Commerce Commission wins 'FibreX' case against Vodafone

Wednesday, 28 April 2021

Vodafone stopped calling its cable network FibreX in 2019.

Vodafone shouldn’t have rebranded its cable networks in Wellington and Christchurch as “FibreX” networks as that was likely to mislead people into thinking they were fully fibre-optic, Auckland District Court has ruled.

The court sided with the Commerce Commission which brought a case against Vodafone, by finding Vodafone guilty of nine charges of breaching the Fair Trading Act between 2016 and 2018.

The issue at stake was whether consumers could have been misled by the FibreX name into thinking the service they were buying was the same as the ultrafast broadband services that are wholesaled by Chorus and Enable in the two cities.

The court found Vodafone’s branding and advertising was liable to mislead consumers into thinking that the FibreX branded service was delivered over a fibre-to-the-home network.

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“It did this by naming its broadband service ‘FibreX’ and advertising on billboards, radio, in-store, online and in direct marketing, using phrases such as ‘FibreX is here’ or ‘FibreX has arrived’ and beams of light as a background to its visuals,” the commission said.

The company dropped the FibreX name in 2019.

The networks that were subject to the court case were originally built by TelstraClear and are based on a technology called hybrid fibre-coaxial (HFC) that use fibre to street cabinets and a coaxial copper cable from there to the home, and are more commonly known overseas simply as cable networks.

The district court ruling will end a long stoush between Vodafone and the Commerce Commission – unless the company appeals.

HFC networks can provide very high speed, fibre-like broadband services and are generally regarded as superior to most copper-based services, but are not a complete equivalent to UFB.

Judge Allison Sinclair said in her ruling that she was satisfied there were a number of “inherent limitations” with HFC compared to a full fibre service that customers would want to know about.

These included ”variability, the likelihood of congestion on the network, speed, reliability, latency, upgrade pathways and the ability to change provider”, she said.

The court rejected Vodafone’s argument that consumers would understand that FibreX was not pure fibre, due to the ‘X’ in its name.

Telecommunications companies frequently settle cases brought by the Commerce Commission but in this case Vodafone contested the charges, suggesting the company held out hope of a victory in court.

Vodafone is due to be sentenced later this year.

Vodafone spokeswoman Nicky Preston would not comment on whether the company might appeal the decision.

The company said in a statement that it apologised to “anyone who may have been confused by the marketing or broadband availability associated with its FibreX network”.

But it said HFC remained an important service for the company.

The Commerce Commission found in March that an HFC cable plan was “the cheapest ultra-high user broadband plan in New Zealand,” Vodafone’s statement said.

“The company believes infrastructure competition and maximum customer choice in the important ultrafast broadband market should be welcomed,” it said.

Commerce Commission chairwoman Anna Rawlings said the case reinforced the importance of clear marketing to consumers, including in the name of a product.

“Businesses must take care to ensure that their description of the products and services they are offering is clear and unambiguous and is not liable to mislead their customers into thinking that they are getting something different from what is on offer,” she said.

“They must not operate under the assumption that consumers will make further enquiries to find out exactly what is being offered to them,” she said.