BSA Decisions Ngā Whakatau a te Mana Whanonga Kaipāho

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Summary

Some customer complaints that Telecom had "hijacked" users of other telephone companies were investigated in an item on 3 National News, broadcast between 6.00–7.00pm on 1 December 1997. "Hijacking" involves diverting customers, without their permission, from other telephone companies to the "hijacker".

The solicitors for Telecom New Zealand Ltd complained to TV3 Network Services Ltd, the broadcaster, that the item was unfair and unbalanced in both its preparation and presentation in alleging that Telecom was the only company involved in this activity, and that it was occurring on a substantial scale. A balanced item would have reported that unauthorised diversions were rare, and were undertaken by other companies as well, the complainant wrote.

On the basis that the item accurately reported Telecom's claim that other companies signed up customers against their will, TV3 declined to uphold the first part of the complaint. On the issue of the number of unauthorised diversions, TV3 also declined to uphold the complaint on the basis that the reported statement was TV3’s understanding of the position based on "sources within the telecommunications industry".

When referring the complaint to the Broadcasting Standards Authority under s.8(1)(a) of the Broadcasting Act 1989, Telecom asked the Authority to use its powers to obtain all the background material relevant to the item.

For the reasons below, the Authority upholds the aspect of the complaint relating to the accuracy of the number of diversions which the broadcast said was occurring.

Decision

The members of the Authority have viewed the item complained about and have read the correspondence (summarised in the Appendix). In this instance, the Authority determines the complaint without a formal hearing.

An item on 3 National News broadcast on 1 December 1997 examined the issue of "hijacking" in the telecommunications industry. It claimed that Telecom had "hijacked" users of other telephone companies. "Hijacking", it was reported, involved diverting customers, without their permission, from other telephone companies to the "hijacker".

The solicitors for Telecom complained to TV3 that the item was unfair and unbalanced in that it suggested that Telecom alone was diverting customers, and that this was occurring on a substantial scale. A fair and balanced item, it wrote, would have explained that unauthorised diversions were rare and that they occurred across the industry. Telecom considered that the item had breached standards G1, G4, G6, G14, G19 and G20 of the Television Code of Broadcasting Practice. TV3 was aware of this information about the extent of hijacking and that it was occurring across the industry, Telecom observed, as these points had been made to TV3’s reporter when he had interviewed the company’s Mr Armstrong. Furthermore, Telecom wrote, this was one of the examples which disclosed what it called the anti-Telecom and pro-Clear thrust of the item, and it commented:

For an item described as a special investigation on primetime television news to portray Telecom as engaged in extensive "highjacking", and Clear as no more than an innocent victim, is of course a public relations coup for Clear. If the item were accurate and balanced, Telecom could not complain. But accuracy and balance were conspicuously lacking. Telecom not only complains but believes that TV3 has allowed itself to be "used" by Clear.

Telecom also noted that in the preparation of its complaint, TV3 had refused to supply it with unused footage and other background materials which it had requested.

TV3 assessed the complaint under the nominated standards. The first three require broadcasters:

G1 To be truthful and accurate on points of fact.

G4 To deal justly and fairly with any person taking part or referred to in any programme.

G6 To show balance, impartiality and fairness in dealing with political matters, current affairs and all questions of a controversial nature.

The other three read:

G14 News must be presented accurately, objectively and impartially.

G19 Care must be taken in the editing of programme material to ensure that the extracts used are a true reflection and not a distortion of the original event or the overall views expressed.

G20 No set formula can be advanced for the allocation of time to interested parties on controversial public issues. Broadcasters should aim to present all sides in as fair a way as possible, and this can be done only by judging every case on its merits.

On the basis that the item did not report that Telecom was alone in diverting customers, and clearly stated that rival companies "are also signing up (Telecom’s) customers against their will", TV3 declined to uphold the complaint of lack of balance. TV3 also stood by its earlier assertion that there were "hundreds if not thousands" of instances of hijacking. Dissatisfied with this outcome, Telecom then referred the matter to the Authority.

Telecom’s solicitors also drew to the Authority’s attention an earlier request to TV3 to provide all background materials gathered and prepared for the item. It advised that TV3 had not complied with the request. The solicitors suggested that the Authority should seek this material and, in support, referred to the Court of Appeal’s decision in Comalco New Zealand Ltd v Broadcasting Standards Authority (1995) 9 PRNZ 153.

