Vodafone, Commerce Commission both appeal record $2.24m fine

Fibre X promoted at a Vodafone store in the Wellington CBD in October 2017. Photo / Chris Keall

Vodafone NZ and the Commerce Commission both say they'll appeal a $2.24 million fine over the telco's historic "FibreX" marketing.

The regulator says the fine, which was handed down in the Auckland District Court on April 14, is too low to act as a deterrent.

The telco wants to overturn both the fine and the High Court conviction that led to the penalty.

On April 3 last year, Vodafone was found guilty of misleading consumers with its 2016-2018 "FibreX" marketing campaign for the hybrid fibre-coaxial (aka copper) cable service it offers in parts of the Kapiti Coast, Wellington and Christchurch. It began as a cable TV service operated by Telstra Saturn, and was inherited by Vodafone when it bought TelstraClear in 2012. Vodafone says it's spent tens of millions on upgrades since.

Charges were brought under the Fair Trading Act and the telco faced potential fines of up to $16m. The ComCom had sought a $5.8m penalty.

Judge Pippa Sinclair found Vodafone's branding and advertising was liable to mislead consumers into thinking that the FibreX branded service was part of the UFB fibre network.

She rejected Vodafone's argument that consumers would understand that FibreX was a "fibre-like" network delivering superfast reliable broadband but not pure fibre, due to the 'X' in its name.

Commerce Commission chair Anna Rawlings said this morning that the $2.25m fine did not appropriately reflect the seriousness of the offending, and the size and financial resources of Vodafone.

The Commission will argue in its appeal that Vodafone's conduct was wilful, rather than grossly careless, and allowed Vodafone to make significant commercial gains, Rawlings said.

"The fines imposed for this type of offending must be significant enough to deter Vodafone and other large businesses from engaging in this type of conduct in the future."

Vodafone: Errors

"We are very disappointed with the outcome and respectfully disagree with the court's decisions," Vodafone NZ said in a statement.

"Our appeal will set out our strong belief that there are several errors with the original conviction decision and that there are aspects of the FibreX judgment that simply misunderstand the services we sell and are not in the best interests of consumers or future competition."

The telco says its HFC service does indeed offer fibre-like service, and says that has been proven by the Commerce Commission's own benchmark testing, which found that, in Vodafone's summary, 100 per cent of HFC Max plans were all able to stream four simultaneous UHD [ultra high definition or 4K] Netflix streams, offering an equivalent experience to Fibre to the Home plans in this respect.

The twin appeals come a day after the telco industry introduced two new marketing codes, at the Commerce Commission's direction, which are aimed, in part, at boosting customer rights and making it easier to compare different broadband options.