The Commerce Commission has today released draft guidelines that would require telcos to unpack bundled offers so that Kiwi consumers can easily compare prices and make informed choices about the true value they offer.

Telecommunications Commissioner, Tristan Gilbertson, says the Commission has become increasingly concerned about the transparency and comparability of bundle pricing and marketing.

Mr Gilbertson says in many cases the marketing of bundled telecommunications services is confusing and lacks clarity on the cost of the various components.

“The rapid growth in bundles, particularly energy and broadband bundles, has made the need for greater transparency even more important.

“Bundles can be convenient options for consumers but can come with hidden costs. For example, energy and broadband bundles can give sharp broadband pricing but result in higher power pricing.  The higher power prices can quickly erode any benefit consumers thought they were getting and even leave some consumers worse off than if they’d bought these services separately.

“We want to unpack the confusion Kiwi consumers are experiencing by requiring providers to disclose all key information upfront so that consumers know exactly what they’re signing up for.”

The proposed guidelines from the Commission include requirements that:

• If electricity or gas is cheaper outside a bundle with the same provider, this should be disclosed prominently upfront to the consumer;
• If goods (such as fridges, TVs, or vacuum cleaners) are included in a bundle, then the recommended retail price should be disclosed upfront, to help consumers determine the value of the bundle;
• If consumers can’t switch one part of a bundle without losing another (for example, being unable to switch your electricity provider without losing your broadband), this needs to be prominently disclosed upfront to the consumer;
• Consumers should be clearly told what they’ll need to repay if they cancel any bundled service while in contract; and
• All prices in the bundle should be displayed inclusive of GST to end the practice of having energy prices shown exclusive of GST and broadband prices inclusive of GST.

“We think these proposed guidelines will enable consumers to make more meaningful comparisons and informed choices when it comes to bundles. We welcome feedback from everyone, including industry, consumer groups, and consumers, so we can start putting the right solutions in place.”

The consultation paper on bundling and information on how to provide feedback on the guidelines can be found on the Commission’s website. Submissions are due by 5pm, 13 October 2023.

Background

Because of persistent quality of service issues and ongoing high levels of consumer complaints, Parliament amended the Telecommunications Act in 2018 and tasked the Commerce Commission with improving the quality of service that telecommunications retailers are providing to consumers.

To meet this challenge, we are focused on improving retail service quality to reflect the demands of consumers and ensure they have the information they need to choose the best provider and technology for them.

The Commission’s Retail Service Quality (RSQ) work encompasses all aspects of customer experience, including billing, switching providers, marketing, contracts, installation, and performance.

The work in this area to date has resulted in improvements to the Telecommunications Dispute Resolution (TDR) scheme, usage and spend information for mobile consumers, and broadband marketing practices.

The Commission recently published customer service rankings revealing how New Zealand’s major telecommunications providers rank across a range of key customer service indicators, as this has been identified as a particular pain-point for many consumers and generates a large volume of complaints.

Later in 2023, the Commission plans to introduce additional guidelines to make it easier for consumers to compare telecommunications providers and plans on a like-for-like basis, and will also tackle other consumer pain-points including issues in billing, switching, and debt practices in 2024.