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New Zealand Advertising Standards Authority has ruled in favour of new mobile entrant 2degrees
Posted on 15-Dec-2009 17:02 | Tags Filed under: News

The New Zealand Advertising Standards Authority (ASA) has ruled in favour of new mobile entrant, 2degrees concerning complaints the company laid against Telecom New Zealand over misleading advertising.

In the advertising Telecom suggested that due to 2degrees’ call rounding policy, prepaid calls on 2degrees’ network may cost more than calls made on Telecom’s One Rate Prepaid plan, and more than customers realised which was unfair.

2degrees Chief Executive Officer, Eric Hertz says that contrary to Telecom’s claims, 2degrees customers always pay less and often only a fraction of that paid by Telecom One Rate Prepaid plan customers.

“We are pleased with the outcome, although it was never in doubt that we would win. Even Telecom’s representatives at the ASA hearing acknowledged that our pre-pay pricing was cheaper than theirs,” said Eric.

“The one disappointing aspect to this process has been the heel-dragging employed by Telecom regarding the removal of the offending advertising material from their stores. I’m firmly of the opinion that they deliberately delayed complying with the ASA’s order to ensure the material remained available during the holiday buying season.”

Telecom spokesperson Julia Bell says t he ad was not intended as a direct price comparison, its purpose was simply to highlight that with Telecom’s One Second Billing, after the first minute, you only pay for the time you are on the phone. And that other providers don’t offer that on prepaid.

"We respect the ASA’s decision and we will amend the advertising. The advertisement was a very small part of a large, and successful, catalogue so we will apply a sticker over the ad in question. It is intended that this change will be completed by close of business today. There was no intention to denigrate or disparage Two Degrees’ calling offers - in fact we wish them luck for the busy Christmas selling season."

In the ASA’s view, the statement in the advertisement that: “Both Vodafone Supa Prepay and 2 Degrees round up to the next minute which means you may be paying a lot more for calls that you think,” contained an element of ambiguity, and that, compounded with the omission of any reference to 2degrees in the comparative text box resulted in the claim with regard to pricing being likely to mislead or deceive the consumer with regard to the pricing of 2degrees prepaid pricing structure.

The ASA noted that Telecom believed it was common knowledge among consumers that 2degrees offered a cheaper prepaid call service overall than its market competitors, Telecom and Vodafone.

Accordingly, the ASA said the advertisement was in breach of Rule 2 of the Code of Ethics and Guideline (b) of the Code for Comparative Advertising.

The ASA also considered the phrase “now that doesn’t seem fair” in the text in the advertisement: “Both Vodafone Supa Prepay and 2 Degrees round up to the next minute which means you may be paying a lot more for calls than you think, now that doesn’t seem fair.” (emphasis added)

In the ASA’s view this statement introduced a negative tone about a competing service and discredited and disparaged it. This was exacerbated by the fact that it was acknowledged that 2degrees overall pricing structure was cheaper than Vodafone and Telecom. Accordingly, the ASA ruled that the advertisement was in breach of Guideline (a) of the Comparative Code in respect of this issue. It also said the advertisement denigrated an identifiable competitor, and ruled that the advertisement was also in breach of Rule 8 of the Code of Ethics in respect of this issue.

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