Chris Barton: Telecom losing the trust wars

'The bigger question here is whether New Zealand broadband users have been subject to a con of colossal proportions,' writes Chris Barton. Photo / Greg Bowker

When Mark Peisker contacted me in early June he'd had a guts-full.
Months and months had gone by trying to sort out a problem of over-counting of his broadband usage. Telecom had constantly fobbed him off with one excuse after another.

It was a similar story with Alister Lambert in New Plymouth - months of providing detailed evidence that Telecom was over-counting and months of being given the run-around.

When the story broke in the Herald on June 9 the problem was suddenly fixed the next day and yet Telecom still admitted to nothing. In the days following the Herald received a flood of emails from others who, like Alister and Mark, had also been complaining, and getting nowhere. Nathan, for example, who teaches networking papers at Otago University, had raised concerns with Telecom since December. Each time he was told he didn't know what he was talking about.

On June 17 Telecom finally fessed up. Yes, the problem had been happening since November. Yes, it had affected seven percent (40,000) of Telecom customers. Yes, there would be compensation, but only to those who exceeded their monthly data cap during the seven months of over-counting. Bad luck for those who were restricting their use each month as they got close to exceeding their cap - even though in reality they weren't close to their limit at all.

Customers were relieved, but not pleased.

"Why is it that it was fixed just days after the newspaper article?" asks Nathan, who is quite sure nothing would have changed without the media.

"The extra cost which Telecom can no doubt fix with a credit is one thing, but will they ever be able to fix the relationship between myself and my teenage son?" asks Colin admitting to months of heated arguments over the issue and that he inadvertently blamed his son for the extra usage and costs. "I think not. Perhaps a civil lawsuit for family disruption might make them sit up and take notice."

Neil spoke for many when he asked; "Is this the type of company who should be placed in charge of such a crucial infrastructure?"

It's a good question, especially considering the $929 million of taxpayer money the government has just gifted Telecom to roll-out a new fibre network.

Similarly, Christopher summed up the situation as: "This is the corporate morality in NZ." And Mark ended his tale of woe with: "They can not be trusted."

To be fair, quite a few emails pointed out that Telecom wasn't the only culprit. Vodafone, Compass, TelstraClear, Slingshot were all cited as also over-counting usage. The claims are backed by Telecommunication Dispute Resolution (www.tdr.org.nz) which says the problem is a "systemic issue with the industry" and isn't isolated to any one provider.

But while Telecom's behaviour towards customers is undeniably bad, and is, as Labour's Clare Curran points out, par for the course, the bigger question here is whether New Zealand broadband users have been subject to a con of colossal proportions. That we've been so conditioned by Telecom drip-feeding us broadband on a meter that we've come to accept monthly data caps as a necessary part of the New Zealand broadband landscape.

A number of emails questioned why we need data caps at all - pointing out how easily Telecom and others will offer unlimited plans, or double your data for free to keep your business. Then there was Dean, a Tivo user who had an open cap on his home broadband because Telecom couldn't solve a download problem related to the service. Imagine how miffed he was when Telecom eventually fixed the issue and put him back to 5GB a month.

One industry stalwart I talk to from time to time goes apoplectic when I mention data caps: "There isn't a data cap problem. There's never been a data cap problem. That is just a Telecom pork of immense degrees," he rants. He presents a good argument - that none of the wholesale rates internet providers get from suppliers of international and national bandwidth have data caps.

Internet providers just buy bandwidth circuits at a constant flat rate. Therefore all any internet provider has to do is assess the traffic graphs of its users and stay ahead of the demand curve. As he points out, it doesn't cost an internet provider any more, the more its customers download. If you're buying at a flat rate of megabits per second with no data cap, there is no change to your profitability. All that happens if customers are oversubscribed on the service provided is that the service degrades.

It's an argument that got some backing from Southern Cross's Ross Pfeffer who recently put out a press release about the enormous unused capacity of the cable that connects us to the rest of the world.

Pfeffer was reported at saying: "Internet service providers pay for what they think they will need". In other words it all comes down to how they provision for demand. He also said that, depending on how it is measured, and based on the published current standard price, the international component accounts for between 5c and 65c a gigabyte. Which sounds pretty cheap and indicates international bandwidth may not be the problem bottleneck we've been led to believe.

Telecom has been questioned - and found wanting - about counting data usage, but perhaps the real question is why is it counting in the first place?