The Commerce Commission is investigating a complaint over Telecom’s “Faster, Cheaper Broadband” advertising campaign.
The Commission has acknowledged that it is indeed looking into Telecom’s campaign, and has assigned a part-time investigator to the case, according to communications manager Kate Camp.
While Camp didn’t provide any details about the investigation, the complainant posted an email from the commission’s investigator to web forum Skankyflat that says Telecom’s alleged behaviour could raise issues under the Fair Trading Act 1986. The investigator apparently emailed a follow-up statement claiming the commission has received up to 20 further complaints about the misleading advertising of Telecom’s “Faster, Cheaper Broadband”.
The campaign features Telecom’s new 3.5Mbit/s download speed plans and claims to have reduced the price of several plans. Some users, on a variety of ISPs, have found that, along with the price drop, some traffic caps have also been reduced. This means they now have to pay more for the same traffic limits.
The issue of upload speeds is also a bone of contention for some business users.
Telecom’s original JetStream service offered unconstrained download and upload speeds. However, the new plans offer upload speeds of either 128kbit/s or 512kbit/s. Some business users have complained that their new plans offer slower upload speeds than they original enjoyed.
Telecom hopes that by increasing download speeds and lowering the price for business DSL — which until this year cost $2,400 for a 30GB full-rate service, with steep excess usage charges on top — the New Zealand government will continue its lighthanded regulatory regime, instead of splitting up the telco into separate wholesale and retail units, or improving terms for its reseller partners.
However, with download speeds advertised as 3.5Mbit/s, and upload performance of 128 and 512kbit/s, customer expectation was that the new plans would live up to their promise.
High contention rates (or the number of customers sharing the available bandwidth) have been cited as the major reason for current discontent, since they cause peak-time congestion, with severely degraded performance. With Telecom allocating a low 24kbit/s per user per month on its Asynchronous Transmission Mode optical fibre circuits used for the data backhaul, contention rates can soar up to 148:1, according to industry observers.
Stephen Crombie, Telecom’s manager of new technology investment, states that the congestion rate is, in fact, 33:1 on average, which would mean that each 256kbit/s customer has less than 8kbit/s bandwidth during peak hours.
Telecom spokeswoman Sarah Berry says Telecom is aware that the Commerce Commission is looking at the issue and is responding to queries from the regulator. Berry also says Telecom believes the new plans “deliver great value for customers” and that the advertising of them complies with the law.
Asked if it wasn’t reasonable for customers to expect both faster and cheaper broadband, Berry says Telecom’s “high-level advertising” states “faster, cheaper broadband” — without an “and” to separate the words. Therefore, customers can expect one or the other but not both at the same time.
Berry says Telecom has sent out letters to customers advising them in full of the new plans. Customers are, therefore, considered to be fully informed of what Telecom’s new plans entail, according to Berry.
However, an online search for the term “telecom faster cheaper broadband” returns a press release about Telecom’s as yet unlaunched plans, describing them as “faster and cheaper”.
“From early April you will automatically be upgraded to a faster plan — with either a drop or no change to your monthly plan charge,” says the release, which is no longer available on Telecom’s website.