Vodafone found guilty of misleading conduct over "FibreX" service

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#2700259 30-Apr-2021 20:53

sbiddle:

I'm still with Vodafone on this one and don't see the issue here. The actions (or lack of them) by the Commerce Commission also show the failings and lack of consistency that still occur on a day to day basis.

The simple reality is that HFC is an acronym for hybrid fibre coax. If you're to argue that because this is not a FTTH product and can't have fibre in the description then surely the exact same argument can also be used meaning it can't be described as a coax service either since coax is part of the acronym as well.

While the X at the end was determined by some (and from memory somebody at Vodafone marketing in court) to mean a coaXial product I actually look at an X at the end of something and see it as a hybrid or crossover, and that's something used by literally thousands of brands and products in the English speaking world. Looking at the FibreX brand I simply see it meaning "fibre hybrid".

The Comcom and judge relied on several experts to establish that the technology used in the last mile should be the description of the product, however the view of subject matter experts is going to depend entirely on where in the world they are from. If you look at the UK as a classic example around 90% of the UK receive "fibre internet" which is sold and marketed as "fibre internet" despite being a FTTN/FTTC solution over VDSL. The true number of premises that can get a FTTH fibre connection sits at around 20%. In many other parts of the world the term "fibre internet" does not mean FTTH, and it's really common across Europe and Asia for "fibre" to be used to describe products such as MDU builds where connectivity to the apartment itself is copper using g.hn or G.fast to deliver 1Gbps. The case really centered around the fact the Comcom believe the word "fibre" meant that the product had to be a 100% fibre to the home product.

Your understanding, and international meanings are entirely irrelevant to this case.

Vodafone completely failed the "reasonable person" test - what would a "typical" consumer in NZ understand FibreXYZ to be? Fibre has a meaning in the NZ market and it isn't HFC. FibreX was a deliberate attempt to obfuscate the truth and they got slapped for it. The decision is entirely reasonable in law and in principle.

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#2700875 2-May-2021 21:25

Handle9:

sbiddle:

I'm still with Vodafone on this one and don't see the issue here. The actions (or lack of them) by the Commerce Commission also show the failings and lack of consistency that still occur on a day to day basis.

The simple reality is that HFC is an acronym for hybrid fibre coax. If you're to argue that because this is not a FTTH product and can't have fibre in the description then surely the exact same argument can also be used meaning it can't be described as a coax service either since coax is part of the acronym as well.

While the X at the end was determined by some (and from memory somebody at Vodafone marketing in court) to mean a coaXial product I actually look at an X at the end of something and see it as a hybrid or crossover, and that's something used by literally thousands of brands and products in the English speaking world. Looking at the FibreX brand I simply see it meaning "fibre hybrid".

The Comcom and judge relied on several experts to establish that the technology used in the last mile should be the description of the product, however the view of subject matter experts is going to depend entirely on where in the world they are from. If you look at the UK as a classic example around 90% of the UK receive "fibre internet" which is sold and marketed as "fibre internet" despite being a FTTN/FTTC solution over VDSL. The true number of premises that can get a FTTH fibre connection sits at around 20%. In many other parts of the world the term "fibre internet" does not mean FTTH, and it's really common across Europe and Asia for "fibre" to be used to describe products such as MDU builds where connectivity to the apartment itself is copper using g.hn or G.fast to deliver 1Gbps. The case really centered around the fact the Comcom believe the word "fibre" meant that the product had to be a 100% fibre to the home product.

Your understanding, and international meanings are entirely irrelevant to this case.

Vodafone completely failed the "reasonable person" test - what would a "typical" consumer in NZ understand FibreXYZ to be? Fibre has a meaning in the NZ market and it isn't HFC. FibreX was a deliberate attempt to obfuscate the truth and they got slapped for it. The decision is entirely reasonable in law and in principle.

International meanings are very relevant to the case. Why should they be irrelevant? The simple reality is that across large parts of the world "fibre broadband" is a product delivered using various last mile technologies and not limited to fibre. Why should a meaning in NZ be any different?

Every day we see and experience things that people deem confusing or misleading that the ComCom does nothing about. Many of these things are because people make assumptions that are incorrect. The fact that they chose to ignore most of these shows it's not about protecting consumers, or the population as a whole.

