2degrees has sought urgent Commerce Commission action to stop Telecom from damaging competition in the mobile market. Telecom has confirmed it will lock the phones of customers who buy its planned ‘Skinny’ product, forcing them to pay a fee if they want to leave before a certain time. ‘SIM-locking’ is an anti-competitive practice the Commerce Commission warned against in 2008, when Vodafone tried to get away with it. Vodafone backed down after receiving a letter stating the practice was anti-competitive
2degrees chief executive Eric Hertz says the move shows that the ‘new Telecom’ is up to its old tricks.
“This flies in the face of the competition New Zealanders have come to expect and deserve. Customers will stay if they get value and should have the right to leave if they don’t,” says Hertz.
“2degrees has invested more than $350 million to create competition, backing itself to win and keep customers by giving them a better deal. We thought that this kind of monopolist behavior was a thing of the past, but there’s clearly still a need for consumer protection from dominant players.”
He says Telecom’s justification that SIM-locking will help young people get cheaper phones was insincere.
“This is not about better handsets. Improved competition is already driving down the cost of feature-rich smartphones. This is a cynical move to lock in the most cost-sensitive consumers so they can’t make a choice,” he says.
“Telecom says it will not SIM-lock customers on its XT network. That’s because business customers wouldn’t stand for it and neither should young New Zealanders.”
Skinny Mobile is a “youth -focused” sub-brand of Telecom, and is basically a rebranded version of the network also known as XT. The 20-odd team, led by Paul O’Shaunessy, is expected to launch in January, kicking off at the Rhythm and Vines festival. O’Shannessey told NBR that Skinny would have no ad agency, instead turning to “youth-sourced marketing” for its launch ideas and plans. Their social networking has already begun on Twitter and Facebook, where they have already received flak about the SIM locking.
2degrees has asked the Commerce Commission to gain assurances from all New Zealand mobile operators that they will not SIM-lock their handsets and take action if they attempt to do so. The question is over timing… and whether the Com. Com. will decide before Skinny launches.