Guidelines require providers to state a monthly average price, when it was different from the advertised price, and make standardised offer summaries available. Photo: RNZ
Telecommunications companies will need to cut the marketing jargon and spell out exactly what they are offering consumers when it comes to broadband and mobile services contracts.
Effectively immediately, the Commerce Commission expected telcos to take steps to meet new product disclosure guidelines covering price and costs which made it easier for consumers to understand and compare offers from one provider to another, including contracts already in place.
"We want Kiwis to be able to compare offers more easily and avoid any surprises," Telecommunications Commissioner Tristan Gilbertson said.
The guidelines required providers to state a monthly average price, when it was different from the advertised price, and make standardised offer summaries available, so consumers could more easily compare different offers.
"Consumers told us that understanding how much they'll end up paying each month, and having access to standardised offer summaries, would make it easier for them to find the best deal," he said.
Several providers were already producing standardised summaries for broadband services, but not all, while a template for mobile plans was still in the works.
Some of the issues raised by consumers were around such things as 28-day mobile plans which meant they were billed 13 times a year, rather than 12 times.
Offers with initial upfront discounts were another issue, which left some consumers paying more over 12 months than if they had chosen a plan with a flat monthly price.
"Our guidelines give Kiwis what they need to compare offers on a like for like basis and make informed decisions," Gilbertson said.
The guidelines would also require early termination fees to be prominently disclosed up-front to consumers and reduce over the period of the contract.
"Early termination fees are a recurring pain point for consumers - either because they didn't realise they signed-up to them or because it's not clear what the exit costs are when a better deal comes along," Gilbertson said.
Providers must also ensure customers could easily find out how much was left to pay at any point in time.
"With clear and consistent pricing and penalties information customers can make more informed choices and know what they're signing up to - right from the start," Gilbertson said.
Commission head of retail service Andrew Young said the guidelines were not designed to discourage innovation.
We don't want to limit innovation from providers. In fact, we would encourage innovation. We just want to make sure that it's clear for consumers what they're signing up for so they can make the best choices for themselves," Young said.
Telcos will have up to 12 months to comply with the new guidelines.
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