Vodafone guilty of nine breaches of Fair Trading Act
The Auckland District Court has found Vodafone NZ guilty of nine charges under the Fair Trading Act in relation to its ‘FibreX’ service, it was revealed today.
The case, which was brought by the Commerce Commission and heard last year, related to conduct in Wellington, Kapiti and Christchurch, where the FibreX service was offered between October 2016 and March 2018.
Auckland District Court’s Judge Sinclair ruled that Vodafone’s branding and advertising of the service — specifically the inclusion of the word ‘fibre’ in its name — was ‘liable to mislead’ consumers into thinking FibreX was delivered similarly to the government-subsidised Ultra-Fast Broadband service when it was not.
In reality, the Commerce Commission says, the service uses fibre optic cable to a street cabinet and coaxial copper cable from there to the home and is referred to as a ‘hybrid fibre-coaxial’ network.
Specific instances of Vodafone’s marketing campaign in question included 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, according to the Commerce Commission.
In its initial hearing, the Commerce Commission argued that Vodafone’s use of the word ‘fibre’ conjured in the minds of consumers in Wellington, Kapiti and Christchurch a service that included end-to-end fibre connection.
In its Auckland District Court case, Vodafone argued consumers would understand that the FibreX service was a ‘fibre like’ network — but not pure fibre — due to the ‘X’ in the name of the service. Judge Sinclair rejected this argument, and said that fixed line broadband networks are identified in telecommunications markets by the technology used for the last mile to the home/premise, and that in the case of the UFB networks, that is fibre optic cable.
Commerce Commission chair Anna Rawlings says this case reinforces the importance of clear marketing to consumers, including and especially, in this case, 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.
“They must not operate under the assumption that consumers will make further enquiries to find out exactly what is being offered to them.”
Vodafone is due to be sentenced later this year.