One of the country's biggest telecommunications companies claims from 2024 its customers will have '100% mobile coverage' - but the consumer watchdog says that is not entirely true.
Now One NZ, formerly Vodafone, has been told to stop its high-profile advertising campaign.
The Commerce Commission has issued a "stop now letter" to the company after its investigation into the campaign raised concerns that it may be in breach of the Fair Trading Act, consumers are "being harmed", and it could distort competition in the sector.
The most significant concern the Commission has is about its "100% mobile coverage. Launching 2024" claim.
Appearing on AM on Friday, Commerce Commission chair Dr John Small said the issue is 100 percent coverage to most people implies a mobile service and this is not that.
"The headline claim is too broad and we think it is deceptive and misleading and we think a court would find it [the same]," Dr Small said.
The Commission said the coverage will only provide the ability to access text messaging (SMS and MMS only) from late 2024 and will only be accessible in locations where a consumer’s mobile phone has a "line of sight to the sky". The promotional material does not explain what this means.
In April, One NZ announced a partnership with the Elon Musk-founded US aerospace company SpaceX which will see Starlink satellites deliver the service to Aotearoa's territorial limit.
But Dr Small said there are potential issues with this as to get the service off the satellites there needs to be a direct line of sight.
"I have heard people even just having a tree in the way between their house and the satellite is problematic," he said.
"Coverage is one thing, connectivity is something completely different but when people buy a mobile service they are looking for something they can use all over the place."
The Commission believes One NZ's claim is likely to be understood by consumers as the ability to access all current mobile services – text messaging, voice calling and data – in all locations in New Zealand, at all times, from 2024.
However, the ability to access text messaging will only be late in 2024 with voice and data services following later in 2025. Text messaging send and receive times will also initially average two minutes, rather than the typical expectation of near-instantaneous transmission.
"You can make a strong headline claim as long as it's accurate. If you need to qualify that claim… then that needs to be of a similar kind of scale and obviousness to the main claim," Dr Small said.
"We are worried that it will actually mislead people."
The Commission has requested that One NZ stop making the representations without providing "prominent qualifying information" that explains the limitations of its coverage.
It noted only the courts can decide if there has been a breach of the Fair Trading Act.
One NZ confirmed they have received the Commission's letter and are reviewing it.
"The fact is the Starlink space satellites that enable the service will cover 100 percent of New Zealand, so we think it’s valid to talk about 100 percent mobile coverage," a spokesperson said.
One NZ said it has been clear the service will launch with text messaging in late 2024 to be followed by voice calling and data in 2025 and explained to connect to the coverage you need a "line of sight to the sky".
"That clearly means it's unlikely to work inside caves or dense buildings or bush where you can't easily see the sky, much like your current mobile use where there are some connectivity constraints even though you might be in range of a cell site," the spokesperson said.
"Once these next-generation satellite arrays are launched we’ll be able to fully test their connectivity capabilities.
"For now, we're focused on communicating the giant leap forward this satellite-to-cell technology will mean for One NZ customers to stay in touch with friends and family, connect their businesses and in emergency situations."