Vegetarian sausages for example can't legally exist because FSANZ food laws specify what a sausage is, and the fat free meat content of sausages. It's why sizzlers are not sausages but a processed meat product yet there are a multitude of "vegetarian sausages" on NZ supermarket shelves. Why is this allowed?

The fact that the Comcom have not yet even bothered do deal with the term "fibre" being used by multiple companies to describe their wireless product offerings shows they actually couldn't care less about protecting cunsumers from everything they argue about in their court action. If they truly believed in protecting consumers they would do something about this (which would be a simple as contacting WISPA for a start), but the simple fact is they obviously couldn't care less. They bet VF so they're happy, even if it's ultimately consumers having to pay the cost of that legal action.

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#2700887 2-May-2021 22:11

Handle9

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#2700888 2-May-2021 22:13

sbiddle:

International meanings are very relevant to the case.

Nope. Fibre broadband has a meaning in NZ, Vodafone acknowledge this in the instruction above to their sales staff.

The test is clear, it is the meaning in the NZ market that is relevant.

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#2700891 2-May-2021 23:00

sbiddle:

Handle9:

Your understanding, and international meanings are entirely irrelevant to this case.

Vodafone completely failed the "reasonable person" test - what would a "typical" consumer in NZ understand FibreXYZ to be? Fibre has a meaning in the NZ market and it isn't HFC. FibreX was a deliberate attempt to obfuscate the truth and they got slapped for it. The decision is entirely reasonable in law and in principle.

International meanings are very relevant to the case. Why should they be irrelevant? The simple reality is that across large parts of the world "fibre broadband" is a product delivered using various last mile technologies and not limited to fibre. Why should a meaning in NZ be any different?

Every day we see and experience things that people deem confusing or misleading that the ComCom does nothing about. Many of these things are because people make assumptions that are incorrect. The fact that they chose to ignore most of these shows it's not about protecting consumers, or the population as a whole.

Vegetarian sausages for example can't legally exist because FSANZ food laws specify what a sausage is, and the fat free meat content of sausages. It's why sizzlers are not sausages but a processed meat product yet there are a multitude of "vegetarian sausages" on NZ supermarket shelves. Why is this allowed?

The fact that the Comcom have not yet even bothered do deal with the term "fibre" being used by multiple companies to describe their wireless product offerings shows they actually couldn't care less about protecting cunsumers from everything they argue about in their court action. If they truly believed in protecting consumers they would do something about this (which would be a simple as contacting WISPA for a start), but the simple fact is they obviously couldn't care less. They bet VF so they're happy, even if it's ultimately consumers having to pay the cost of that legal action.

Vegetarian sausages, Airfiber wireless links, and other not-x-but-like-x terms all include another word that clearly indicates that the product is *not* x. A 'vegetarian sausage' is a contradiction in terms, and clearly cannot both be true - so any consumer knows something else is meant. Ask the average jury of 12 what a vegetarian sausage is, and I'm sure you won't get 'meat product'.

FibreX is not that. The X does not in any way indicate to a consumer that it's not what's generally considered - here - a fibre connection. If anything, it sounds more like Hyperfibre or Fibre Plus - an upgrade from plain 'Fibre'.

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#2700910 3-May-2021 08:02

I asked a couple of folk this over the weekend, all folk who are modern Internet age savey, but not technology nurdes like those in this thread.

Almost all thought the X implied it was super duper extra fantastic fibre rather than just fibre.

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#2700917 3-May-2021 08:43

Anything with cables, coax, fibre or wires is so last century. Spark would have you believe that wireless is all you'd ever need.

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#2701737 4-May-2021 15:09

SomeoneSomewhere:

Vegetarian sausages, Airfiber wireless links, and other not-x-but-like-x terms all include another word that clearly indicates that the product is *not* x. A 'vegetarian sausage' is a contradiction in terms, and clearly cannot both be true - so any consumer knows something else is meant. Ask the average jury of 12 what a vegetarian sausage is, and I'm sure you won't get 'meat product'.

FibreX is not that. The X does not in any way indicate to a consumer that it's not what's generally considered - here - a fibre connection. If anything, it sounds more like Hyperfibre or Fibre Plus - an upgrade from plain 'Fibre'.

