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Four telcos warned by Commission

14 August 2017

The Commerce Commission has sent warning letters to four telecommunication companies about specific conduct that the Commission considers breached the Fair Trading Act.

Warning letters have been sent to MyRepublic Limited (MyRepublic), Two Degrees New Zealand Limited (Two Degrees), Spark New Zealand Trading Limited (Spark), and Vodafone New Zealand Limited (Vodafone).

The letters follow the Commission’s announcement that retail telecommunications will be an organisation-wide priority for the Commission in the 2017/18 year. 

“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,” said Commissioner Anna Rawlings.

“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,” said Ms Rawlings.

The Commission is continuing to investigate further potential issues in the sector, including 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.

In the Commission’s view, the companies which have been warned are likely to have breached the Fair Trading Act by engaging in the following conduct:

MyRepublic

  • Promoting its 1 Gigabit per second service up to 2 months before it was actually available
  • Representing that customers on its GAMER broadband service would not experience lag or latency when they could experience lag or latency caused by third party servers
  • Incorrect representations that consumers’ rights of cancellation under the uninvited direct sales provisions of the Fair Trading Act ceased to apply once MyRepublic had commenced the service

Two Degrees

  • Making misleading representations about the price of its unlimited broadband plan, by not identifying or inadequately disclosing the additional cost of a modem and its delivery

Spark

  • Making representations that Vodafone’s 2G network was imminently closing, in the marketing of Spark’s Skinny Mobile service

Vodafone

  • Making misleading representations in the promotion of 12 month broadband plans bundled with “free” goods or services when, in order to receive the “free” goods or services, the consumer was required to pay additional fees or to take additional services
  • On some occasions, a monthly headline price was advertised, but that price did not include the additional fees to be paid in order to receive “free” goods or services

Background

The Commission has taken a number of prosecutions or actions against telecommunication companies in recent years, including:

  • Trustpower was fined $390,000 in September 2016 for misleading consumers over the price and terms of its bundled electricity and unlimited data broadband offer
  • Also in September 2016, Vodafone was fined $165,000 for false price representations on invoices for its ‘Red Essentials’ mobile plan
  • Vodafone reached a $268,000 settlement with the Commission in January 2014, over the promotion of its ‘Broadband Lite’ service
  • Call Plus Services Limited (trading as Slingshot) was fined $250,000 in December 2013 over the telemarketing of its services

In February 2016 the Commission issued its review of unfair terms in telecommunications contracts.