Competition watchdog gives telcos until Christmas to clean up marketing

Monday, 8 November 2021

The gradual withdrawal of copper phone services is expected to result in a once-in-a-generation frenzy to win over – and hang onto – thousands of broadband customers.

The country’s competition watchdog appears to have lost patience with telcos over the way they are promoting their broadband offerings ahead of the gradual withdrawal of copper-based services.

The Commerce Commission has written to the Telecommunications Forum industry body saying that if it didn’t put in place a new code of conduct for its members within 60 working days, it would impose one itself.

It also said it expected phone companies to bring their practices into line with new marketing guidelines issued by the commission before Christmas, ahead of the actual code being released.

Telecommunications commissioner Tristan Gilbertson said in April that a newfound ability for Chorus to withdraw copper phone lines in streets where the uptake of ultrafast broadband (UFB) was high could result in a once-in-a-generation feeding frenzy for broadband customers.

* Telcos called into line by ComCom ahead of copper withdrawal feeding frenzy

* Telco commissioner Tristan Gilbertson has two big tasks and a 'paradox' to fix

* First copper phone services to be cut from September under Chorus plan

Tech Users Association chief executive Craig Young says there has been “deliberate confusion” of unsuspecting customers.

One of the commission’s concerns has appeared to be that telcos might use unfair tactics to win or hold on to customers while moving them to different technology.

Craig Young, chief executive of the Tech Users Association (Tuanz), said a code was necessary to tackle “the use of deliberate confusion to onboard new, uninformed, and unsuspecting customers”.

Young said Tuanz had become deeply concerned about tactics being used by telcos.

The Commerce Commission says it expects telcos to start applying its guidelines before they are enshrined in a new code of conduct.

“Copper migration is being used as an excuse to move unsuspecting consumers to preferred services without their express consent, or the information they need to make an informed decision about the alternatives,” he said.

“We are with the Commerce Commission on this. I think we are all running out of patience with how this is being handled.”

Sources suggested the commission was concerned that some telcos had been sending out fixed-wireless modems unsolicited to customers to bounce them into switching to their wireless broadband offerings.

Guidelines issued by the commission on Monday state that telcos “should avoid actions that risk creating a sense of pressure or obligation on consumers, or confusion for consumers”, cautioning they should also be mindful of the Fair Trading Act”.

If telcos were withdrawing copper-based services before Chorus did so, they should avoid creating the impression that copper services weren’t available from other providers, the commission said.

They should also market broadband services based on their expected peak-time performance, rather than their maximum theoretical performance, and let customers cancel contracts without penalty if they did not perform to expectations within 30 days of a complaint, it said.

If telcos sent out unsolicited modems, they should make it “immediately and prominently obvious” that the modem was being provided for the purpose of an unsolicited telecommunications service.

Spark and Vodafone have repeatedly clashed with ultrafast broadband (UFB) network company Chorus over what Chorus has viewed as their overly aggressive marketing of fixed-wireless broadband.

The two phone companies have consistently rejected the criticisms, reporting that fixed-wireless has proved popular with their customers based on its combination of performance, price and convenience.

Vodafone spokeswoman Nicky Preston said it had sent out fixed-wireless modems to customers in areas where it was stopping selling copper services, but only after several attempts to contact customers by phone, email and post.

Customers were free to send the modems back or throw them away, Preston said.

“We’re super clear that there are a range of options and include a link to the National Broadband Map,” she said.

Spark spokeswoman Cassie Arauzo said it was “not currently proactively sending wireless modems to customers”.

“When we communicate to customers about switching … to an alternative technology we are clear with our customers about what their technology options are, what they can expect, what will stay the same, what’s different and important things to know,” she said.

“We let them know the choice of which technology they go with is theirs. We also include that they have the option of moving to an alternative provider if they wish to do so. So we are supportive of, and already acting consistently with, the principles outlined by the commission,” she said.

In August, Gilbertson published an open letter to the industry after receiving complaints, seeking input on new rules.

But he said in his letter to the Telecommunications Forum on Monday that the matter now required “urgent attention”.

Telcos should bring their marketing conduct into line with the commission’s guidelines as quickly as possible, with a “clean” pipeline of advertising complying with the guidelines for the Christmas and New Year period, he wrote.

“If the industry process fails to achieve its intended purpose, or appears to be unlikely to do so, we will move to issue a mandatory commission code, with statutory penalties and enforcement provisions,” he said.