About 1300 Telecom customers will share $120,000 in refunds from the telco after it reached a settlement with the Commerce Commission over a potentially misleading broadband promotion carried out in 2008. The refunds, averaging $92, will go into cust
About 1300 Telecom customers will share $120,000 in refunds from the telco after it reached a settlement with the Commerce Commission over a potentially misleading broadband promotion carried out in 2008.
The refunds, averaging $92, will go into customers accounts tomorrow, Telecom in-house counsel Tristan Gilbertson said in a statement.
Telecom will also contribute $75,000 to the cost of establishing an internet-based tool, to be developed by Consumer, which will help people compare the cost of broadband plans and other telco services.
Between April and June of 2008 Telecom marketed its Basic Broadband Plan using the phrase “Get Telecom Broadband at Dial Up Prices”.
Under the Basic Broadband Plan consumers could obtain 200MB of data per month at a cost $16.95 for each of the first six months of a minimum 12 month fixed term contract and then at $29.95 for each of the remaining months - that is, a higher price than any of Telecom's dial-up plans.
Some consumers also complained that the 200MB data cap meant that they would effectively get much less internet usage than they had previously on a comparably priced dial-up plan.
Telecom admits Fair Trading Act breach
Telecom admitted that its promotion breached the Fair Trading Act in that its initial television advertising failed to adequately disclose that there was a minimum 12 month contract period and that the Basic Broadband Plan was only available at $16.95 for each of the first six months of the contract and $29.95 per month after that.
It also admitted that its print and television advertising did not adequately disclose that the Basic Broadband Plan had a data cap of 200MB per month, with an overcharge rate of 2 cents per MB.
As part of the settlement with the Commission, Telecom will refund affected customers who have not already been credited:
Too much misleading advertising
Telecommunications Users Association chief executive Ernie Newman said was too much misleading advertising in the sector.
“We want broadband offerings to be simple, clear, and easily comparable," said the Tuanz boss.
“However, this episode is at the less serious end of the scale.
Drive to right history's wrongs
Telecom's inhouse counsel, Tristan Gilbertson, painted the settlement as part of a concerted effort to wipe the slate clean with the Commerce Commission.
“Our drive to resolve these historic issues is all about acknowledging mistakes where they have been made in the past and putting things right," Mr Gilbertson said in a statement.
"Equally, as we move into the future, we need to ensure we learn from the past. To this end, we have been on a concerted drive to improve our compliance processes, to keep future issues to an absolute minimum”
Telecom's desire to wipe the slate clean only extends to far, however.
The telco remains embroiled with the Commerce Commission in the decade-old 0867 dispute, and three separate High Court cases centering around the Telecom Service Obligation levy the company has historically received for servicing commercially non-viable rural customers.
And oh what wrongs
This morning, the Commerce Commission released a list of Telecom's previous Fair Trading Act convictions, settlements and warnings.
The laundry list in full:
January 2010: the Commission reached a settlement with Telecom New Zealand Ltd and Xtra Limited, in which Telecom admitted breaching the Fair Trading Act by making misleading representations about the price customers had to pay for internet services (both dial up and broadband).. The settlement resulted in the refund of $9.5million to affected customers.
December 2009: Telecom New Zealand Limited pleaded guilty to 17 charges of breaching the Fair Trading Act over claims made in 2006 when promoting Xtra's Go Large broadband plan. Telecom was fined $500,000 in the Auckland District Court.
March 2009: Xtra Ltd, a division of Telecom New Zealand Ltd, was found guilty of breaching the Fair Trading Act and fined $45,000 in the Wellington District Court. Xtra also paid $10,000 in costs. Xtra was convicted on three charges of misrepresenting to complainants that its pricing, conditions attached to its services or its billing systems had been approved by the Commerce Commission.
July 2006: Telecom Mobile Limited was fined $45,000 and ordered to pay over $3,000 in costs in the Wellington District Court for breaching sections 11 and 13(g) of the Fair Trading Act after misleading customers about a new mobile phone deal. In October 2006, an out-of-court settlement reached by the Commerce Commission and Telecom saw Telecom returning around $3.3 million to customers after a billing fault saw them charged twice. As part of the settlement Telecom accepted that it breached the Fair Trading Act when it charged customers twice.
October 2005: the Commerce Commission reached a settlement with Telecom Mobile Limited after a billing fault in 2001 and 2002 on the 027 network resulted in thousands of customers being charged peak rates for off-peak calls. Telecom Mobile admitted breaching the Fair Trading Act and agreed to credit approximately 11,000 affected customers a total of $54,000.
In October 2005: Telecom was convicted under the Fair Trading Act for failure to disclose costs associated with an 0832 telephone information service in 2001. Telecom was fined $4,000.
October 2003: Telecom Mobile Limited was fined $10,000 plus costs in the Wellington District Court after pleading guilty to two charges of breaching the Fair Trading Act. The charges related to nationwide advertising campaigns in late 2001 aimed at inducing both existing 025 and rival customers to switch to the 027 network.
