Angry firm fights $25k Spark break-up fee

An Auckland Spark branch. The telecommunication company, formerly Telecom, is being sued by a Chch company for imposing a $25,000 termination fee. File photo / Peter Meecham

An electrical wholesaler that tore up its Spark contract after becoming frustrated by its "unreliable and slow" service has been whacked by more than $25,000 of termination fees.

R Redpaths Ltd now refuses to pay the break-up penalty, with company bosses expressing disbelief at being penalised for moving away from a company that it says could not offer the goods they were paid to produce.

Now the electrical supplier - which has 15 branches across the South Island, has vowed to fight the telecommunications giant in court.

"In no other business could this be the case," Redpaths' operations and marketing director Brent Cameron said.

The company claimed it had "constant" issues with the service from Telecom, now Spark, which it was paying between $10,000 and $20,000 a month for.

System crashes that could put branches out of action for hours at a time, a slow line speed, and a "poor" back-up service are all part of the firm's allegations.

"Speed, reliability, and back-up: those were the key issues that they sold the product to us on and they couldn't provide it," Cameron said.

He said his company switched over two branches to a standard residential service for a year - without telling Spark - as a trial.

"We had more reliability and faster speed than the rest of the company at just five per cent of the cost. It was ridiculous," Cameron said.

Redpaths hired an independent IT expert to investigate the problems and he concluded it was Telecom's issue.

Telecom carried out a review and suggested that Redpaths needed to upgrade its system.

"We spent a lot of money doing what they said to make the system work properly but the issues continued," Cameron said.

Spark believes voice and data, mobile and WAN services met the customer's needs.

"When issues did arise, in particular with two challenging site relocations involving multiple parties, Spark Digital worked closely with the customer to resolve them," a spokesman said.

"In the case of the managed mobility service, there was integration and installation issues so Spark Digital cancelled the contract at no cost to the customer."

But Redpaths say problems persisted and earlier this year told Spark it wanted out of its contract.

It enlisted another telecommunications company to facilitate and manage the company's internet and phones.

"The day we changed over, all of our problems - the speed, reliability, back-up - disappeared," said Cameron.

Spark then charged Redpaths $25,000 in termination, or break, fees.

A Spark spokesman said that once Redpaths made it clear it did not wish to continue with its ongoing contracted services for voice and data, mobile and WAN services, the firm was advised that early termination fees applied.

"These fees are laid out in the contract and reflect costs incurred by Spark Digital for rental, equipment purchase and installation over the life of the contract."

While Redpaths paid initial termination payments while it was changing over services, it said it would not pay any more and would take the matter to court if necessary.

"My response to them was that they couldn't provide the service - how the hell could they charge me extra on top of what I paid them for years, to get away from them?" Cameron said.

Spark would not speculate on potential legal action, but noted that much of the early termination fees had already been paid.

"We hope that any outstanding matters can be resolved as quickly as possible," the spokesman said.