson said the proposed marketing principles aim to provide consumers with certainty about when copper was being withdrawn from their premises so that they are not hurried into making a decision about replacement technology. 

Consumers would also be made aware of alternative access technologies available to them and RSPs would avoid giving consumers the impression that their options are limited to only what that RSP can provide. 

RSPs would also encourage consumers to use independent information like www.broadbandmap.nz to see what alternative services are available at their location.

Consumers will also be told about the likely actual peak-time performance of different technologies and plans rather than theoretical maximums, ‘up-to’ speeds or labels like ‘super-fast’, which were "meaningless when it comes to comparing alternative access technologies and plans".

Gilbertson added that the key thing all New Zealanders need to know about copper withdrawal is that copper will not be withdrawn from their area until fibre is in place. 

If fibre is their preferred technology, then it will be available to them and they will not be forced to use a different technology.


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Tags broadbandTelecommunicationsISPsInternet service providersTelecommunications Carriers ForumUltrafast Broadband (UFB)UFBCommerce Commissioner

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