Section 1: Consumer access to dispute resolution

Background

Consumers of telecommunications services need to be able to purchase and use these services with confidence. An important aspect of this is having recourse to an independent and impartial means of resolving disputes with telecommunications providers. Part 7 of the Act provides for the establishment of industry dispute resolution schemes but does not mandate membership.

Dispute resolution services are intended to be available when a consumer has been unable to reach a resolution through their service provider’s complaints process. They provide a more cost and time effective means of dispute resolution than other alternatives, such as taking a dispute to the Disputes Tribunal.

There is currently one industry dispute resolution scheme that has been established under Part 7 of the Act, the Telecommunications Dispute Resolution scheme (the TDR) established by the TCF. The Act also allows for other industry dispute resolution schemes to be set up by the telecommunications industry.

The TCF is an industry member organisation representing most telecommunications providers in New Zealand. All members of the TCF are required to be members of the TDR. Non-TCF members may also become members of the TDR.

Under the Act an industry dispute resolution scheme plays an important role in hearing disputes about Commerce Commission codes (such as the 111 Contact Code or the Copper Withdrawal Code). The Commission is required to review industry dispute resolution schemes every three years. The Commission completed a review of the TDR in 2021.

In its review of the TDR the Commerce Commission highlighted the high level of complaints within the telecommunications sector. This has been a persistent problem for over a decade, with complaint volumes doubling in the preceding five years to the review. Against this backdrop of high complaints, the Commission noted that 13 per cent of fixed line customers did not have access to the TDR.

Mandatory membership of an industry dispute resolution service is a common feature of telecommunications regulatory frameworks overseas, for example in jurisdictions such as Australia and the United Kingdom.

Problem definition

We have some concern that not all telecommunications service providers are members of an industry dispute resolution scheme. While consumers of these providers may still refer complaints to the TDR about Commission codes, the providers themselves are not required to be members of the TDR (as the only industry dispute resolution scheme currently).

Consumers may not be aware that they have access to free and impartial dispute resolution services in relation to Commission codes. In addition, for any other consumer disputes, consumers may have no access to dispute resolution services with specialist knowledge and experience in telecommunications services. The problem potentially results in unfair or inadequate resolutions to disputes for consumers, and risks undermining confidence in our telecommunications markets.

This is an issue we are also considering in the context of recent market developments. New types of providers, such as satellite companies, now offer services to New Zealanders, and providers from other sectors (such as the energy sector) are offering bundled telecommunications products.

Questions for stakeholders

Options

Option 1: Status quo – no mandatory dispute resolution scheme membership

Under the status quo, membership in a telecommunications industry dispute resolution scheme remains voluntary in the Act. Consumers may continue to experience inconsistent access to telecommunications dispute resolution.

Option 2: Making membership in an industry dispute resolution scheme mandatory

Under this option, the Act would be amended to require all retail telecommunications service providers to become members of an industry dispute resolution scheme. This would give all consumers of telecommunications services access to free and impartial dispute resolution through an industry dispute resolution scheme.

Given there is only one industry dispute resolution scheme currently in place (the TDR), the implication of this option is that all telecommunications providers would likely become members of the TDR. Under the Act there is provision for other industry dispute resolution schemes to be developed.

Benefits

• Consumers would have access to free and impartial dispute resolution by schemes that specialise in telecommunications.

Considerations

• It will be important to consider whether scheme membership fees are affordable for smaller telecommunications providers.
• If additional industry dispute resolution schemes are developed, there could be greater choice and potentially lower costs, but there may be a risk of fragmentation in terms of user experience.

MBIE comment

At this stage we do not have a preferred option. We are seeking feedback from the industry and consumers on whether there is a need to make membership in an industry dispute resolution scheme compulsory.

Questions for stakeholders

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