Trustpower misleads with untrusty broadband ads
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.