TV3’s lengthy response to the Authority is summarised in the Appendix. TV3 decided, on a "without prejudice" basis, to supply the tape of the full interview with Telecom’s Mr Armstrong. However, it otherwise declined to supply footage, background material or notes of interviews on the basis that it did not accept that these were necessary to a determination of the complaint.

The matter has not been pursued by Telecom and, in view of other events referred to below, it is now not necessary for the Authority to rule on the matter.

In its referral to the Authority, Telecom reiterated the main points of its original complaint. It maintained its allegations that the programme was neither fair nor balanced, and that it was inaccurate.

The specific matters of concern are conveniently detailed, together with TV3’s response, in the summary of correspondence in the Appendix.

TV3 in response identified the essence of the complaint as concerning an impression conveyed by the programme that Telecom alone was engaged in diverting customers away from other suppliers without the customer’s consent, and that this was occurring on a substantial scale.

In response to this and while continuing to dispute the claim of lack of balance, TV3 conceded to the Authority that the item had overstated the matter when it referred to "hundreds if not thousands" of hijacking incidents. It agreed that this aspect of the complaint should be upheld.

As for the other essential part of the complaint, TV3’s view was that the item had in fact reported Telecom’s claim that other companies had signed up Telecom’s customers against their will.

TV3’s comments were forwarded to Telecom’s solicitors and, while they did not fully accept TV3’s reasoning on some aspects of the complaint, they advised that they would accept TV3’s concession as being sufficient to bring the referral to an end. Telecom’s solicitors advised that in view of the length of time which had elapsed since the broadcast, a written decision would be sufficient and they did not seek the imposition of any penalty or costs.

The Authority notes that Telecom’s complaint to the Authority raised a number of issues in addition to the two essential matters referred to above. Nevertheless, it is prepared to treat those additional matters of complaint as having now been withdrawn, not because Telecom concedes them to be without foundation, but because Telecom is content for the matters to be restricted to the essential points identified.

Furthermore, as the Authority interprets the situation, Telecom has now abandoned its allegation that the programme suggested that Telecom was the only company involved in hijacking activity. Lest it be wrong about that assumption, the Authority indicates that on the material made available to it, it would not be prepared to uphold this part of the complaint in any event.

TV3 now acknowledges that it was "an overstatement" for it to report (as it did) that there may have been "hundreds if not thousands" of hijacking incidents. From that, the Authority must conclude that the report was sufficiently inaccurate to misrepresent the situation, with the consequence that it upholds this part of the item as a breach of standard G1.

For the above reasons, the Authority upholds the complaint that the broadcast by TV3 Network Services Ltd of an item broadcast on 3 National News on 1 December 1997 breached standard G1 of the Television Code of Broadcasting Practice.

Having upheld a complaint, the Authority may impose an order under s.13(1) or s.16(4) of the Broadcasting Act 1989.

The Authority shares Telecom’s view that no order is appropriate. However, in passing, the Authority observes that it would have been spared some cost and inconvenience if TV3 had fully addressed the issue now conceded in its initial response to the complainant.

Signed for and on behalf of the Authority

Sam Maling
Chairperson
12 November 1998

Appendix

Telecom New Zealand Limited's Complaint to TV3 Network Services Limited – 22 December 1997

The solicitors for Telecom New Zealand Ltd (Chapman Tripp Sheffield Young) complained to TV3 Network Services Ltd about an item broadcast on 3 National News at about 6.30pm on 1 December 1997. The solicitors wrote:

The essential complaint by Telecom is that this item was unfair and unbalanced in both its preparation and its presentation. The item conveyed to its audience that Telecom alone was engaged in diverting customers away from other suppliers, (principally Clear) without the customer's consent, and that this was occurring on a substantial scale. A fair and balanced item would have conveyed that such unauthorised diversions are very rare, and that it is occurring across the industry - in particular, in relation to customers being directed away from Telecom by other couriers (notably Clear). In the result, Telecom believes that the item breached Standards G1, G4, G6, G14, G19 and G20 of the Code.

