We always knew the broadband industry was full of tired, old practices and processes, but now we’ve joined the market with our own plans, we’ve realised the extent to which consumers are being let down.
We’ve been working hard to improve the energy industry to the benefit of Kiwi households and businesses for several years now – with plenty of success – and now we’re determined to make things better in broadband, too.
Our primary concern is notice periods. Customers usually have to give 30 days’ notice when they intend to leave, or at least notice until their next scheduled billing date. We believe these notice periods are designed to discourage switching because they create anxiety among consumers, and the general feeling that it’s all just too difficult. If you’ve remained with your broadband provider and tolerated high prices and poor service for years without leaving, you’re certainly not alone.
Notice periods are clearly a barrier to switching (we’ve done the research to prove it, below) and therefore undermine what’s supposed to be a competitive market. They’re not necessary in energy and we’re convinced they have no place in broadband either. That’s why we don’t charge in advance and don’t have contracts or notice periods.
But we know we face an uphill battle, because the processes we’re talking about work in favour of the incumbents. As one challenger telco put it to us when we contacted them about our intentions, “you can’t change anything without the support of Vodafone, 2degrees and Spark”.
Well, we accept the challenge.
We believe notice periods are designed to discourage switching because they create anxiety among consumers, and the general feeling that it’s all just too difficult.
What are we going to do?
Our intention is to advocate for change, but also to amend our own processes so that incoming customers get the best switching experience they can based on which telco they’re leaving (this includes making sure customers are aware of, and hopefully avoid, any fees they may incur from their old provider). We firmly feel that process improvement is in everyone's best interests, most importantly consumers who should be able to switch providers quickly and easily without fear of losing their service or having to pay unnecessary costs.
We’ve reached out to all major telcos in New Zealand to seek their cooperation on this – and to see if they want to join our campaign to end notice periods – but we’ve received lukewarm responses at best from most of them. The worst of the bunch have point-blank refused to engage with us at all. A notable exception is Trustpower who seems to share our broad concerns with notice periods, though we may differ slightly on the specifics, and that’s OK.
The industry body that represents telco companies, the NZ Telecommunications Forum (TCF), doesn’t see a problem with notice periods because they provide a point of difference between retailers. Well, they’re not wrong there…
We already know many customers hate notice periods. The challenge for us is to convince the industry that change is needed because we think it’s in the best interest of consumers no matter which telco they’re with or switching to.
Why change is needed
We haven’t been involved in broadband for long, but we already know that many Kiwis are clinging onto their old telcos because switching just feels too difficult. This means they could be missing out on cheaper prices, better service and superior internet performance. Like we said, notice periods are in the best interest of the retailers, not consumers…
We surveyed about 1,500 adults to ask about their experience switching broadband providers, or to get their reasons for not doing so (we commissioned market research agency Pure Profile to do this on our behalf in August).
We found that 44% of households have switched providers in the last three years, leaving 56% who haven’t. While the majority of those who haven’t switched said they’re still happy with their current telco, a significant one in five (21%) admitted that the process of switching is too daunting. A further 12% said they haven’t switched because they’re under contract and don’t want to pay exit fees.
Of those who have gone ahead and switched, most did so in search of cheaper prices (66%), about one in three (35%) said internet performance was a reason and 20% were fed up with the customer service and general experience of their old provider.
Crucially, 47% of survey respondents who switched admitted that they would have done so sooner if it wasn’t for notice periods and the process in general. This is epitomised by the fact that one in four (25%) said they were charged more than expected by their old telco.
The good news is that 90% of switchers ultimately said it was worth the effort, and fewer than 50% would consider returning to their old provider.
Our point, of course, is that switching shouldn’t be an effort in the first place. Switching should be easy. It encourages consumers to engage with the market and forces retailers to up their game in respect of price, conditions and service. That’s why the big guys will fight it, and why we’re certain we’re on the right track.
Watch this space.