Photo: RNZ / Nate McKinnon
- The Commerce Commission believes 100 percent mobile coverage claim was misleading
- The commission says the service has limitations which wasn't made clear
- One NZ will "vigorously defend" the charges
- Telco warns the legal action could affect the entire industry
The Commerce Commission is filing criminal charges against telecommunications company One New Zealand for its claims of 100 percent mobile coverage for its upcoming satellite service.
The competition watchdog believes the advertising campaign for the satellite service run by Elon Musk's SpaceX service may have breached the Fair Trading Act.
The campaign ran in April 2023 as the company rebranded from Vodafone to One NZ. In June 2023, the commission told One NZ to stop the 100 percent mobile coverage campaign.
One NZ said it would "vigorously defend" the charges.
Commission deputy chair Anne Callinan said the watchdog was concerned about the headline claims made during the campaign being potentially misleading and distorting competition.
"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 commission said One NZ's initial campaign featured "absolute and unqualified" claims about mobile coverage and did not make its limitations clear to consumers.
It said the coverage would initially only provide text messaging (SMS and MMS), and the initial service would be available from 2024, potentially as late as 31 December.
The timeline for launch remained unclear as of mid November but One NZ said it was "tracking well to launch".
The coverage would also only be accessible in locations where a consumer's mobile phone has a line of sight to the sky, which the commission said meant users may not be able to access the service inside a building, a car, or underneath tree coverage.
And it said sending and receiving texts would initially have a two-minute delay on average, rather than the near instant messages.
"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," Callinan said.
One NZ to defend charges
The company's spokesperson Nicky Preston said the partnership with SpaceX would bring coverage to all parts of New Zealand "effectively ending mobile blackspots".
"One New Zealand will vigorously defend the legal charges laid by the Commerce Commission. The charges relate to a three-month advertising campaign about a new network technology, which was approximately 18 months away from launching, and was not being marketed for purchase," Preston said.
The company said the commission's decision to bring the charges could have "significant implications across the entire telecommunications sector" regarding how coverage and service was described and promoted.
"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," Preston said.
"We are concerned with the commission's approach and strongly disagree with the basis for this legal action."
The satellite service is yet to be made available to consumers, but One NZ said it was testing the text service to "determine the roadmap to launch".
"Before we launch commercially, we expect to have a beta testing phase with a smaller number of customers to stress-test the service even further," Preston said.