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You can now walk away from a bad broadband provider, with no penalty, according to a new set of rules backed by a regulator. But the details are messy.
Telcos have released two new marketing codes, which follow a pre-Christmas ticking off from the Commerce Commission.
The watchdog saw a need to "reduce consumer confusion". The issue has dogged the industry since back in 2006, when ex Telecom boss Theresa Gattung talked about her industry, historically, using "confusion as its chief marketing tool".
Today, the ComCom welcomed the new codes.
Telecommunications Commissioner Tristan Gilbertson said the regulator directing the telcos to draft the new codes had resulted in three benefits for consumers:
• The right to walk away from their broadband plan or provider, without penalty, when a service materially fails to deliver what was advertised.
• Getting at least four months' notice about any change to their copper service, so they're not rushed into making decisions about a replacement service, and getting information about the full range of alternative services available to them.
• Speed indications in advertising that must be based on independent testing under the Measuring Broadband New Zealand programme, overseen by the ComCom (rather than "up to" or theoretical maximum speeds).
While those three wins sound good on the face of things, the code is voluntary, and the situation is muddy if you and your broadband provider disagree over whether your service "materially fails to deliver", or instances where a wholesaler (mainly Chorus, exempt from the code) is to blame rather than a retailer.
"The codes in themselves provide some good steps forward to help remove some of the confusion and unhelpful behaviour we've seen in the past, and will depend on the operators ensuring all the elements are implemented across all of their business," Technology Users' Association head Craig Young tells the Herald.
"But these are not compulsory across the industry and so there will be operators who may not operate under these codes."
The codes were coordinated by the Telecommunications Forum (or TCF), an industry group whose members include Spark, Vodafone, 2degrees, Orcon Group and Chorus, along with scores of smaller telecommunications providers.
So who'll referee if a telco and a customer disagree? If say, a punter says they can walk away from a broadband contract without a break-fee because a service "materially fails to deliver", but the provider disagrees and wants to charge a penalty?
TCF chief executive Paul Brislen says the barney would go before the Telecommunications Dispute Resolution service - the free adjudication service that was also the final option before the new marketing codes.
Local fibre companies, including Chorus, are not bound by the new codes but have issued separate commitments about service levels and advertising, the Commerce Commission says.
That could complicate things if a retail ISP blames wholesaler and network operator Chorus for a home's poor broadband experience - and if indeed that was the case, the customer would not escape the issue by hopping to another retailer, just as if there was a problem with the Vector power line to your house, it would not be solved by switching power companies from, say, Trustpower to Mercury.
Brislen says in that case, the retail ISP and Chorus would sit down and hash things out.
The TCF head also notes that issues such as poor home wiring, or a dodgy Wi-Fi kit you've bought on Trade Me, will also fall outside the code. Telcos will work through an issue with a customer. If the issue is the internet service provider's fault, then they will be free to walk without a penalty.
"How long that takes to work through depends on the technical problem, if there is one, so it's a bit hard to tell at this point until we get some examples under our belt," the TCF head says.
The marketing code covering copper was triggered by the fact that Chorus now has the right to withdraw copper line service in areas where there's UFB fibre. Chorus complained to the Commission that the mobile network operators were trying to lead customers by the nose to their own fixed-wireless broadband services rather than UFB fibre (something the retail telcos denied). The new code calls for more clear marketing about broadband alternatives, and customers must get at least four months' notice before they lose copper.
Using the Commerce Commission's independent test results to describe the speed of different broadband plans should help clarify marketing. But even there, there's an element of controversy, with the regulator only including 4G fixed-wireless, not the faster, less prone to congestion 5G fixed-wireless in its benchmarks.
Although the new codes are voluntary, it's in the retail broadband providers' interests to make them work.
Telecommunications Commissioner Gilbertson told the Herald that how telcos handled barneys with customers over the new codes would be a point of focus.
"If there's disagreement over whether the retail service provider has materially failed to deliver what has been advertised to the consumer, then the dispute can be referred to TDRS for independent adjudication, at no cost to the consumer," he said.
"We'll be monitoring this area to ensure that expected outcomes are being met. If they're not, we remain willing to step in to issue a binding commission code, with statutory penalties and enforcement provisions."
"Making it easy for consumers to compare different offers is critical. Any steps towards ensuring that consumers have this type of information is welcome," says Auckland University marketing expert Associate Professor Bodo Lang.
"At present, even when using online comparison tools, it is very difficult for New Zealand consumers to make the best decision when switching services, providers, or just usage plans."
This is because telco providers utilise a broad range of sales promotion tactics to encourage consumers to sign up, Lang says.
Such tactics, include one-off discounts, discounted offers for a certain time period, and providing free products, such as routers.
"Consumers' ability to make good decisions quickly is further complicated by the large number of plans and their complexity across a number of important attributes, such as connection speed, whether it involves a contract, if so, how long, and a number of other factors," Lang says.
"In short, selecting the best provider for one's broadband needs is a complicated decision-making process. Many consumers will not pay sufficient attention to this decision. Thus, simplifying the way in which telco providers market their services is a step in the right direction."
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