Retail service bundling guidelines for telcos

Consultation overview

In September 2023, the Commerce Commission released draft guidelines that would require telcos to clearly explain their bundled offers, so that consumers can easily compare prices and make an informed choice about the value they provide. The proposed guidelines included the following requirements.

• If electricity or gas is cheaper outside a bundle with the same provider, this should be disclosed prominently upfront to the consumer.
• If goods (such as fridges, TVs, or vacuum cleaners) are included in a bundle, then the recommended retail price should be disclosed upfront, to help consumers determine the value of the bundle.
• If consumers can’t switch one part of a bundle without losing another – for example, being unable to switch your electricity provider without also losing your broadband – this needs to be prominently disclosed upfront to the consumer.
• Consumers should be clearly told what they’ll need to repay if they cancel any bundled service while in contract.
• All prices in the bundle should be displayed inclusive of GST, to end the practice of having energy prices shown exclusive of GST and broadband prices inclusive of GST.

The Commerce Commission invited feedback on the guidelines, which we provided on behalf of NZ's small electricity consumers.

Submissions on this consultation closed on 13 October 2023.

Telecommunications retail service quality | Commerce Commission(external link)

Our recommendations

We support efforts to improve price transparency at the point of sale and help ensure consumers can make informed decisions. We also agree that consumers need to be able to understand the price of each component within a bundle, as well as any specific obligations associated with signing up for a package of services. 

Our comments on the draft guidelines focus primarily on clauses 9.1 and 9.2. 

Clause 9.1

Clause 9.1 states retail service providers (RSPs) should prominently disclose if a price for a plan in a bundled deal is higher than the price for a comparable plan outside the bundle.

In relation to electricity (or gas), clause 9.1.1 states 'if the daily charge and/or the per-kWh unit price are higher in the bundle than the unbundled price for a comparable plan, this should be prominently disclosed so that consumers are aware of the unbundled alternative'.

• We recommend the Commerce Commission considers an addition to clause 9.1.1 that would require the RSP to disclose the estimated difference in annual cost. This could be done by including a statement on estimated annual costs, based on average household electricity consumption
• Where the consumer is already an electricity customer of the RSP, the company will have data on the household’s power use. In these situations, RSPs could be further required to provide an estimate of the price difference, based on usage data, before the customer signs up for the bundled deal.
• We also suggest the Commerce Commission could consider the development of a simple online calculator that consumers could use to independently check the annual costs of bundled offers. The calculator could help consumers work out whether a bundled deal provided better value than their current plan.

Clause 9.2

Clause 9.2 states RSPs should 'prominently disclose the RRP' for any goods or third-party services offered as part of the bundle or, in the case of goods or third-party services sold separately by the RSP, the RSP’s retail price of the good or service offered outside of the bundle.

The use of the recommended retail price (RRP) as a reference point for price comparisons may be problematic. We note the RRP is the price recommended by the product manufacturer and may not be a price that is actually charged in the market. Therefore, using the RRP may lead consumers to believe the deal offers better value than it does.

We suggest the Commerce Commission considers an addition to this clause to state that if an RRP is used, then the RRP must reflect a price at which the item is readily available. This would be consistent with its published advice to retailers on the pricing of products and services.

Other clauses 

We support the provisions of clauses 9.3 to 9.6. We agree conditions (clause 9.3) and any termination fees (clause 9.5) associated with bundled deals should be prominently disclosed. We also strongly support prices for goods and services within a bundle being displayed on a GST-inclusive basis by default (clause 9.6).