FibreX record fine not enough for Commerce Commission

The Commerce Commission has appealed the $2.25 million fine imposed on Vodafone for its misleading FibreX advertising campaign. It originally called for a $5.8 million fine.

Although the fine is a record for a Fair Trading Act office, the Commission says it is not punishment enough and won’t discourage others from similar conduct.

Anna Rawlings who chairs the Commission also says the fine does not appropriately reflect the seriousness of the offending nor does it reflect Vodafone’s financial resources.

Wilful conduct

The Commission argues Vodafone’s conduct was wilful, not an act of carelessness and it made the company a lot of money.

To support its case, the Commission plans to ask the court to take another look at evidence submitted by the consumers who suffered as a result of Vodafone’s action.

Among other specific offences, Vodafone offered consumers an online tool to let them know what broadband options are available at their home address.

The tool was designed to suggest that Vodafone’s FibreX service was the only broadband option at an address when that was clearly not the case.

Deliberate confusion

Elsewhere Vodafone went to great lengths to confuse customers into thinking its HFC network was the same as the UFB fibre network which was in the process of being rolled out at that time.

Vodafone persisted with its misleading campaign even after being contacted and warned by the Commerce Commission.

Last year Vodafone was found guilty and sentenced for 18 charges under the Fair Trading Act. In 2018 the company pleaded guilty to nine of the charges. Then in 2021 it was found guilty of a further nine charges after a 14 day trial.

Vodafone has released a statement saying it will argue there are errors in the original conviction decision and that there are aspects of the decision that misunderstand the service. It says the decision is not in the best interest of consumers or competition.

Comment: Vodafone’s counter argument is weak.

There’s no question Vodafone’s FibreX promotion is one of the telecommunications sector’s worst Fair Trading Act offences in recent years.

The Commerce Commission is right to appeal the case. Its job is to protect consumers from predators.

Information in markets like telecommunications is asymmetric with consumers at the mercy of aggressive or misleading marketing of technologies they barely understand.

A reasonable fine

Given that, the $5.8 million fine originally sought by the Commerce Commission looks reasonable. The figure is a small fraction of the amount Vodafone made from misleading its customers.

Remember Vodafone was warned. Yet it persisted with its offending long after the branding was shown to be misleading.

Letting Vodafone off with a slapped wrist does nothing to send the message that deception is unacceptable.

Vodafone has a point

Vodafone has a point when it argues in its response that its HFC service is now hitting performance goals that can put it on a par with UFB fibre.

Yet that was not true at the time in question. In 2016 FibreX performance was a long way behind UFB.

Likewise, Vodafone could be on to something when it says HFC is not subject to fibre company price rises and that makes it good value for money. However, there’s no guarantee Vodafone won’t increase HFC prices in line with fibre.

Two arguments in favour of the HFC network do nothing to address the key point of the Commerce Commission case: Vodafone knowingly misled customers and went on misleading customers.

If Vodafone was sincere about its belief in healthy competition, it should accept it failed to meet that standard in the past and renew its focus on providing a quality service.

Broadband marketing codes ease consumer choice

Two new codes from the Telecommunications Forum should help broadband customers make better, more informed buying choices.

The TCF drew up the code at the requisition of the Commerce Commission which issued a series of guidelines on how broadband companies market their services.

The Copper and PSTN Transition Code covers the phasing out of copper lines. It works with the Commerce Commission’s Copper Withdrawal Code which sets out the rules Chorus must follow when removing copper services.

Clear information

Under the TCF’s code, retail telcos must set out clear information on the options available to consumers.

A separate Broadband Marketing Code is also about giving consumers clear information. Companies offering broadband plans must provide accurate and up-to-date information about the performance and technical limits of a service.

Telecommunications Forum CEO, Paul Brislen says: “As an industry, we’ve put in a huge amount of work to create a model for consumers that presents technical information in a clear and accurate way.”

“The new Broadband Marketing Code means customers will be fully informed of the changes to their service, the timeframes involved and exactly what their options are.”

Telcos can sign up to the code and have three months to make the changes to meet the requirements.

Telecommunications Commissioner Tristan Gilbertson says he is encouraged by the industry’s positive response to his earlier call. He says the Commission will watch progress as part of its continuing market monitoring work.

