Telecom to repay $8.4M to ‘Go Large’ customers

Telecom agrees to repay $8.4M to ‘Go Large’ customers, cops $500,000 fine

Dec. 7 (BusinessWire) - Telecom Corp. will pay about $8.4 million in compensation to customers and has been fined $500,000 after a Commerce Commission investigation found the company made misleading claims in its 2006 Go Large broadband campaign.

The commission began an investigation in December 2006 after complaints from Telecom Xtra customers who had signed up to Go Large expecting unconstrained speeds and no data caps. Instead, some found speeds were as slow as dial-up and the small print flagged constraints including a “traffic management policy,” the regulator said in a statement.

Since 2003, Telecom has been reprimanded and/or fined seven times for breaches of the Fair Trading Act relating to its mobile phone services, broadband and billing systems. Until now, the biggest fines imposed were $45,000 in March this year for misrepresentations of its billing systems and a same-sized fine in 2006 imposed on Telecom Mobile for misleading customers over a new mobile deal.

Telecom stopped offering Go Large for new customers in February 2007. It will pay compensation to 97,000 affected customers. The shares fell 0.4% to $2.40 on the NZX today and have declined about 13% in the past three months.

Companies “should ensure that their goods and services can live up to any marketing hype – in this case Telecom clearly failed to do so,” said Graham Gill, the commission’s Fair Trading Manager in Auckland. “There is increasing choice in the broadband market and it is important that all relevant information is disclosed to consumers so that they can make informed decisions.”

Telecom had “fully cooperated” with the commission’s investigation, it said.

(BusinessWire)

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