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19 May 2022

FibreX fight heading to High Court

Record $2.25m fine for FibreX marketing "manifestly inadequate" - Commerce Commission.

The record $2.25 million fine Vodafone has to pay for the way it marketed its FibreX service isn’t enough for the Commerce Commission, which has launched a High Court appeal.

22may vodafone fine

It was the largest fine under the Fair Trading Act when Vodafone was sentenced in Auckland District Court last month, but the Commerce Commission says it’s still “manifestly inadequate”. It had sought a fine of $5.8m.

The commission’s chair, Anna Rawlings, said $2.25m did not reflect the seriousness of the offending, Vodafone’s financial resources, that the conduct was wilful, and that it led to the telco making significant commercial gains.

Vodafone has announced it will also be appealing its conviction and fine. In a press release that seemed to be attempting to make the marketing of FibreX sound like ancient history, the telco referred to “historic marketing” and “historical marketing” three times in the first four sentences.

The press release went on to say Vodafone would rather be focusing on providing great service but “the commission has advised us that it will appeal the fine handed down”.

“Accordingly, we must respond and will be appealing both the conviction and the fine.”

FibreX was offered in Wellington, Kapiti and Christchurch between 2016 and 2018. Marketing of the product included phrases such as “FibreX is here” or “FibreX has arrived”.

But FibreX didn’t connect people to the ultrafast broadband network that was being rolled out at the same time. It only used fibre-optic cable to the street cabinet, then copper cable from there to the home.

We first warned people about FibreX in 2017 after getting complaints from consumers about the service. One Consumer NZ member told us they’d been close to signing up to a plan when the salesperson mentioned they wouldn’t be linking to fibre but to Vodafone’s cable network.

In 2018, Vodafone pleaded guilty to nine charges relating to the way FibreX was marketed on its website. Then last year, after a 14-day trial, it was found guilty of nine charges related to the way it advertised FibreX.

The commission said it would ask the High Court to reconsider evidence from consumers about the harm they had suffered as a result of being misled by Vodafone.

“The promotion of Vodafone FibreX denied consumers the ability to make an informed choice about FibreX or to choose the type of broadband most appropriate for their needs,” Rawlings said.

News of the duelling appeals came the day after the commission announced new marketing codes to clean up the way telcos advertise their products. It had written to the industry last year regarding complaints from consumers about the information they were getting about switching from the old copper phone lines to other technologies, such as fibre and wireless broadband.

Telcos worked with the Telecommunications Forum (TCF) to create two binding industry codes. Telecommunications Commissioner Tristan Gilbertson said the three key benefits for consumers would be:

  • Getting sufficient notice of any change to their copper service, so they’re not rushed into making decisions about a replacement service, and getting information about the full range of alternative services available to them.

  • Speed indications in advertising must be based on independent testing under the Measuring Broadband New Zealand programme (rather than “up to” or theoretical maximum speeds).

  • The right to walk away from their broadband plan or provider, without penalty, when a service materially fails to deliver what was advertised.

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