'Confusing' marketing: Commerce Commission asks telcos to make four changes

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A market watchdog is asking telcos to make four changes to the way they market their plans.

At the moment when people look for a new mobile or broadband plan, "There can be a disconnect between the advertised price and the true monthly cost," Telecommunications Commissioner Tristan Gilbertson told the Herald.

"Different plan durations and different upfront options can make it difficult for consumers to compare."

Gilbertson said that's different to supermarket shopping, where buyers now see the price per 100g for many products - making direct comparisons easy between different size options. The confusion led to complaints, and people potentially being on a more expensive plan than they needed.

"We're keen to fix that, particularly in the current economic climate, where large numbers of Kiwis doing it increasingly tough," Gilbertson said.

"It's never been more important for consumers to be able to target their spend at the service that is absolutely right for them."

He wants the following four elements added to marketing, which he says would make it easier to compare the actual costs of mobile and broadband plans on a like-for-like basis.

1. The monthly average price. Gilbertson told the Herald that some plans are charged monthly (charged 12 times a year), while others are billed every 28 days. Many consumers did not realise that if they chose the 28-day option, they would be billed 13 times a year.

2. The total cost of a plan Customers could be attracted to a "first three months free" deal without realising that a plan could actually cost more than one without any free period over its 12 or 24-month duration.

3. Mark it clear if power costs more in broadband/electricity bundles. Gilbertson says bundling can provide great deals. But, in some instances, power costs more than it would if a consumer bought it standalone - which means they pay more for their power and broadband than if they purchased individual plans. His proposed solution is to always publish the cost of a standalone power plan alongside the amount it costs if you buy it with broadband.

4. A comparable coverage map. The Commissioner says it's great that Spark, Vodafone and 2degrees all feature coverage maps on their websites. But he says each uses different methodology, making it hard for punters to make direct comparisons. He wants the telcos to agree on a single standard.

Gilbertson says he favours a collaborative process with the telcos, who will have until around Christmas to make submissions. He hopes to see the new measures implemented in the New Year.

"Our work has shown that competition is delivering more choice than ever before, which is fantastic. But at the same time, that proliferation of choice has made it increasingly difficult for consumers to compare plans and providers on a like-for-like basis," Gilbertson said.

"And that difficulty of making comparisons is a major driver of consumer dissatisfaction and complaints."

Today's measures are part of an ongoing Commerce Commission focus on telco service.

The telcos have gone along with Gilberston's recommendations in other areas so far, saying they share his aim of better customer service. (Their voluntary co-operation has also meant they've avoided the Commissioner pulling out his regulatory stick).

Measures introduced including annual summaries of usage and cost sent to customers, to all them to more easily gauge if they're on the best plan, plus a new provision to walk away from a plan, with no penalty, if an issue around bad service can't be resolved.

Gilbertson says the marketing proposals he's suggested today are resolved, he'll move on to billing issues.

Industry responds

"Many providers offer bundled services that combine their broadband, electricity and gas, for example, with one provider, or receive discounted content services. This can be challenging for some consumers and it's important we make it easy for them to understand what's on offer," said Paul Brislen, head of the Telecommunications Forum that represents Spark, Vodafone, 2degrees and other providers.

"Making sure consumers have a clear understanding of the products and services they buy is essential and we fully support the Commission's work in this regard. The paper [released by the Commission today] raises a number of areas for input and we will be seeking to better understand how we can move this work forward in the New Year."

Technology Users Association head Craig Young said the four proposals outlined today mirrored his organisation's recommendations, following research it commissioned last year.

"So we will be responding positively to the Commission's paper recommending that the actions are implemented. Our strong belief is that these will help users be able to make better-informed decisions about their connectivity services."

A spokesperson for Spark said, "A core focus of our strategy is improving customer experiences through simplification, and providing customers with the information they need to make informed decisions is an important part of this. So we welcome the report and look forward to engaging with the Commission on the detail of the proposals announced today."

And a spokesperson for Vodafone said, "We support the Commission's goal of creating further transparency for consumers and will engage with the Commission during the consultation process to ensure that any further measures deliver the best customer outcomes."