Vodafone owner Infratil reports earnings lift

Infratil says Vodafone, the business it co-owns alongside Brookfield Asset Management, recorded improved earnings on flat revenue in the year to March 2022.

Revenues were much the same as the previous year: $1.97 billion as compared to $1.95 billion. The company saw gains in mobile, but these were offset by retreat in fixed line services. EBITDA for the year was $480 million compared with $437 million a year earlier.

Hawaiki cable acquisition completes

BW Digital says it has formally completed its acquisition of Hawaiki Submarine Cable Limited. The transaction was subject to regulatory filings and approvals, that’s all done.

Hawaiki founder Rémi Galasso is now CEO at BW Digital. He says the businesses next move it to capitalise on the assets and work on further projects in the region. This includesthe Hawaiki Nui cable that will link Singapore, Indonesia, Australia and New Zealand to the US.

In addition BW Digital is a partner with the Chilean Humboldt cable that will link Chile to ANZ.

Budget sets aside $20 million for tech sector growth

The government plans to $20 million over four years on its digital industry transformation plan.

David Clark, the minister for the digital economy and communications, says the money will go towards supporting the growth of the local software as a service sector.

It will also be used to fund a marketing initiative telling New Zealand’s technology story overseas.

West Tech aims to tackle digital divide

West Tech aims to put 1000 computers into the hands of students who don’t have their own hardware. The key lies in teaching primary age students how to recycle devices that are no longer used elsewhere. In many cases they would otherwise end up in landfill.

There is training for whanau who West Tech teaches to provide home support and show students how to make use of the hardware.

The project is run by Auckland Council’s Western Initiative along with Zeal, a youth development charity. Funding is provided by The Trusts, a community owned hospitality group.

West Tech says as many as 150,000 students do not have access to a home internet connection. Many of the are Maori, Pasifika, live in social housing or have disabilities.

Vodafone takes control of 52 retail stores

Vodafone has paid an undisclosed sum to private equity firm Millennium Corp for its 50 percent stake in Vodafone Retail. As part of the deal, more than 400 store workers will become Vodafone employees.

In 2019 Vodafone increased its share in the joint venture from 25 percent to 50 percent.

Jason Paris, Vodafone’s CEO says the 26-year partnership with Millennium was always set up with the potential to move the retail operation back into the main business. He says the acquisition is part of a broader programme to evolve the company’s “customer care” strategy.

Context

The shape of Vodafone as a retail telecommunications provider is changing fast. A year ago customer facing retail outlets were outside the main tent and, presumably, not regarded as a strategic asset.

On the other hand the network of mobile towers was seen as strategic. Today a stake in the mobile towers is for sale. It appears network infrastructure is no longer crucial to Vodafone’s ability to compete.

Thales: One in four Kiwi businesses breached in 2021

A quarter of New Zealand businesses experienced a data breach in 2021 according to the 2022 APAC Data Threat Report from Thales.

This compares favourably with almost one in three (32 percent) of companies in the Asia-Pacific region. Yet we are behind other nations when it comes to knowing where company data is stored. Thales reports one New Zealand IT leader in nine (11 percent) has complete knowledge of where their company’s data is stored. In the region 16 percent of respondents say they know where their data is stored.

Like other recent surveys Thales highlights the danger of ransomware. About half of all New Zealand companies say they have a formal plan to deal with ransomware while 40 percent have an additional budget to deal with the problem.

Government review ticks space activity law

Economic Development Minister Stuart Nash released a government review of New Zealand’s space activity laws.

The review found the law has performed well without safety or security issues.

A 2019 report found the sector contributes $1.69 billion to the economy and supports 12,000 jobs.

Nash flagged a separate study on space policy is on its way later this year.

In other news…

At Stuff, Tom Pullar-Streck writes about a bullish NZTE report that says New Zealand can compete in cloud computing infrastructure. Electricity prices could be a problem, but renewable power and lower temperatures are a huge plus.

United Arab Emirates telco Etisalat is now Vodafone Group’s largest shareholder with close to ten percent of the business. Etisalat says it has no intention to make a take-over offer for Vodafone.

The Financial Markets Authority warns New Zealand investors have been in the sights of scammers offering shares in Starlink. The scammers claim to offer shares in an initial public offering.