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Regulator moves on telco comparison shopping

ComCom calls for greater price and coverage transparency in bid to boost competition. Spark to offer broadband failover service. Handset sales still weak.
Regulator moves on telco comparison shopping

Regulator moves on telco comparison shopping

Guidelines published this week by the Commerce Commission aim to make it easier for consumers to compare telco offers.

The draft guidelines are part of the Commerce Commission’s telecommunications retail service quality work which stem from the recent updates to the Telecommunications Act.

Customers have long found it hard to make meaningful comparisons of prices, additional costs and coverage.

Confusion as a marketing tool

In 2006 former Telecom NZ CEO Theresa Gattung told a conference the industry uses confusion as a marketing tool and a way of keeping high margins. Matters have improved, but Telecommunications Commissioner, Tristan Gilbertson wants to see greater transparency.

He says": “Coverage differences matter – especially for rural consumers or people travelling or commuting. Knowing what real-world coverage they can expect from different providers and technologies is important – especially with 5G roll-out and competition heating up.”

To this end, Gilbertson wants service providers to use standardised maps and stand behind their coverage claims. At the same time he wants consumers to be able to walk away from a service without penalty if a service is unavailable in an area despite being indicated as available on a coverage map.

Inconsistent billing cycles

In another part of the new draft guidelines, service providers are asked to include average monthly prices in their advertising allowing consumers to compare offers.

While a handful of carriers do this today, other carriers price their services on a four week cycle. This allows them to get 13 payments a year. Although the calculations are not difficult, using a shorter cycle is a classic Gattung-style confusion marketing technique.

Gilbertson says: “Consumers find it difficult to navigate different combinations of billing terms, discounts, and promotions. We want providers to cut through the complexity by disclosing upfront how much consumers will pay each month for a particular deal.

Shop around

“Our work shows that consumers find it easier to shop around when they know how much they’ll be paying on average each month – so disclosing this upfront will reduce uncertainty and enable more meaningful comparison and choice.”

When it comes to contracts, the guidelines require service providers to make the total cost over the entire life of a contract visible during the sign up process. This includes termination fees. Again, this measure will make it easier for customers to compare contracts from different providers.

In an interview earlier this year Gilbertson outlined the big picture thinking behind the retail service quality work. He sees the mission outlined in the Telecommunications Act as requiring informed customers to participate confidently in the market. Gilbertson says helping and encouraging consumers to meaningfully compare different providers and services and move between them is a critical driver of competition.

For more background on the Commerce Commission's retail service quality work see last month's Regulatory update.

Spark free broadband backup offer for mobile customers

Spark is to provide free backup during network outages for customers who also have mobile accounts with the company. The service includes up to 14GB of additional mobile data at full speed, hotspotting and unlimited New Zealand texts and calling.

This kicks in if there is a fault on the customers fibre or copper broadband connection. Spark is also promising customers to provide text notification of when the company expects normal service will resume.

The service is being branded as Outage Assist, which Spark says aims to improve transparency around network outages.

As part of Outage Assist, Spark offers broadband customers a new 'My Broadband Health' dashboard when they log into their Spark account. The company says this: "Allows customers to track restoration progress during network outages in their area, or perform broadband health checks to identify issues unrelated to the network e.g. modem placement."

Comment: Network outages are uncommon these days and even less common on fibre. Yet, on the rare occasions when connections fail, it can be frustrating finding information about when the network will be repaired. For this reason, improved notifications are a welcome move.

Few people have their own back-up options organised. Which means Outage Assist is a clever stand-by option. Yet, it needs to be seen in the context of a broadband-mobile cross-sell at a time the Commerce Commission is paying increased attention to service bundling.

New Zealand phone handset sales remain weak

IDC reports that New Zealand's phone handset shipments were down 13.5 per cent year on year in the third quarter of 2023.

The sector shipped 346,000 devices in the quarter which was the fourth consecutive quarter of declining sales. "Shipments" is a measure of phones moved from warehouses to retailers; over time it correlates with sales.

Apple introduced the iPhone 15 models during the quarter while Samsung launched its Z5 series. These are the only brands that matter, accounting for roughly four out of every five phones sold in New Zealand.

Samsung remains the most popular brand with a 43 per cent market share. Apple follows with 34 per cent. Oppo now has 15 per cent share of the market, its best-ever quarter in New Zealand.

In a separate report Counterpoint Research says worldwide phone handset sales are set to fall by around five per cent in 2023. It says the 1.2 billion phones sold in 2023 is the lowest level in "almost a decade".

2degrees sponsor Tall Ferns NZ women's basketball team

New Zealand's senior women's basketball teams are now the 2degrees Tall Ferns and 2degrees 3x3 Tall Ferns. The telco has the naming rights for the teams and the new name will get a work out next year as the team attempts to qualify for the Paris Olympics.

In other news...

Rakon, the New Zealand based company that makes frequency control and other components used in, among other devices, mobile phones, is the object of a takeover bid. On Tuesday Rob O'Neill filed Rakon in play as $391M offer drops for Reseller News. He says the "mystery suitor" is a "credible industry player".

Writing at the NZ Herald Chris Keall says the offer is "opportunistic". While the $1.70 offer price was well above the $0.58 share price at the time, it is considerably below the $2.22 Rakon traded at last year, coming at the time of an industry downturn.

Are you ready for LiFi? It's a technology that uses light instead of radio waves for short distance communications and could be set to supplant WiFi. Its big advantage is that it used spectrum where there is little competition.

The negative is that light waves don't go through walls. This means a LiFI router connected to the Optical Network Terminal in your living room won't connect the teenager's bedroom or your home office. On the other hand, it would be great for open plan offices and classrooms.

LiFi's technical name is IEEE 802.11bb. Read *Why Li-Fi Might be Better than Wi-Fi.*

Another new technology that could change your internet experience is L4S, which promises to make websites load faster. L4S stands for Low Latency, Low Loss, Scalable Throughput.

There can be problems with slow loading sites even when you are on a gigabit fibre connection. A bunch of companies including Apple, Nokia and Ericsson plan to use L4S to reduce latency. If you're an engineer you can get the details from the paper explaining L4S. Nokia Bell labs has a less intense explanation of L4S for the rest of us.

The Download Weekly is supported by Chorus New Zealand.