Vodafone found guilty of misleading conduct over “FibreX” service

Vodafone NZ Limited has been found guilty of engaging in conduct that was liable to mislead consumers in relation to its FibreX branded broadband service.

In a case brought by the Commerce Commission and heard last year, the Auckland District Court ruled on Friday that Vodafone was guilty of nine charges under section 11 of the Fair Trading Act. These related to conduct in Wellington, Kapiti and Christchurch where its FibreX branded service was offered, between 26 October 2016 and 28 March 2018.

Judge Sinclair found Vodafone’s branding and advertising was liable to mislead consumers into thinking that the FibreX branded service was delivered over a fibre-to-the-home network (like those services delivered over the Government-subsidised Ultra-Fast Broadband (UFB) networks), when it was not. It did this by naming its broadband service “FibreX” and advertising on billboards, radio, in-store, online and in direct marketing, using phrases such as “FibreX is here” or “FibreX has arrived” and beams of light as a background to its visuals.

In fact the advertised network uses fibre optic cable to a street cabinet and coaxial copper cable from there to the home and is referred to as a “hybrid fibre-coaxial” network.

The Commerce Commission argued that the word “fibre” is a generic description of the service “fibre to the home”, where there is an end-to-end fibre connection, and that this was the meaning established in the minds of some consumers in Wellington, Kapiti and Christchurch by the time of Vodafone’s FibreX campaign in October 2016.

Judge Sinclair agreed that fixed line broadband networks are identified in telecommunications markets by the technology used for the last mile to the home/premise, and that in the case of the UFB networks, that is fibre optic cable. She rejected Vodafone’s argument that consumers would understand that FibreX was a “fibre like” network delivering superfast reliable broadband but not pure fibre, due to the ‘X’ in its name.

Commerce Commission Chair Anna Rawlings said this case reinforces the importance of clear marketing to consumers, including in the name of a product.

“Businesses must take care to ensure that their description of the products and services they are offering is clear and unambiguous and is not liable to mislead their customers into thinking that they are getting something different from what is on offer. They must not operate under the assumption that consumers will make further enquiries to find out exactly what is being offered to them,” said Ms Rawlings.

Vodafone is due to be sentenced later this year.

As the case remains before the court, the Commerce Commission will not comment further at this time.

A full version of the judgement can be found on our website.

Background

Fibre to the home

In 2009, the New Zealand Government launched its nationwide “Ultra-Fast Broadband Initiative” involving the building by Chorus and local fibre companies Enable, Ultrafast Fibre and Northpower – of networks using fibre optic cable to deliver broadband all the way to customers’ homes. This type of network is known as a “fibre to the home” network.

FibreX

In 2012, Vodafone purchased TelstraClear including its network operating in Wellington, Christchurch and Kapiti. This network uses fibre optic cable to a street cabinet and coaxial copper cable from there to the home and is referred to as a “hybrid fibre-coaxial” network.

In 2015–2016, Vodafone upgraded its hybrid fibre-coaxial network to DOCSIS 3.1 . In or about October 2016, following completion of the upgrade, the company rebranded the network as “FibreX” and undertook an advertising campaign in the Wellington, Kapiti and Christchurch regions to promote the service.

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