In the preparation of the item, the solicitors recorded, TV3's reporter had had several discussions with Telecom's Mr Armstrong and, thus, TV3 would have been in no doubt that Telecom had evidence that some of its customers had been hijacked by other suppliers. Moreover, TV3 would have been aware that Telecom, with customer clearance, would provide details of the incidents if TV3 wished to follow it up.

A transcript of the item accompanied the complaint and, the solicitors maintained, the anti-Telecom and pro-Clear thrust of the broadcast was apparent. Four specific examples were given from the transcript which, it was said, disclosed this approach. A fifth example, the solicitors added, was the exclusion of Telecom's Mr Armstrong making the highly relevant point that Telecom had strong incentives not to antagonise its customers.

As for balance, the solicitors noted that Clear had developed a long-standing campaign to provoke additional Government regulations, which involved denigrating Telecom at every opportunity. The complaint added:

For an item described as a "special investigation" on primetime television news to portray Telecom as engaged in extensive "hijacking", and Clear as no more than an innocent victim, is of course a public relations coup for Clear. If the item were accurate and balanced, Telecom could not complain. But accuracy and balance were conspicuously lacking. Telecom not only complains but believes that TV3 has allowed itself to be "used" by Clear.

Should the complaint be upheld, Telecom proposed the following action:

a) broadcast of an appropriate corrective item on TV3 National News, preferably following consultation with Telecom; and

b) Circularisation of TV3 reporting staff on the importance of industry competitive dynamics, and the risk of being used to one party's advantage, when making news or current affairs items relating to the New Zealand telecommunications industry.

Under the heading "Access to Unused footage, etc", the solicitors stated:

We record that the preparation of this complaint, insofar as it relates to the preparation of the item, has been hampered by TV3's refusal to make available unused footage and other background materials request by Telecom after the item was broadcast. Telecom reserves its rights in relation to that refusal.

TV3's Response to the Formal Complaint – 12 February 1998

Assessing the complaint under the nominated standards, TV3's Standards Committee said that it had focused on what was described as the essence of the complaint.

It wrote:

The Standards Committee finds that the item did not convey that "Telecom alone" was engaged in diverting customers. It clearly stated that "Telecom ... claims that rival companies are also signing up its customers against their will". This was included in the item as a result of discussions between the reporter and Telecom's Mr Barker who said Telecom had a record over the past year of "seven incidents in both directions".

The extent to which "hijacking" occurs was described in the item as "hundreds if not thousands". This was and remains TV3's understanding of the position and is based on conversations with sources within the telecommunications industry.

It declined to uphold the complaint.

Telecom's Referral to the Broadcasting Standards Authority – 11 March 1998

Dissatisfied with TV3's decision, Telecom's solicitors referred the complaint to the Broadcasting Standards Authority under s.8(1)(a) of the Broadcasting Act 1989.

After comment of the papers enclosed, the referral continued:

… you will appreciate that the complaint is essentially (but not necessarily exclusively) one of editorial selection. To better make that point, Telecom sought from TV3 the documentary and film material relating to the item. TV3 declined to make that material available to Telecom or to us.

Bearing in mind the thrust of Telecom's complaint, and the Act's contemplation that a second consideration of a complaint may require greater formality than the first (section 5(i)), we request the Authority to use its powers under section 12 to require the production to it, and to Telecom, of the material sought. That material may be described, as it was in the request made to and declined by TV3, as

all footage that TV3 holds in relation to the item in question, together with background materials, notes of interviews and meetings, research material, and draft scripts.

Obviously enough, in making this request, Telecom is mindful of the reasoning and result in the Court of Appeal's decision in Comalco New Zealand Ltd v Broadcasting Standards Authority (1995) 9 PRNZ 153.

It was acknowledged that the Authority was generally reluctant to conduct formal hearings when determining complaints, and the referral continued:

Nevertheless, this is a matter of real significance to Telecom, and it believes that the most effective way for its complaint to be demonstrated is by the holding of a formal hearing with the benefit of the TV3 materials referred to in the preceding paragraph. Nevertheless, it must be recognised that whether a formal hearing is appropriate, or the matter could be dealt with by way of detailed submissions, will be more apparent after Telecom has had the opportunity to consider the TV3 materials already mentioned.

