Commerce Commission taking legal action over One NZ's '100% coverage' claims for SpaceX service
Thursday, 14 November 2024
The Commerce Commission is filing criminal charges against One NZ over claims made in advertisements for its SpaceX service.
The telco’s ad campaign promoted “100% coverage. Launching 2024”, but the commission says the claims may have breached the Fair Trading Act.
One NZ says it will defend the charges, which could have significant implications for the telecommunications sector.
One NZ is facing court over claims made in advertisements for its SpaceX service, but says it will “vigorously defend” the charges brought by the Commerce Commission.
On Thursday morning, the commission announced it was filing criminal charges against the telco (formerly Vodafone NZ) for representations made in its campaign promoting “100% mobile coverage. Launching 2024,” which the commission said may have breached the Fair Trading Act.
Commission deputy chairperson, Anne Callinan, said there were concerns that the headline representations made during the campaign could be misleading and distort competition in the telecommunications market.
“In our view, the claims were likely to mislead consumers because they gave an overall impression that all currently available mobile services — text messaging, voice calling, and data— would be supported and available from 2024 and that consumers would have access to instant communication from all locations in New Zealand when, in fact, that may not be the case,” she said.
“One NZ’s initial advertising campaign featured absolute and unqualified claims about mobile coverage that did not make the limitations, which we believe are significant, clear to consumers.”
The commission was particularly concerned as the coverage would initially provide only the ability to access text messaging, and under the arrangements between One NZ and SpaceX, it was expected that the initial service will be available from 2024 – potentially as late as 31 December.
The coverage would also be accessible only in locations where a consumer’s mobile phone had line of sight to the sky. That meant users may not be able to access the service inside a building, a car, or underneath tree coverage.
Calinan said the requirement to have line of sight to the sky may significantly reduce the usefulness of the service, which was not apparent from the claims.
“Not knowing these limitations may have influenced consumers’ purchasing decisions.”
Sending and receiving text messages would also initially have a two-minute delay, on average, rather than the impression conveyed in the campaign of near instantaneous service.
In a statement, One NZ spokesperson Nicky Preston, said the telco would vigorously defend the charges, which could have significant implications for the telecommunications sector regarding how coverage and service availability were described and marketed.
“In April 2023, we announced a partnership with SpaceX, which we said will bring coverage to all parts of New Zealand, effectively ending mobile blackspots.
“This ground-breaking technology will help keep New Zealanders safer and more connected,” she said.
“The charges relate to a three-month advertising campaign about a new network technology, which was approximately 18 months away from launching, and was not being marketed for purchase.”
One NZ’s language was consistent with long-standing practice of how coverage is described by the industry and the regulator in New Zealand, Preston said.
“Other telcos globally have used similar statements and we’re not aware of regulatory issues regarding these.
“We are concerned with the Commission’s approach and strongly disagree with the basis for this legal action.
“We remain confident that SpaceX will be able to deliver mobile coverage across New Zealand, and our testing is demonstrating this.”