Telecom NZ has admitted a breach of the Fair Trading Act. Between 1999 and 2006 the company misled more than 130,000 broadband customers who switched from the company’s dial-up broadband service.

Collectively those customers were overcharged $NZ9.5 million. It is the latest of a string of Fair Trading Act breaches involving the company stretching back over a number of years.

In a statement issued yesterday, Commerce Commission Fair Trading Auckland manager Graham Gill said; “the Commission is becoming increasingly concerned at the number of occasions on which Telecom has acted in breach of the Fair Trading Act. Since 2003 Telecom has been the subject of Fair Trading Act convictions, settlements or warnings on at least eight occasions. The Commission encourages Telecom to make compliance with the Act a top priority.”

Telecommunications Users Association of New Zealand chief executive Ernie Newman told CommsDay the number of Fair Trading actions involving Telecom NZ is a “cause for concern”. However, he says it needs to be seen in context. “It is not confined to Telecom but is an industry-wide problem on an international scale. In almost any consumer survey around the world where consumers are asked which kinds of businesses they do or don’t trust, telecommunications companies score worst or very poorly”, he said.

Newman said one reason for this is the rapid evolution of the industry and the newness of many services offered. Yet, he said; “While this may be an explanation, it is not an excuse”.

On a more positive note Newman said; “Our observation is that there has been a genuine effort to eliminate such issues in New Zealand, both within Telecom where the current management has a very ethical view, and across the industry where the Telecommunications Industry Forum has done some good work. Nevertheless, this latest finding shows there is still work to do”.

Wellington-based technology commentator Colin Jackson went further. He said the overcharging issue is quite simple; “Telecom basically promised something at price X, then charged customers price Y. To their credit they spotted the matter themselves and went to the Commerce Commission. But the issue is Telecom has been pinged several times and the Commerce Commission is obviously frustrated with it. It clearly takes a long time for these matters to be resolved. This dates back to 1999, justice is so slow it is effectively a case of justice delayed being justice denied”.

In the case of the most recently uncovered breach Telecom NZ told customers would continue to have dial-up accounts along with broadband, but would not be charged for dial-up. However, due to a series of administrative errors caused by Telecom employees not following correct procedures these customers continued to be charged for their dial-up accounts. Collectively the overcharging amounted to NZ$9.5 million.

Telecom has since written to most of the affected customers and refunded them incurring additional costs along the way. As part of the settlement the company has also agreed to change its procedures to prevent a similar failure occurring in future. A company spokesman told Commsday, “In broad terms it was a system failure. Something fell through the cracks and it took some time for the company to be aware of problems with the provisioning system”.