Commission Urges Telcos To Better Inform Consumers About Technology Options

The Commerce Commission has published an open letter to the telecoms sector urgently seeking views on proposed new marketing principles aimed at reducing consumer confusion about alternative technology options as New Zealand transitions away from copper-based services.

The letter follows complaints from consumers as well as from some telecommunications providers that consumers are receiving incomplete, confusing or potentially misleading marketing information about their options for switching to alternative access technologies as Chorus begins to progressively withdraw the old copper network and Spark removes public switched telephone network (PSTN) connections.

Chorus is able to withdraw copper in areas that already have fibre from 1 September this year under the Copper Withdrawal Code, issued by the Commission, provided certain consumer protection conditions are met. Meanwhile, Spark has been withdrawing public switched telephone network (PSTN) connections since late last year.

Telecommunications Commissioner Tristan Gilbertson said concerns include that consumers are not aware of alternative service options available to them when transitioning, that they have been pressured to immediately move to alternative services even when copper and the PSTN are not scheduled to be withdrawn from their area, and that marketing materials are confusing when it comes to performance of alternative technologies. These technologies include 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 withdrawal isn’t even scheduled yet, and marketing materials are making claims about the performance of alternative technologies that don’t reflect real world performance,” he said.

“We want to work with the industry to develop meaningful marketing principles to ensure consumers receive the information they need about alternative technology options as they transition off these services, and to put all operators on a level playing field as they compete for customers.

“We expect retail service providers (RSPs) will bring their marketing conduct into line with these principles as quickly as possible, so that consumers on copper-based services can make informed decisions about the alternative telecommunications services best suited to their needs. Our preference is for the industry to turn these into a retail service quality code through the Telecommunications Forum (TCF), but we are prepared to protect consumers with a binding Commission code if this doesn’t happen.”

Mr Gilbertson said that the matter is urgent and that the Commission’s preliminary view is that the Commission will formalise these principles as guidelines following consultation and that the TCF will develop an industry code within 60 days of final guidelines being issued. The TCF is a body made up of most of New Zealand’s telecommunications providers to represent the industry’s interests.

The open letter sets out the key outcomes the Commission wants to achieve for consumers by working with the industry. Mr Gilbertson said the proposed marketing principles aim to provide consumers with certainty in three specific areas:

1. Consumers will have sufficient notice that copper is being withdrawn from their premises so that they are not hurried into making a decision about replacement technology. This is already part of the Copper Withdrawal Code that applies to Chorus and the Commission wants to extend it to all RSPs.
2. Consumers will be aware of alternative access technologies available to them and RSPs would avoid giving consumers the impression that their options are limited to only what that RSP can provide. RSPs would also encourage consumers to use independent information like www.broadbandmap.nz to see what alternative services are available at their location.
3. Consumers will be told about the likely actual peak-time performance of different technologies and plans rather than theoretical maximums, ‘up-to’ speeds or labels like ‘super-fast’, which are meaningless when it comes to comparing alternative access technologies and plans.

Mr Gilbertson added that the key thing all New Zealanders need to know about copper withdrawal is that copper will not be withdrawn from their area until fibre is in place. If fibre is their preferred technology, then it will be available to them and they will not be forced to use a different technology.

Under the Telecommunications Act, the Commission has a role to monitor the retail service quality (RSQ) of telecommunications services and to make information available to consumers so they can make informed choices. Under Part 7 of the Act it is able to issue guidance on matters relating to RSQ codes, review industry RSQ codes, and make Commission RSQ codes that RSPs must follow. RSQ includes customer service, fault service levels, installation issues, contract issues, product disclosure, billing, the switching process, service performance, speed and availability.

The Commission wants to hear from the sector as well as 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.

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