Download Weekly: Commerce Commission warns telcos

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.

A high number of consumer complaints

“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:

MyRepublic

• 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

Two Degrees

• 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.

Spark

• Implied that Vodafone’s 2G network was about to close, when marketing Spark’s Skinny Mobile service

Vodafone

• 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.

Southern Cross Next cable takes the fast route to the USA

Southern Cross says its recent seabed survey found a faster route for its Next cable project which will connect Auckland and Sydney to Los Angeles. 

The route will mean laying cable in waters off the Wallis and Fortuna Islands but should pay off by cutting latency, the time taken for data to travel across the Pacific. Southern Cross Cable Network CEO Anthony Briscoe says this means it will be the fastest connection between New Zealand, Australia and the US. 

The Next cable is expected to cost around US$350 to build and should be open for business by the end of 2019. The plan is for a 60Tbps link, which is three times the 20Tbps on the existing Southern Cross cable. 

Like its rival, Hawaiki, the Southern Cross Next cable will drop off at several Pacific island nations. Fiji, Samoa, Tokelau and Kiribati are the most likely candidates. Southern Cross says it potentially has eight customers. 

Southern Cross is 50 percent owned by Spark, Singtel owns 40 percent and the remaining 10 percent belongs to Verizon.

Mark Petrie moves on

Mark Petrie will leave 2degrees next month. Petrie was the owner of the Snap broadband business. He joined 2degrees when he sold Snap to the company in 2015. As part of the sales deal he acquired 2degrees shares and says he doesn’t plan to sell his stake in the business in the immediate future. The Snap acquisition catapulted 2degrees from its role as a mobile carrier to a full-service telco.  

Chorus executive team changes

Chorus chief commercial officer Tim Harris is to leave the company as it restructures to focus more on customer experience. Incoming general manager, strategy and business operations is Scott Newton. Newton comes from Fletcher Building. He was the group general manager in charge of transformation. Before that he was the turnaround lead at Spark. His unit will run the Chorus programme of work, help drive programme disciplines, the prioritisation of initiatives and continuous improvement. A new executive role, general manager customer care, will also be created as part of the changes. It is yet to be filled.