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Commission Directs Telco Industry To Create Marketing Code To Reduce Consumer Confusion

The Commerce Commission has instructed the telecommunications industry to develop a marketing code that ensures consumers receive all the information they need from telco providers to make informed choices about the technology options and plans that best suit their needs.

Industry body New Zealand Telecommunications Forum Inc. (TCF) will have 60 working days to turn marketing guidelines issued by the Commission today into an industry retail service quality (RSQ) code. The Commission expects the code to be binding on TCF members, which include most of New Zealand’s major telecommunications providers.

Telecommunications Commissioner Tristan Gilbertson said the issue has become urgent as a result of increased marketing activity linked to Chorus withdrawing the old copper network and Spark removing public switched telephone network (PSTN) connections.

“Consumers have told us that marketing of alternatives to legacy copper-based services is often incomplete, confusing or misleading,” he said. “Providers have also contacted us with concerns about their competitors’ behavior.

“While we have given the TCF 60 working days to create an industry code, we expect providers to bring their marketing into line with these guidelines as soon as possible, so that consumers can make an informed choice about the technologies and plans that are best for their telecommunications needs.

“We particularly want to see telco providers clean up their marketing activities as we head into the Christmas period, which is traditionally a busy time for the sector.”

Alternative technologies to copper include fibre, hybrid fibre-coaxial cable and wireless broadband.

The marketing guidelines issued by the Commission aim to ensure consumers will:

  • have sufficient notice of any change to their copper service so that they’re not hurried into making a decision about a replacement service
  • know about the full range of alternative services available to them, which is usually more than just what their provider wants them to buy
  • know how alternative services are likely to perform – particularly in terms of speeds where providers must now avoid “up to” or theoretical maximums and use likely actual peak time speeds

The Commission is required to monitor retail service quality and has the power to intervene to improve outcomes for consumers. This can include issuing guidance on matters relating to RSQ codes, as it has done today, reviewing industry RSQ codes, and making Commission RSQ codes that retail service providers must follow. RSQ matters include customer service, fault service levels, installation issues, contract issues, product disclosure, billing, the switching process, service performance, speed and availability.

Mr Gilbertson said the Commission wrote to the industry and consumers in August this year raising concerns around marketing of telecommunications technology and seeking views on how to best implement its proposed marketing principles to quickly clear up confusion.

“We are taking a collaborative approach to this issue so that we can leverage the knowledge and expertise of industry to make sure we achieve the desired outcomes in a pragmatic and workable way,” he said.

“Feedback from industry on our August letter was that a TCF Code was preferable to a Commission Code and we are now giving the industry the opportunity to lead the way on this important issue for consumers.

“More than 600 individual consumers gave feedback on the marketing principles outlined in our letter, which shows just how important this issue is to them.”

The issue of consumer confusion as a result of telecoms marketing was also highlighted in the Commission’s Improving Retail Service Quality – Draft Baseline Report

published in September. The report drew on six months of consultation with consumers and industry, plus insights from one of the largest surveys of telecommunications consumers ever conducted in New Zealand, and is a key part of the Commission’s work to improve retail service quality.

The marketing guidelines are on the Commission’s website.

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