You simply cannot have a product called "Air fibre" based on the Comcom ruling. They have made that very clear - so if you believe Air fibre is fine as a product you *have* to believe FibreX is OK too.

Likewise vegetarian sausages cannot legally exist based on the ruling. We have a legal definition of a sausage, and adding vegetarian in front if do different to adding the air in front of fibre to make air fibre or the X at the end of Fibre to be FibreX. Based on the Comcom ruling it's simply not legal.

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#2701746 4-May-2021 15:30

sbiddle:

SomeoneSomewhere:

Vegetarian sausages, Airfiber wireless links, and other not-x-but-like-x terms all include another word that clearly indicates that the product is *not* x. A 'vegetarian sausage' is a contradiction in terms, and clearly cannot both be true - so any consumer knows something else is meant. Ask the average jury of 12 what a vegetarian sausage is, and I'm sure you won't get 'meat product'.

FibreX is not that. The X does not in any way indicate to a consumer that it's not what's generally considered - here - a fibre connection. If anything, it sounds more like Hyperfibre or Fibre Plus - an upgrade from plain 'Fibre'.

You simply cannot have a product called "Air fibre" based on the Comcom ruling. They have made that very clear - so if you believe Air fibre is fine as a product you *have* to believe FibreX is OK too.

Likewise vegetarian sausages cannot legally exist based on the ruling. We have a legal definition of a sausage, and adding vegetarian in front if do different to adding the air in front of fibre to make air fibre or the X at the end of Fibre to be FibreX. Based on the Comcom ruling it's simply not legal.

Yeah nah.

Firstly it's not a Commerce Commission ruling, it is a ruling by the district court. Vodafone were proved guilty of misrepresenting the nature of their service beyond reasonable doubt. This is a substantial bar.

What you call a product is a very small part of misrepresenting it. If you make the nature of the product clear then you are not misrepresenting it. Vodafone failed this badly.

The rest of what you have written is fairly silly.

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#2701889 4-May-2021 18:38

Per the Court's decision, relating to charges under s 11 of the FTA, you need to prove that the conduct was both liable to mislead the public and in relation to the characteristics of its services. The alternative charges under s 13(b) were not considered.

Interestingly, it appears that this solely relates to services and not goods in any way. Presumably there is a comparable section of the FTA relating to goods; I haven't checked.

The requirement is that they mislead the public. Puffery is a deliberate exception (though vegetarian sausages would not be 'puffery', and Stuff Fibre ran afoul of this).

ComCom hasn't issued any warnings about the vege sausages despite the fairly major campaign in the EU to ban the term, so I suspect they are legalised here somewhere.

Paragraphs [37] through [48] consisted of Vodafone trying to convince the court that the 'X' meant 'not fibre', including admitting that they don't have records of what ads they ran when. I think it would be a lot easier to convince the court that 'Vegetarian' meant 'not a meat sausage'.

This is also a pretty interesting footnote:

Handle9

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#2701901 4-May-2021 19:05

SomeoneSomewhere:

Per the Court's decision, relating to charges under s 11 of the FTA, you need to prove that the conduct was both liable to mislead the public and in relation to the characteristics of its services. The alternative charges under s 13(b) were not considered.

Interestingly, it appears that this solely relates to services and not goods in any way. Presumably there is a comparable section of the FTA relating to goods; I haven't checked.

The requirement is that they mislead the public. Puffery is a deliberate exception (though vegetarian sausages would not be 'puffery', and Stuff Fibre ran afoul of this).

ComCom hasn't issued any warnings about the vege sausages despite the fairly major campaign in the EU to ban the term, so I suspect they are legalised here somewhere.

Paragraphs [37] through [48] consisted of Vodafone trying to convince the court that the 'X' meant 'not fibre', including admitting that they don't have records of what ads they ran when. I think it would be a lot easier to convince the court that 'Vegetarian' meant 'not a meat sausage'.

Section 10 of the FTA relates to goods.

"...liable to mislead the public" is the test - it doesn't actually have to mislead someone.

Vegetarian sausages is a poor example as the name is liable to mislead the public. The name is a reasonable description of the product. A reasonable person would have no idea of the legal definition of sausages but they get a good understanding of the nature of vegetarian sausages from the name.

