Telecom lock-in must be stopped

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. ‘SIM-locking’ is an anti-competitive practice the Commerce Commission warned against in 2008.

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 Mr 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.”

Mr Hertz says Telecom’s comments in this morning’s media that SIM-locking will help young people get cheaper phones were 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,” says Mr Hertz.

“We note 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.”

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.