Accordingly, Telecom suggested that the first step for the Authority was to decide whether it would require TV3 to provide the material sought to Telecom. The next step would be for Telecom to advise whether it sought a formal hearing, or to proceed with written submissions.

Further Correspondence

In a letter to the Authority of 13 March, Telecom's solicitors repeated the point that, in their opinion, the first step at this stage was for the Authority to obtain the pre-broadcast materials from TV3, to enable both the Authority and Telecom to examine them. A decision on the substantive complaint, they wrote, would be a later decision.

TV3's Response to the Complainant's Request – 14 April 1998

TV3 began by expressing the opinion that Telecom’s approach amounted to unwarranted escalation of the litigation, accompanied by increased cost. It then dealt with each aspect of the complaint.

The essential complaint, TV3 wrote, was contained in the assertion:

The item conveyed to its audience that Telecom alone was engaged in diverting customers away from other suppliers … without the customer’s consent, and that this was occurring on a substantial scale.

TV3 cited an extract from the text in which Telecom acknowledged that there had been seven accidental transfers in the past year, and said that the item had also reported Telecom’s claim that other companies had signed up Telecom’s customers against their will. Moreover, TV3 advised, an item on the following night’s news reported that Telecom was investigating a number of incidents where its customers had been hijacked by other carriers. This story was based on a press release from Telecom, although TV3 observed, the investigation had not been mentioned by Messrs Barclay or Armstrong of Telecom when interviewed for the item on 1 December.

Telecom’s second assertion, TV3 said, was:

A fair and balanced item would have conveyed that such unauthorised diversions are very rare and that it is occurring across the industry.

TV3 acknowledged that the item had referred to "hundreds if not thousands of incidents", which created the impression that hijacking was occurring on an unprecedented scale. TV3 considered that this impression would have been ameliorated by the other material contained in the item which referred to a small number, as had Telecom’s Mr Armstrong. It wrote:

TV3 concedes that in respect of this element of Telecom’s complaint the appeal should be allowed, but it does not follow that the balance of its report is in breach of the Broadcasting Codes. TV3 invites the Authority to uphold this essential aspect of the Telecom complaint.

As it admitted one of what it regarded as the two essential elements of Telecom’s complaint, TV3 said that it did not accept the need to address the balance of the complaint. It does so nevertheless "as a matter of caution for completeness".

TV3 then dealt with its questions to Telecom’s Mr Barclay and enclosed a tape of its complete interview with Mr Armstrong. This material, it added, was disclosed without prejudice.

The next aspect of Telecom’s complaint, TV3 said, was:

Telecom had evidence that some of its customers had complained about being hijacked to other suppliers (Global 1 – one incident, and Clear – seven incidents) but TV3 did not publish this.

TV3 dealt in some detail with the information its reporter had been given, which included minimal specific allegations.

TV3 then dealt with the following aspects of Telecom’s complaint:

1. Assertion: To Telecom’s knowledge the number of cases of its staff wrongly directing
   customers from Clear services was minute.

TV3 noted that the script referred to Telecom’s estimate of seven accidental transfers on which it reached the view that the number was minute. Mr Armstrong, it added, had been pressed on the point during the interview and had responded, "I am not certain about the exact number".

2. Assertion: TV3 insinuated that Telecom was evasive and was pro-Clear and   
   anti-Telecom.

TV3 disputed this claim. In its view Telecom was confronted with the evidence from the outset and that was an appropriate approach. Furthermore, the item made the position clear.

3. Assertion: References to Telecom’s "anti" campaign were misleading by omission.

TV3 responded that the solicitors were being over-sensitive on this point. It claimed that TV3’s reporter "never suggested that there was anything sinister in the ‘anti’(win-back) campaign".

4. Assertion: Omission of Telecom’s incentive not to antagonise customers.

TV3 maintained that it was appropriate to interview a Consumers’ Institute representative in the context of this type of story. TV3 also noted that Mr Armstrong had stated that it was not beneficial to Telecom to use high pressure sales tactics. However, it responded, the item had produced evidence of such tactics being employed.

5. Assertion: Telecom’s criticism of statement attributable to Mr Forsyth.

TV3 argued that it was appropriate for the item to report some criticism of Telecom when there were people in the industry who held such a view. One such critic was Mr Forsyth of TUANZ who was said to be critical of Telecom’s refusal to work alongside competitors. In view of Telecom’s argument contained in the complaint that it was now working alongside competitors, TV3 suggested to the Authority a formal hearing as a means to reconcile these views. However, TV3 added, it did not consider a hearing to be necessary in this instance.