It's also not just the name that is important, it is the way the product is portrayed. Vodafone could have quite legitimately called HFC FibreX if they made it clear that it wasn't fibre. They deliberately didn't do that and in fact produced marketing material that gave the impression that it was fibre.

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#2701947 4-May-2021 21:53

Aucklandjafa:

Speaking of: is Voda's HFC internet worth the $40+ saving per month compared to gigabit fibre? Looking at alt ISPs for a new flat

A bit off topic, but in my opinion - yes.

For us in Christchurch it's been a great reliable service.

When I connect to ethernet for a speedtest, I get over 900 download speed, and 100 up.

Over Wifi with my MacBook Pro and the included router, I get over 600 down, and 100 up.

Just make sure it's possible to upgrade to Fibre later if needed - EG, is there Fibre / an ONT installed? And check with Chorus, Enable or UFF if Fibre free installs are ending soon and what that means whether you do or don't have an ONT installed.

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#2703836 9-May-2021 10:39

Guys my mobile phone connects to the tower by 3G/4G/5G but the tower itself is fed with fibre backend. Plus 5G tech can go up to 2+Gbps too, therefore I also have fibre on my phone!

My 1.5Mbps ADSL connection's last mile is still copper and can only go up to that speed due to noise and interference, but it has a fibre network fed to the cabinet the the road side. Therefore I'm calling it FibreY.

There's a reason why you run fibre for the 'last mile' and distinguish it from non-fibre last mile connections.

edit: in the US, ATT rebranded their 3.5G service as 4G because their competition/Verizon had a big leg up in deploying LTE everywhere. And even though ATT's 4G was not LTE because they argued that their speed 'can be' comparable to LTE (it's not). They got away with it and other carries started doing the same, so now the phone will display 4G for when you have a fairly bad connection without actual 4G and LTE when you actually do have true '4G'.

Yabanize

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#2703996 9-May-2021 14:50

danza: Guys my mobile phone connects to the tower by 3G/4G/5G but the tower itself is fed with fibre backend. Plus 5G tech can go up to 2+Gbps too, therefore I also have fibre on my phone!

My 1.5Mbps ADSL connection's last mile is still copper and can only go up to that speed due to noise and interference, but it has a fibre network fed to the cabinet the the road side. Therefore I'm calling it FibreY.

There's a reason why you run fibre for the 'last mile' and distinguish it from non-fibre last mile connections.

edit: in the US, ATT rebranded their 3.5G service as 4G because their competition/Verizon had a big leg up in deploying LTE everywhere. And even though ATT's 4G was not LTE because they argued that their speed 'can be' comparable to LTE (it's not). They got away with it and other carries started doing the same, so now the phone will display 4G for when you have a fairly bad connection without actual 4G and LTE when you actually do have true '4G'.

I remember being confused when I used an american cellphone in NZ, around 2012 or 2013 before 4G was available, and it said "4G" at the top, when really, it was just 3G (or 3.5G)

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#2915383 18-May-2022 08:35

From Commerce Commission:

Commission appeals record $2.25m fine in Vodafone FibreX case

The Commerce Commission has filed an appeal in the High Court against a record $2.25 million fine imposed on Vodafone NZ Limited (Vodafone) for its offending under the Fair Trading Act during its FibreX advertising campaign.

While the sentence imposed in the Auckland District Court on April 14 was the largest-ever fine under the Fair Trading Act, the Commission will argue that it is manifestly inadequate.

Commerce Commission Chair, Anna Rawlings, says the Commission will argue the fine did not appropriately reflect the seriousness of the offending, and the size and financial resources of Vodafone. The Commission will also argue that Vodafone’s conduct was wilful (rather than grossly careless) and allowed Vodafone to make significant commercial gains.

“The Commission sees this case as raising important issues relating to compliance with the Fair Trading Act.

“The fines imposed for this type of offending must be significant enough to deter Vodafone and other large businesses from engaging in this type of conduct in the future.

“The Commission sees benefits in clarifying the application to this case of the Court of Appeal’s decision in 2020 in Steel & Tube, which sets out a framework for sentencing decisions under the Fair Trading Act.”

The Commission had originally sought a fine of $5.8 million and is appealing the $2.25 million sentence.

