One NZ is facing criminal charges over claims made in its ‘100% mobile coverage’ advertising campaign that the Commerce Commission says may have breached the Fair Trading Act.
It related to an advertising campaign to promote a proposed future satellite direct-to-cell mobile phone service in collaboration with Space X.
The country’s second biggest telecommunications company, One NZ, formerly Vodafone, was asked by the Commission to stop the high-profile 100% mobile coverage advertising campaign last year.
Commerce Commission deputy chairperson Anne Callinan said the Commission has now filed criminal charges. It said headline representations made during the campaign could be “misleading and distort competition in the telecommunications market”.
One NZ said it would “vigorously defend” the charges.
Callinan said One NZ’s initial ad campaign “featured absolute and unqualified claims about mobile coverage that did not make the limitations, which we believe are significant, clear to consumers”.
“In our view, the claims were likely to mislead consumers because they gave an overall impression that all currently available mobile services — text messaging, voice calling, and data — would be supported and available from 2024 and that consumers would have access to instant communication from all locations in New Zealand when, in fact, that may not be the case.”
Callinan said the coverage would be accessible only in locations where a consumer’s mobile phone has line of sight to the sky. This means users may not be able to access the service inside a building, a car, or underneath tree coverage.
“The requirement to have line of sight to the sky may significantly reduce the usefulness of the service, which is not apparent from the claims. Not knowing these limitations may have influenced consumers’ purchasing decisions,” she said.
The Commission was also concerned that coverage would initially provide only the ability to access text messaging (SMS and MMS only) and under the arrangements between One NZ and SpaceX, and that sending and receiving text messages would initially have a 2 minute delay, on average, rather than the impression conveyed in the campaign of near instantaneous service.
One NZ responds
One New Zealand’s head of corporate affairs Nicky Preston said the company would “vigorously defend the legal charges laid by the Commerce Commission”.
“Our language was consistent with long-standing practice of how coverage is described by the industry and the regulator in New Zealand. Other telcos globally have used similar statements and we’re not aware of regulatory issues regarding these.”
She said the Commission’s decision to bring these charges could have “significant implications” as to how telcos describe coverage and service availability to consumers.
“We remain confident that SpaceX will be able to deliver mobile coverage across New Zealand, and our testing is demonstrating this.”
