Can we trust our telcos?

This week, Telecom New Zealand has been hauled over the coals . In a settlement with the New Zealand government's Commerce Commission, the telco agreed to repay NZ$9.5 million to more than 130,000 customers.

Telecom has also promised to tighten its administration as the commission notes "increasing concern" at Telecom's many similar breaches.

Consumer groups have called for stiffer penalties, The Telecom Users Association of NZ (TUANZ) is unhappy, as is the government. "Telecom has been the subject of at least eight Fair Trading Act convictions, settlements and warnings since 2003", noted Wellington's Dominion Post newspaper.

Such serial offending should justify tough action, even if offences are blamed on acts committed by former management several years ago.

Either way, it all adds to the poor reputation Telecom NZ has with many consumers, something that could cost it more in lost custom than any government fine. The latest breach led many tv bulletins and vox pops in the street showed little public faith in the company.

But Vodafone New Zealand cannot laugh either. It too has attracted the attention of the Commerce Commission, with charges relating to the Fair Trading Act being laid against it in October 2009.

Apparently, "cut throat competition is to blame" for much offending, says the Commerce Commission, as telcos push the act to the limit. New technologies and tech savvy consumers are other factors.

Now, Australia's telco market seems more competitive than New Zealand's phones, so is the ComCom right about competition? It could well be, as Telstra also seems a serial offender, most notably with claims concerning Next G. False claims from Telstra has led to a campaign being formed to get the giant to 'tell the truth.'

Telstra, however, is not alone, with the ACCC threatening telcos last March, before securing a binding agreement over misleading advertising in September.

Perhaps it is too soon to tell whether Australia's agreement has worked, and whether New Zealand needs a similar arrangement, particularly as Telstra also seems in particular trouble over access and wholesale issues.

Now, I can understand how competition might be a factor in misleading claims, but it does seem interesting that former state-owned giants appear to be the worst offenders. Do they carry the arrogant monopolist attitudes of the days when they were nationalised and cared little for the consumer?

Or are the telcos so untrustworthy that government should own them again. But if they were, could government be trusted to run and investigate them properly?