Spark scolded for misleading customers on price hike

By Paul McBeth

May 23 (BusinessDesk) - Spark New Zealand has been told off by the Commerce Commission for the way it hiked copper-line broadband prices last year when it didn't let customers know they could cancel their agreement.

The regulator sent a warning letter to the country's biggest broadband provider today, saying Spark was probably in breach of the Fair Trading Act in the way it told in-contract customers on its copper-based broadband service that prices were going to rise by $5 a month.

The commission said Spark's terms and conditions stated the company wouldn't change the monthly charge without getting the customer's consent or let them cancel without attracting a break fee. However, when Spark told customers of the increase, it didn't explain that clause, and instead said if a customer was in a contract and wanted to discuss their options, "there might be a solution available".

Spark responded by updating the information on its website and telling affected customers, the regulator said.

"Businesses must not create the impression that prices can be unilaterally increased if that is not permitted by the contract, or if consumers are not bound to accept the increase," commissioner Anna Rawlings said in a statement.

In the commission's view, customers would have believed they had no option but to accept when that wasn't the case, it said in its warning letter. It deemed a warning was sufficient.

Spark raised prices for copper products in October and has been keen to encourage customers on that technology to move to wireless where fibre isn't available. It says wireless is of comparable quality. Wireless also lets the telco avoid paying wholesale charges to network operators, such as Chorus.

It charges $99.99 a month for unlimited naked ADSL or VDSL plans. Most other retail service providers sell ADSL at $80-90 a month.

Last month, Spark was fined $675,000 for breaching the Fair Trading Act by over-charging almost 72,000 customers who terminated their contracts, and in January, the regulator issued a warning over the way it marketed download speeds of portable WiFi hot-spot devices and for overcharging 178 customers due to a software fault.

Spark shares rose 0.9 percent to $3.815.

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