The Commerce Commission warns telcos over unclear marketing

In an open letter to the telecoms sector, the Commerce Commission urgently seeks views on proposed marketing principles to reduce consumer confusion about alternative technology.

This comes as New Zealand makes the transition away from copper-based services. The letter follows up on complaints from consumers and some telecommunications providers who say consumers are receiving incomplete, confusing or potentially misleading marketing information around options for switching to alternative access technologies.

The complaints arise as Chorus withdraws the old copper network and Spark removes public switched telephone network (PSTN) connections.

Telecommunications Commissioner Tristan Gilbertson explains consumers are often not aware of available alternative options when transitioning.

He says they can also feel pressured to immediately move to alternative services, even when copper and the PSTN hasn't even been scheduled for withdrawal in their area. And that marketing material is confusing regarding the performance of alternative technologies, including fibre, hybrid fibre-coaxial cable, wireless broadband and mobile.

"We have examples of people being told they need to move now because Chorus and Spark are in the process of withdrawing their copper or PSTN service when the withdrawal isn't scheduled yet," says Gilbertson.

"And marketing materials are making claims about the performance of alternative technologies that don't reflect real-world performance.

The Commerce Commission wants to work with the industry to develop meaningful marketing principles and ensure consumers receive information about alternative technology options. It says this will put all operators on a level playing field as they compete for customers.

"We expect retail service providers will bring their marketing into line with these principles as quickly as possible, so consumers on copper-based services can make informed decisions about alternative telecommunications services best suited to their needs," says Gilbertson.

"Our preference is for the industry to turn these into a retail service quality code through the Telecommunications Forum (TCF), but we're prepared to protect consumers with a binding Commission code if this doesn't happen.

He says the matter is urgent, and the Commission's preliminary view is that it will formalise these principles as guidelines following consultation. The TCF will develop an industry code within 60 days of the final guidelines being issued.

The New Zealand Telecommunications Forum is a body made up of most of New Zealand's telecommunications providers to represent the industry's interests. The Commission wants to hear from the sector and other interested stakeholders like consumer groups about the proposed outcomes and marketing principles contained in the open letter.

Information on how to provide feedback is available on the Commission's website. Feedback is due by Friday, 27 August 2021.