“We will argue that the District Court did not apply adequate uplift to ensure that the fine sufficiently reflects the offending of a large corporate offender like Vodafone,” Ms Rawlings says.

The Commission will also ask the High Court to reconsider the evidence presented from individual consumers as to the harm that they suffered as a result of Vodafone’s breaches.

Vodafone was found guilty, following a two-week trial, of conduct liable to mislead consumers into believing that FibreX was a fibre-to-the-home broadband service, when it was not. Vodafone also pleaded guilty to charges relating to its online address checker, which suggested to consumers that FibreX was the only available broadband service at their address, when that was not true.

“The promotion of Vodafone FibreX denied consumers the ability to make an informed choice about FibreX or to choose the type of broadband most appropriate for their needs,” Ms Rawlings says.

It also impacted competition for the supply of broadband services in New Zealand. By misleading consumers into believing FibreX was fibre-to-the-home, Vodafone gave itself an unfair advantage over its competitors who were selling true “fibre”, including local fibre companies and other retailers.

Vodafone’s conduct coincided with Government investment of more than $1.5 billion in the roll-out of UFB (Ultra-fast Broadband). This investment had a focus on stimulating consumer uptake of fibre-to-the-home broadband services.

Around 250,000 households in Wellington, Kapiti and Christchurch were targeted by Vodafone’s FibreX campaign.

Vodafone continued with the campaign even after being contacted by the Commission following consumer complaints.

As this matter is now before the court, the Commission will not be commenting further at this time.

The judgment from 14 April 2022 is available on our case register here.

Background
Vodafone was sentenced in the Auckland District Court on 14 April 2022 for 18 representative charges under section 11 of the Fair Trading Act 1986 (FTA) relating to conduct in Wellington, Kapiti and Christchurch, where its “FibreX” branded service was offered, between 26 October 2016 and 28 March 2018.

The 18 charges comprise:

• nine charges relating to Vodafone’s representations on its website about the availability of fibre-to-the-home (FTTH) broadband services, to which Vodafone pleaded guilty on 16 November 2018; and
• nine further charges arising from Vodafone’s branding and advertising of its Hybrid Fibre Cable (HFC) broadband service, of which Vodafone was found guilty in the Auckland District Court in April 2021 after a 14 day trial.

Read more information here.

Under section 11 of the Fair Trading Act, no person shall, in trade, engage in conduct that is liable to mislead the public as to the nature, characteristics, suitability for a purpose, or quantity of services. The District Court found that Vodafone’s naming and marketing of FibreX was liable to mislead the public into thinking FibreX is something that it is not.

Vodafone’s prior history with the Commerce Commission
In 2020, Vodafone was warned by the Commission for misleading consumers about account credits and for representations made in a loyalty discount promotion.

In 2019 Vodafone was fined $350,000 for making false representations in invoices it sent to customers after it pleaded guilty and was convicted of 14 charges under the Fair Trading Act for conduct that occurred between January 2012 and December 2018.

In 2017 Vodafone was one of four telecommunication companies issued warnings by the Commission about specific conduct that the Commission considered breached the Fair Trading Act.

In 2016 Vodafone was fined $165,000 in the Auckland District Court after pleading guilty to making false price representations in breach of the Fair Trading Act in invoices sent to customers who signed on to the ‘Red Essentials’ mobile phone plan between January and December 2014.

In 2013, the Commission and Vodafone reached an out of court settlement over misleading conduct in relation to Vodafone’s promotion of its “Broadband Lite” service.

In 2012 Vodafone was fined $960,000 in relation to advertising campaigns it ran from October 2006 – February 2009 for various broadband and mobile phone promotions including Broadband everywhere, Supa Prepay Connection Pack and Largest 3G Network.

In 2011, Vodafone pleaded guilty to breaching the Fair Trading Act in relation to its Vodafone Live! mobile phone internet service. Vodafone misled consumers that its Vodafone Live! service was "free to browse" and customers would be warned before incurring any charges.

That same year, Vodafone was fined $81,900 for breaching the Fair Trading Act in relation to its $1 a day mobile phone internet data charges promotion. It represented that it would only charge customers $1 a day for 10 megabytes of casual data usage, but failed to disclose that the $1 threshold would be reached once the customer had used 204.8 kilobytes of data.

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