6. Assertion: An untrue allegation that there were hundreds if not thousands of incidents.

As a final comment on the reference to "hundreds if not thousands of incidents", TV3 stated:

The statement was not made without reference to a source – a source who is very knowledgeable about all litigation between telecommunications providers (including Telecom and Clear). TV3 will not disclose the source of its information for reasons which are obvious. It would disclose to the Broadcasting Standards Authority alone provided it first has an undertaking from the Authority that the disclosure of its sources will not and cannot be made available to any other person (including administrative staff of the BSA). The protection of sources’ identity is critical to the free flow of information in a democratic society.

On the claim of imbalance, TV3 did not accept that the item had denigrated Telecom at every opportunity, or had portrayed Clear as an innocent victim. Members of the public were the victims, it said.

In its conclusion, TV3 acknowledged that it agreed with the central aspect of the complaint that the item had overstated the extent of the problem. It conceded that in this respect "the appeal should be allowed".

As for Telecom’s request for documents, it did not accept that they were necessary for the Authority to view in order for it to determine the complaint. It continued:

TV3 would not be prepared to make any of its footage, background material, notes of interviews, meeting, research material or draft scripts available. In disclosing that material it would put at risk the disclosure of the identity of sources, something TV3 is not prepared to do. Further, there is a serious concern that the information is being sought for an ulterior purpose.

"Without prejudice" nevertheless, TV3 provided a copy of the tape of the interview with Mr Armstrong. There was no tape, it said, of the discussions with Mr Barclay. TV3 finished:

If the Authority intends to take this issue further TV3 would require a full hearing and the opportunity to present submissions in writing and orally in a full tribunal hearing on the issue. It has massive consequences for TV3 and other broadcasters, where sensitivity is required, and the protection of sources’ identity.

Further Correspondence

After some correspondence with TV3 to ascertain the meaning of the "without prejudice" provision on this occasion, on 23 May 1998 the Authority forwarded Telecom’s solicitors a copy of the material received from TV3, and sought its response.

Telecom’s Response – 17 September 1998

Telecom’s solicitors summarised TV3’s letter in the following way:

(a) TV3 concedes that Telecom’s appeal should be allowed in respect of the complaint that the item should have conveyed that unauthorised diversions (from one telephone service supply to another) are very rare;

(b) the item was otherwise unimpeachable; but

(c) TV3 is determined to protect the identity of "a source who is very knowledgeable about all litigation between telecommunications providers", including requiring a full hearing, because of the "massive consequences for TV3 and other broadcasters".

They responded:

While still of the view that (b) is simply wrong, and suspicious that TV3 has greatly overstated the position in relation to (c), Telecom has no desire to become side-tracked into an extended debate on whether or not the identity of media sources should be protected. It is doubtless a matter of acute interest to TV3, but not to Telecom.

Telecom suggested that the Authority accept TV3’s concession, uphold the complaint and then determine the appropriate action to be taken. And, mainly in view of the time which had elapsed since the broadcast, Telecom considered that the issue of a written decision would be sufficient.

Telecom also raised the possibility that the decision:

… might usefully draw the attention of all broadcasters to the risk that, in this highly competitive industry, criticism of one party in isolation will be seen as a public relations coup for other parties, and that it is generally desirable to take an industry-wide perspective, rather than focusing on one particular player (unless it is quite clear that only one player is involved).

In conclusion, it wrote:

At the risk of repetition, Telecom recommends the course outlined above only after careful consideration, and with real reservations about whether TV3 "protests too much" in relation to the question of the identity of sources. There is room for suspicion that this is a "smokescreen" to avoid a number of other issues. Nevertheless, in the context of this particular item only, Telecom is prepared to see the matter resolved quickly as earlier discussed.

Further Correspondence

On receipt of a copy of Telecom’s letter, on 25 September 1998 TV3 sent the Authority an article from the New Zealand Herald (dated 18 September) which reported court action by Clear – with support from other telcos – against Telecom for taking back business without asking customers – ie hijacking.