Commerce Commission wields big stick at telecommunications sector

The Commerce Commission hasn’t liked what it’s seen in the telecommunications space as New Zealand transitions away from copper-based services and has sent what amounts to a warning shot across the bows to the sector in an open letter to the industry.

The Commission’s concern is that retail service providers like Spark are sending consumers “incomplete, confusing or potentially misleading marketing information” about their options for switching to alternative access technologies and it is stepping in to protect customers.

It points out that many of those affected by this misleading material are likely to be vulnerable, elderly or less technologically aware and that the telecommunications service consumers choose now will likely be the only technology change they make for the foreseeable future.

That decision can have life-changing implications – wireless and fibre services, for example, do not work in the event of a power cut and medical alarms may not be able to work, even if they have a battery. 

A matter of urgency

The letter states that – “In light of the issues that have been brought to our attention, we have reached the view that additional protection for consumers is required at the retail level of the market. We also consider these protections are needed urgently because the copper and PSTN withdrawal process is underway and RSPs are actively marketing alternative telecommunications services to consumers on copper-based services.”

If they don’t start toeing the line the Commission will wield a big stick and impose a binding Commission code on the sector.

It says it has received complaints from consumers and some telecommunications companies.

This is happening as Chorus begins to progressively withdraw the old copper network and Spark removes public switched telephone network (PSTN) connections and offers consumers new technologies like wireless, fibre, hybrid fibre-coaxial cable, wireless broadband and mobile.

The Commission believes that consumers are not being informed about the full range of options available to them when being presented with offers to move to alternative services.

It also believes that consumers are being pressured to move quickly to alternative services on the basis of copper or PSTN withdrawal when in some cases neither of these services are being withdrawn.

Copper withdrawal

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 says – “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.”

He adds 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 it will be available to them and they will not be forced to use a different technology.

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