The Commerce Commission identifies cause for further intervention to boost transparency from operators and simplify consumers’ contract exit rights
ComCom is consulting on revised guidance for broadband advertising
On 15 October 2024, New Zealand’s Commerce Commission (ComCom) launched a consultation, open until 6 November, on its updated Broadband Marketing Guidelines. The new guidelines aim to help consumers compare and choose the best service for their needs by addressing concerns about marketing conduct and reducing confusion – a particularly important issue as consumers transition away from copper. These guidelines also update the original November 2021 guidance, which set out ComCom’s expectations for providers when managing consumers’ migration from copper and when advertising broadband services more generally. Tristan Gilbertson (Telecommunications Commissioner, ComCom) has said that there has been a positive response from industry and an improvement in marketing conduct across the board since 2021. Gilbertson noted that of those consumers coming off of copper, complaints had dropped by 36%. However, despite the successes of the 2021 guidance, Gilbertson explained that the ComCom review identified other opportunities to improve consumer choice further.
The updated guidelines focus on clarifying broadband speed disclosures and standardising the grounds for an ‘exit right’
Although ComCom has recognised that its 2021 guidelines led to providers moving away from unhelpful and confusing language in their broadband advertising around the use of theoretical ‘up to’ speeds, the regulator has now updated its guidelines to address outstanding issues, requiring that:
Providers display Measuring Broadband New Zealand (MBNZ) download and upload speeds for fibre and wireless broadband;
Providers standardise an ‘exit right’ to allow consumers to exit broadband contracts without penalty if they suffer performance issues; and
Consumers to have access to at least 12 months usage and spend information (as is the case with mobile) so that they can determine whether or not they are on the best plan and technology for their usage and spend.
Broadband providers are expected to correct any gaps to compliance with the new guidelines and industry body, the Telecommunications Forum (TCF), is expected to push through any changes to industry codes within six months of the revised guidelines being finalised.
ComCom wants providers’ materiality test to be standardised to prevent ‘lock in’ issues in broadband contracts
According to ComCom, the original guidelines require providers to offer consumers an ‘exit right’ if real world performance is materially different to what was advertised – and it is pleased to see most now offer this. However, the regulator considers that these materiality tests currently vary too much between providers. Under the revised guidelines, ComCom has urged broadband providers to standardise a common materiality test so that they are treated on an equal basis when seeking to use their right to exit contracts without penalty. ComCom’s focus on this reflects global trends around exit solutions. In Germany for example, in December 2021 the Telecommunications Act (TKG) was updated to further protect consumer rights by allowing them to terminate broadband contracts without notice in the event of substantial quality discrepancies. In order for consumers to terminate contracts, the regulator expects them to provide 30 evidence indicators of this. Similarly, in Australia, ACCC guidance recommends that when providers cannot produce a timely resolution to a speed problem they should give consumers the opportunity to exit without further charge alongside appropriate refunds and compensation. Since consumers are required to provide proof of the shortcomings of their service in order to exercise these exit rights, the challenge for regulators and operators remains balancing that burden for consumers in developing standards such as a ComCom’s materiality test.
