Lawyer warns telcos over regulatory landmines

New dispute procedures, Fair Trading Act issues and a newly invigorated Commerce Commission all drew solicitor's attention

Solicitor Michael Wigley delivered a series of warnings to telecommunications operators over the new telecommunications regulatory environment at the annual Tel.Con 9 conference, held in Auckland last week.

New dispute procedures, Fair Trading Act issues and a newly invigorated Commerce Commission all drew Wigley’s attention.

The Telecommunication Dispute Resolution Scheme (TDRS), a co-regulatory body launched last November, has just released its first quarterly report. Wigley says some themes are starting to develop.

TDRS is available to residential customers and SMEs with less than 19 employees when they want to escalate complaints against providers. It focuses on resolution through fair and accessible internal complaints procedures. If that doesn’t work, the customer can ask TDRS to intervene.

Wigley says while the TDRS can require providers to pay up to $12,000 in respect of an individual complaint, their exposure under the scheme is potentially much greater.

“For example, as has been experienced in relation to similar dispute services elsewhere, numerous overlapping claims against one provider (or against the whole industry) can escalate into multi-million dollar exposure,” he says.

“Additionally, providers’ obligations (such as in relation to fairness in handling customers, and their obligations as to quality of service) extend more widely than the $12,000 limit.”

Fairness, Wigley says, is a key TDRS concept.

While the TDRS’ scope is limited, Wigley says the Customer Complaints Code is ambiguous as to whether or not the TDRS can handle consequential loss claims arising under the Fair Trading Act or the Consumer Guarantees Act — such as for loss of profit.

The TDRS’ first report, he says, notes that communication difficulties have played a central role in many of the complaints received.

“Difficulties for customers in contacting and getting responses from providers have been noted in a very large percentage of cases.”

Wigley warns performance claims under the Fair Trading Act are a significant risk for all providers. He says, like its Australian counterpart, the ACCC, the Commerce Commission is active. As the law in New Zealand is similar to Australia’s, prosecutions relating to misrepresentations by suppliers of goods and services are likely.

“Unless telco and internet providers are careful about the claims they make about their products and services, prosecution is a real risk,” Wigley says, citing issues with Telecom’s Go Large promotion as a local example.

Statements about speeds and coverage have to be accurate.

“The Commerce Commission is vigilant in this area. It won’t be too surprising if Telecom and Xtra, which are being prosecuted for their Go Large claims, will be joined by other ISPs alleged to have over-claimed performance,” he says.

In addition, new monitoring reports will provide the Commerce Commission with data which will make it easier to prosecute for misleading claims.

“Although broadband performance has complex and variable characteristics,” he says, “it should be possible to craft material which is low risk yet sets out the features of the service in relatively straightforward fashion for consumers.”

Wigley says the Commerce Commission has “jumped at the opportunities presented” by its new powers and become much more active, both formally and informally. It’s move against Vodafone’s plan to lock handsets recently, a position from which Vodafone quickly backed down, is a case in point.

Another Vodafone case shows the Comcom is also checking the information it is given. It got mystery shoppers to visit Vodafone retail outlets to check whether claims about the availability of a particular Vodafone offering were sustainable.

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Tags telecommunicationregulationsCommerce CommissionNetworking & Telecomms ID

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