Telcos warned about marketing tactics as copper turned off

The Commerce Commission has published an open letter to retail internet service providers, saying it has “concerns” about the way they are marketing alternative technologies as copper line service is switched off.

The warning letter has landed as a key date looms: September 1. That’s when, under a new telecommunications regulatory regime, Chorus will be able to start ripping out copper- or at least disabling it – in areas where UFB fibre is offered.

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But as Telecommunications Commissioner Tristan Gilbertson notes in today’s letter, Spark has already run copper withdrawal pilots.

In July last year, Spark told customers in Devonport and Mirimar that it would turn off copper lines. Customers in the two suburbs had until December 18 to choose an alternative technology – UFB fibre or wireless broadband – or switch to another provider.

Technology Users Association head Craig Young told the Herald it was “a form of forced migration off copper”.

Spark eventually relaxed its deadline, but a February 2021 OIA request by the Herald revealed the Commerce Commission had received 15 complaints from Devonport and Mirimar consumers. (Today, a Spark spokeswoman said, “We began our PSTN [switching from copper] programme with a pilot project in Devonport and Miramar in September of last year which is now coming to an end. Nearly all impacted Spark customers have shifted off the end-of-life PSTN, with the vast majority moving to more modern technologies – voice and/or broadband over wireless or fibre.”)

Meanwhile, wholesaler Chorus, which operates nearly all copper lines and the lion’s share of UFB fibre, alleged that Spark and Vodafone were being too front-foot in promoting their wireless broadband services, while downing playing UFB fibre.

This morning, a Chorus spokesman told the Herald, “We formally complained to the Commerce Commission about the marketing of fixed wireless services and some the sales practices like inertia selling.” Chorus said the “inertia” marketing involved sending a fixed-wireless modem to copper customers who had not requested to upgrade from copper service. Spark says the allegation is incorrect (more below).

Spark and Vodafone have pushed wireless broadband hard over the past couple of years, attracting more than 200,000 customers to the technology – which uses a mobile network to deliver broadband into a home or small business, cutting landline operator Chorus out of the loop, physically and financially.

In today’s letter, Gilbertson appears to be siding with Chorus in terms of its wireless broadband marketing gripe.

He writes:

“We have been made aware through complaints, communication with consumer
groups such as Consumer NZ, and letters from several providers, that some of the
information being provided to consumers facing this switching decision may be
incomplete, confusing, or potentially misleading. The nature of the concerns
expressed to us include 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;

• consumers are being pressured to move quickly to alternative services on the
basis of copper or PSTN [public switched telephone network] withdrawal when in some cases neither of these
services are currently being withdrawn; and

bull; 8.3 consumers are not being given appropriate information or are being misled
about the performance characteristics of alternative services.

Spark, Vodafone and 2degrees have been asked for comment.

'At odds with reality'

Today, a Vodafone spokeswoman said while her company supported guidelines for clear marketing, it also wanted a focus on wholesalers’ marketing efforts. Without specifically naming Chorus, she said:

“We support measures to improve greater transparency around retiring old services and offering newer and more reliable products to our customers, and will engage with the principles accordingly.

“These measure must apply to all industry players engaged in direct to consumer marketing – including wholesalers who are actively marketing fibre services to consumers.

“Ignoring wholesalers’ role in how consumers are informed about different services is at odds with the reality of how services are being marketed right now.”

A spokesman for the Commerce Commission said that the open letter’s comments and guidelines applied equally to wholesalers and retailers.

During earlier rounds of the controversy, Vodafone and Spark both said they were propertly informing customers about broadband options.

Spark said in Devonport and Mirimar, it has given five months’ notice, waived the cancelation fee for those who decided to switch to another retailer, and offered to help those who had issues with the likes of burglar alarms or other monitors when switching from copper to fibre or fixed-wireless.

As it began its consultation for a Copper Withdrawal Code last year, the Commerce Commission said around 581,000 homes and businesses were still using the older landline technology.

Gilbertson says in today’s letter that each retail ISP must “promptly review its marketing practices” to make sure consumers are aware of all alternative technologies when they upgrade from copper.

Buyers should be encouraged to consult independent sources, and offer advice on issues such as 111 calling – which is “always” on with a copper line but disappears in a powercut with a home phone running over fibre or fixed-wireless broadband.

Earlier, Vodafone told the Herald that Chorus’ complaint about retailers’ marketing was “motivated by self-interest” as the company sought to defined its landline business against fixed-wirless.

A spokesperson for Spark said, “We do not sell wireless broadband in the manner described by Chorus. Where we have a customer who is a good candidate for wireless broadband, for example they are on ADSL [copper], we will send them a letter offering a switch over to wireless.

“If they don’t want to switch they can call us and opt-out, but if they are keen or we don’t hear from them we will send them out a wireless modem.

“If they receive a modem and don’t want to switch they don’t have to do anything.

“They don’t even have to return the modem if they don’t want to.”

Today, a Spark rep added, “When we communicate to customers about switching from the PSTN to an alternative technology we are clear with our customers about what their technology options are and that the choice of which technology they go with is theirs.

“We also include that they have the option of moving to an alternative provider if they wish to do so. So we are supportive of, and already acting consistently with, the principles outlined by the Commission.

“Our customers are provided with information about what they can expect, including what will stay the same, what’s different and important things to know. For example, for wireless broadband we explain that speeds are similar to a 4G mobile connection and typically faster than copper ADSL [copper] broadband.”

Technology Users Association head Craig Young said today, “We know that broadband and phone services can often be complex and are sometimes difficult to compare but the industry can do better to help consumers make informed decisions. And we support the approach of the Commission in asking the industry to work together on developing a joint approach, but if this is not successful then we would support the Commission taking further steps in this space.”

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