Trustpower misleads with untrusty broadband ads

Trustpower’s $49 unlimited broadband offer always looked too good to be true. It turns out, it was too good to be true. At BusinessDesk Paul McBeth reports Trustpower to plead guilty over misleading broadband offer.

He writes:

Trustpower intends to plead guilty to charges claiming the electricity generator and retailer mislead customers over the market and sale of a bundled power and broadband offer.

The Commerce Commission filed seven charges under the Fair Trading Act in the Auckland District Court over a Trustpower ad campaign between March and July last year promoting a $49 a month deal promoting 12 months of unlimited broadband in a bundle package, it said in a statement.

What isn’t clear in the advertising is that the $49 price is only for customers who sign a two-year contract. And even then only for the first year of the contract. The second year would cost $79 a month.

This means the total cost of a two-year contract is $1536 or $64 a month over two years.

Details in the small print

Trustpower only reveals the full contract cost in small print. Also almost out of sight is a clause telling customers about exit fees for those who leave early.

Tauranga-based Trustpower sells broadband services to around a quarter of its electricity customers.

Tying two utilities together this way can be a clever move. If a utility has an efficient billing system, it can squeeze costs.

Trustpower lowest broadband prices

Yet, some of Trustpower’s rivals suspect it sells broadband below cost. The headline $79 a month for unlimited data is set well below prices charged elsewhere.

With the wholesale price of a broadband line costing $41 a month, there is little left to pay for support,  backhaul and other costs.

One electricity insider suggested that consumers

looking for a low-cost internet connection have a good idea of the going rate for a broadband connection think they are getting a bargain. Meanwhile Trustpower more than makes back the shortfall from selling electricity.

A danger with fixed-term broadband contracts is the retailer has less incentive to perform. Many internet contracts are not fixed. If support or service isn’t up to scratch, consumers can find a provider more interested in meeting their needs.

Trustpower is not alone. There are problems with truth in broadband advertising.