Wellington, June 18 NZPA - Telecom is to refund a total of about $120,000 to around 1300 customers who may have been misled by a "Basic Broadband Plan" promotion carried out by the company in 2008.

As part of a settlement reached with the Commerce Commission, Telecom has also agreed to pay $75,000 to Consumer New Zealand to help fund a telecommunications Price Comparison Project intended to provide an internet-based tool for consumers to compare the prices of different telecommunications products.

This settlement closed the last of a number of significant fair trading investigations involving Telecom, the commission said today.

In the latest case, the commission and Telecom had reached a settlement for the plan which the company marketed between April and June 2008 using the phrase "Get Telecom Broadband at Dial Up Prices".

Under the plan consumers could obtain 200 megabytes (MB) of data per month for $16.95 for each of the first six months of a minimum 12-month fixed term contract, then at $29.95 for each of the remaining months.

The commission said it received complaints that some of the advertising for the promotion failed to accurately disclose the true cost and data restrictions of the plan.

It was alleged that the phrase "Get Telecom Broadband at Dial Up Prices" could lead consumers to believe that the plan would cost no more than a comparable dial up plan. But for the second six months of the minimum 12-month contractual term, the price of $29.95 per month was higher than for any of Telecom's dial up plans.

Some consumers also complained that the 200MB data cap meant that they would effectively get much less internet usage than they had previously on a comparably priced dial up plan, the commission said.

Telecom admitted its promotion breached the Fair Trading Act in that its initial television advertising failed to adequately disclose the minimum 12-month contract period and that the plan was only available at $16.95 for each of the first six months of the contract and $29.95 per month after that.

It also admitted its print and television advertising did not adequately disclose that the plan had a data cap of 200MB per month, with an overcharge rate of 2c per MB.

The refund being paid as part of the settlement is for customers not already credited in several other ways.

Previous Fair Trading Act convictions, settlements and warnings included a settlement in January 2010 with Telecom and Xtra in which Telecom admitted making misleading representations about the price customers had to pay for internet services. The settlement resulted in the refund of $9.5m to affected customers, the commission said.

In December 2009 Telecom was fined $500,000 in Auckland District Court after pleading guilty to 17 charges over claims made in 2006 when promoting Xtra's Go Large broadband plan.

Telecom group general counsel Tristan Gilbertson said Telecom was pleased to have reached a settlement for the historical Broadband at Dial-Up prices campaign.

It was the third and final of three historic issues the company had been working with the commission to resolve, he said.

"Our drive to resolve these historic issues is all about acknowledging mistakes where they have been made in the past and putting things right," Mr Gilbertson said.

"Equally, as we move into the future, we need to ensure we learn from the past. To this end, we have been on a concerted drive to improve our compliance processes, to keep future issues to an absolute minimum."

Updated training had been developed for Telecom staff, and targeted refresher training had already been undertaken by Telecom's marketing teams.

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