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The Commerce Commission has named and shamed internet service providers who do not belong to the Telecommunications Dispute Resolution Scheme (TDRS) - a free, independent service for resolving disputes customers have with their phone or broadband provider (see list at end of story).
The watchdog said non-members – including Contact Energy, Inspire Net, Lightwire and Voyager – leave over 100,000 Kiwi consumers locked out of the free dispute process and “left with a harder road to complain”.
But the hold-outs are not taking the criticism lying down.
“It’s disappointing that the ComCom has effectively chosen to smear and savage us for their pet scheme,” Voyager founder Seeby Woodhouse told the Herald.
“Customers already have a route to resolution - the Disputes Tribunal. Why New Zealand needs the overhead of a separate system is unclear and the benefits of the TDRS unproven.”
The Disputes Tribunal (formerly called the Small Claims Court) provides general dispute resolution for fees starting from $45.
Woodhouse said the TDRS was funded by set fees levied on providers. While these fees were indexed to revenue, he said only a small amount of Voyager’s revenue came from consumers.
“TDRS charges a set fee, not a cost per complaint – so there is no incentive to actually address the complaint before it gets to the TDRS, meaning bigger overheads and time wasted handling a complaint back and forward,” Woodhouse said.
He pointed out a July 2022 submission to the Commerce Commission from ISPANZ - the Internet Service providers Association of New Zealand, a group of mainly smaller to mid-tier providers.
It said, “TDRS membership has an additional cost that brings no discernible benefit either to them or to their customers.
“One of the deterrents to TDRS membership is the cost. Small companies manage their cashflows carefully, and vigorously prune unnecessary expenses.”
The TDRS fee structure is weighted heavily in favour of larger ISPs, the submission claimed.
“For example, Spark has around 701,000 broadband connections, 2.4 million mobile devices, and a TDRS fee of $485,465 per year. If just counting the broadband connections they pay $0.69 per connection per year. Counting their total connections it is $0.16 per connection per year,” it said.
“For comparison, one ISPANZ member has calculated that they would have a TDRS fee of $1177 per year. For them this would mean $4.10 per connection per year. Depending on the method of measurement that means that, for them it would be either 5.94 times or 25.63 times more expensive than the bigger players.”
Inspire Net managing director James Watts was also fuming.
“As a small, high-quality service provider that prides itself on good service, and at a time of high inflation and people struggling, it seems bizarre that the Commerce Commission would try to enforce a levy of over $20,000 per annum on us to join a scheme that in our opinion we do not need,” he said.
“In 25 years of business we have always believed in looking at our customers as our top priority, and yet we now seem to be being named and shamed by the Commerce Commission for not joining their overpriced scheme, which has to deal with complaints from companies that do not do such a good job of looking after their customers.”
Meanwhile, Lightwire executive Brendan Ritchie claimed his customers didn’t need it.
“The TDRS aims to provide consumers with an avenue where their provider is not addressing their complaint adequately, and, where an ISP’s response is lacking, that is a fantastic thing. Our aim is to ensure our customers are never in that position, and our relentless focus on the experience of our customers as the basis of our success has ensured we have been, and will continue to be, successful on that front.”
“These providers are profiting from providing telecommunications services to New Zealand consumers while avoiding the accountability that TDRS is designed to provide,” Telecommunications Commissioner, Tristan Gilbertson said.
The largest of the holdouts is Contact Energy, which bundles broadband with power for some 70,000 of its customers.
“The concern is that many of Contact’s customers may not be aware that it isn’t a member of TDRS and that, if any problems arise, they can’t sort them out using the specialist industry scheme,” Gilbertson said.
“While Contact is a member of the energy dispute resolution scheme – Utilities Disputes Limited (UDL) – its absence from TDRS means things get more complicated with the bundled telecommunications and energy services it is promoting in the market.
“If there are issues with these [power and broadband] bundles, which we recently found can be problematic, customers have no recourse to TDRS, and UDL has no jurisdiction over telco disputes – leaving customers stuck in an unhelpful position.”
“While all of our energy customers have access to an independent energy dispute resolution process through Utilities Disputes Limited (UDL) we acknowledge there is a gap when it comes to managing dispute resolution when it comes specifically to our broadband customers,” Contact Energy chief retail officer Matt Bolton told the Herald.
“For Contact customers, broadband is offered as an addition to an energy account and we continue to actively review the best forums for dispute resolution services for our broadband customers.”
There have also been grumbles from some of the larger ISPs that Starlink - the Elon Musk-owned satellite broadband provider - that’s made a splash with its launch over the past 24 months, is absent from the TDRS.
A person close to Starlink’s NZ rollout, which has involved six ground stations developed with partners Vocus (now part of 2degrees) and Cello, told the Herald that Starlink has quickly nabbed 10,000 customers.
“Starlink is not included because we understand it does not yet earn telco revenues of over $10m annually. The list will be updated as new information comes to light.”
The Musk-owned firm, which charges $159 per month for its broadband, appears to have hit annual recurring revenue of close to $20m for the current financial year.
Inspire Net’s Watts said while there was a tier for providers with revenue of between $10m and $50m, which involved a TDRS fee of $23,538 per year (Tier 3 on the TDRS’s scale), there was also a Tier 4 rate of $1177 per year for providers with revenue below $10m. The big telcos on the top tier pay $485,465 per year.
“Out of 160 ISPsm I think it sucks that they only picked four of us,” he said.
Telecommunications Carriers Forum chief executive Paul Brislen said his organisation encouraged all telcos to join - in part because it made industry-wide problems easier to solve.
“The TCF strongly believes all telcos should belong to the TDR scheme. It provides a vital backstop for customers, increases trust and accountability for the sector and means as an industry we can identify and fix any systemic issues as early as possible.”
Source: Commerce Commission
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