Why One NZ has just copped a record fine over the Vodafone NZ-era ‘FibreX’ campaign

Fibre X promoted at a Vodafone store in the Wellington CBD in October 2017. Photo / Chris Keall

One NZ has been hit with a record $3.68 million fine over its historic “FibreX” marketing campaign.

It is the largest penalty ever imposed for a breach of the Fair Trading Act, a Commerce Commission spokeswoman told the Herald.

The telco was found guilty of misleading consumers with its 2016-2018 “FibreX” marketing campaign for the hybrid fibre-copper cable service it offers in parts of the Kapiti Coast, Wellington and Christchurch. The Commission argued consumers were liable to think, mistakenly, that UFB (Ultrafast Broadband) fibre was on offer.

The regulator also argued the telco “was falsely suggesting to consumers that FibreX was the only available broadband service at their address, which was not true”.

District Court Judge Pippa Sinclair found the telco guilty and imposed a $2.25m fine in April 2021 (from a potential maximum penalty of $16m).

Both sides appealed the penalty, with Commission arguing the penalty was too low to be a deterrent, and the telco standing by a claim its hybrid service was “fibre-like” and consumers were not misled. The telco wanted the conviction overturned.

In a judgment dated August 11, 2023 and released today, the fine was increased to $3.68m. At the same time, One NZ’s appeal against its original conviction was dismissed.

The ruling by Justice Simon Moore followed a March 13-15 hearing.

One NZ responds

One NZ spokesman Conor Roberts said the fine related to a now-discontinued promotion that ran from late 2016 to early 2018 when the business was known as Vodafone.

“We are very disappointed with the outcome and respectfully disagree with the Court’s decisions both in its initial conviction, and subsequent dismissal of our appeal. We will consider our response and have no further comment at this time.”

‘Strong deterrent’

Commission chairman John Small said the $3.68m penalty would be a strong deterrent to other large businesses.

Using notably front-foot language, he called it a “sting to One NZ for Kiwi consumers.

“This judgment against One NZ is a significant win for Kiwi consumers – because every New Zealander should be able to trust what businesses are saying in their marketing and promotion of their services,” he added.

“The Fair Trading Act requires claims to be truthful and accurate in order to give you the information you need to make an informed purchasing decision.

“In this case, One NZ’s conduct was misleading and, in addition to the consumer harm, it distorted competition for the supply of broadband services in New Zealand,” Small said.

Series of tangles

The ruling follows a series of tangles between Vodafone NZ (which rebranded to One NZ in April) and the Commerce Commission.

Early actions had the telco fined $350,000 in 2019 for making false representations in invoices sent to customers (Spark was fined $675,000 in a similar case the same year). A 2016 case, also related to invoicing, led to a $165,000 fine.

The most recent spat involved the regulator issuing a ‘Stop Letter” in July over One NZ’s “100% Mobile Coverage” campaign, which related to its partnership with Elon Musk’s SpaceX - which will provide satellite-to-smartphone texting from late next year for service outside areas covered by OneNZ’s mobile network.

The watchdog argued that “100% Mobile Coverage” was potentially false or misleading.

A legal clash was averted when One NZ dropped its “100%” tagline in favour of “Coverage like never before, launching 2024.”

The telco said it disagreed with the Commission that the campaign was misleading. It said it had always planned a fresh campaign from July.

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.