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ComCom scolds Vocus-owned Slingshot for broadband discounts

Thursday 28th March 2019

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The Commerce Commission has warned Vocus Group-owned broadband provider Slingshot over an online ad campaign offering a 10 percent discount for customers who bundled power with internet services. 

The regulator said the retailer probably misled customers and breached the Fair Trading Act in a campaign between July 2017 and May 2018 by failing to make clear that customers would only receive the discount for bundled services provided they paid their invoices by the due date. Slingshot responded by amending its website to clearly reflect the prompt payment criteria. 

"In this case, Slingshot provided information that disclosed the true conditions of the promotion, but only once a consumer had nearly completed the online sign-up process," commission competition and consumer general manager Antonia Horrocks said in a statement.

"In the commission’s view, Slingshot’s late disclosure of a key condition did not remedy the initial misleading representation that was made to consumers at large." 

Vocus built up the New Zealand business after merging with rival M2 Group in 2016, bringing the CallPlus, 2talk, Orcon, Slingshot and Flip businesses and local fibre line provider previously called FX Networks under one umbrella. It diversified into electricity the following year after buying retailer Switch Utilities and now has about 22,100 power customers.

The regulator sent a warning letter to Slingshot on March 21, which it published today, saying that was an appropriate censure rather than legal proceedings. 

The letter noted that once a customer signed up to the offer, Slingshot accurately portrayed the prompt payment criteria of the discount, however, that didn't "remedy the impression created by the initial representation." 

The public warning came the same day Vocus was hoping to make a good impression on the regulator in its oversight of regulated wholesale telecommunications. 

Network operator Chorus today pitched a price for access to its fibre network on an unbundled basis. It is proposing a $28.80 monthly charge covering access to the fibre between the premise and the splitter – a key point where shared fibres are split into individual fibres that go into each customers’ home or office. It would also charge retailers $200 a month to access feeder fibre from each splitter, which can connect up to 16 customers.

Chorus’s regulated prices for the transition period between December 2019 and January 2022 range from $25 a month for a monthly voice connection up to $65 for a 1 gigabit per second connection.

Vocus has set up a joint venture with rival Vodafone New Zealand to buy fibre access at a wholesale price then repackage it for consumers to allow greater innovation for consumers.

Vocus New Zealand chief executive Mark Callander said the pricing proposed by Chorus was ridiculous and would stifle unbundling.

"Chorus have played their hand early and the Commerce Commission will now need to intervene, it’s as simple as that," he said. "The UFB network was designed to be unbundled, and ultimately is an asset that the government has helped fund."

Chorus shares were recently up 2.2 percent at $5.895, having hit a record $5.90 earlier in the day. 

(BusinessDesk)

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