Telstra is offering compensation to 42,000 customers after the telco promoted and offered NBN speeds that couldn’t actually be achieved in the real world.
According to the ACCC, between September 2015 and November 2017 Telstra offered internet services through both its Telstra and Belong brands, advertising a range of different speed plans.
This included a “Super Fast Speed Boost” which advertised maximum download speeds of up to 100 Mbps and maximum upload speeds of up to 40 Mbps (100/40 Mbps).
“Limitations on the affected customers’ NBN fibre to the node or fibre to the building internet connections, however, meant that many customers’ internet services were not capable of receiving the maximum advertised speeds of the plans,” the ACCC revealed today.
ACCC Chairman Rod Sims said the investigation revealed many of these customers could not even receive the maximum speed of a lower-speed plan.
“In essence, people were paying more to get higher speeds that they just weren’t able to get.”
Telstra admits that by this conduct it was likely to have contravened the Australian Consumer Law “by engaging in misleading or deceptive conduct and making false or misleading representations”.
Telstra is offering a range of compensation options – including refunds, the option to change speed plans, and exit from contracts without paying a fee.
“All businesses have a responsibility to ensure that claims about the performance of their products or services are accurate,” the ACCC said.
“This is particularly important in cases where consumers sign long-term contracts to acquire a service. Telecommunications contracts are typically 12-24 months in duration and this can represent a serious financial commitment.”
Those affected included:
- 26,497 (56 per cent) of FTTN customers on the 100/40 Mbps plan could not receive 100/40 Mbps. Of those customers, 9,606 could not receive 50/20 Mbps, which was the next speed tier plan down.
- 6,352 (45 per cent) of FTTN customers on a 50/20 Mbps plan could not receive 50/20 Mbps.
- 9,342 (2 per cent) of FTTN customers on a 25/5 Mbps plan could not receive 25/5 Mbps.
Telstra approached the ACCC about the problems. The ACCC said what it was informed of amounted to “some, but not all, of the affected customers, which the ACCC investigation subsequently uncovered”.
Sims said the ACCC is pleased that Telstra proactively reported the problem and is coming up with a plan for compensation.
“We will continue to investigate other retail service providers selling broadband plans over the NBN and take enforcement action where appropriate. As we’ve said previously, we expect RSPs to provide consumers with accurate information up front about the internet speeds they can expect to receive, and then deliver on those promises.”
Sims said the ACCC is keen to separate out two issues affecting customers’ broadband speeds.
First is the situation where the connection is not capable of delivering the speed that has been sold. The second issue was where speeds can technically be delivered, but the internet service provider has not purchased enough capacity from NBN to provide the speeds it is advertising to customers – particularly at peak times.
As a way of rectifying this, the ACCC wants all ISPs to advertise the typical speeds customers can expect in the busy evening period between 7:00pm and 11:00pm.
Mr Sims says the ACCC is expecting major ISPs will adopt this approach to their advertising over the next month.
“Our message to retailers is that if you advertise a particular speed and customers cannot get that speed, you will risk breaching the Australian Consumer Law,” said Mr Sims.
So what happens now?
Telstra will be contacting current and former customers who could not receive the maximum speed stated in their speed plan, and let them know what they can have as a means of compensation.
- A costless exit from their contract (including any bundle) and a refund
- Moving to a different speed plan and receiving a refund
- Remaining on their current speed plan and not receiving a refund
Customers who Telstra has already remediated will be offered the option to move plans or exit their plan but will not be entitled to a refund.