ACCC flags ‘industry wide problem’ around advertised NBN speeds following Telstra probe

Broadband

Telstra will compensate around 42,000 customers after advising the ACCC that the maximum speeds promised by some of its National Broadband Network (NBN) plans could not be achieved in real-world conditions.

Between September 2015 and November 2017, Telstra advertising a range of NBN speed plans including one that offered maximum download speeds of up to 100 megabits per second (Mbps) and maximum upload speeds of up to 40 Mbps (100/40 Mbps).

An investigation by the ACCC revealed that imitations on many customers’ NBN fibre to the node (FTTN) or fibre to the building (FTTB) internet connections meant they were incapable of receiving the maximum advertised speeds of the plans. The ACCC also found that many customers could not receive the maximum speed of a lower-speed plan.

Telstra admitted that it was likely to have contravened the Australian Consumer Law by engaging in misleading or deceptive conduct and making false or misleading representations. It also provided a court-enforceable undertaking to the ACCC detailing the remedies it will provide affected customers, including refunds as well as the option to change speed plans or exit from contracts without paying a fee.

ACCC Chairman Rod Sims stated that Telstra had notified the commission of issues relating to some, but not all, affected customers, which the subsequent investigation uncovered.

“We are pleased that Telstra proactively reported this serious problem to the ACCC and has cooperated in creating a remediation plan for affected customers,” he said.

“However, we are mindful this is not just a Telstra problem; it is an industry problem where consumers are often not getting the speeds they are paying for.”

“We will continue to investigate other retail service providers (RSPs) 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.”

“The ACCC is keen to separate out two issues affecting customers’ broadband speeds. First, and the subject of today’s action, is the situation where the connection is not capable of delivering the speed that has been sold.”

“Telstra has undertaken that, where it advertises or otherwise represents to potential customers that they will receive a particular speed, it will, within four weeks of connecting a new service, check each customer’s attainable speed. If it is below the advertised speed, Telstra will notify the customer and offer remedies,” said Mr Sims.

Sims said the second issue was where speeds can technically be delivered, but the internet service provider has not purchased enough capacity from NBN Co to provide the speeds it is advertising to customers, particularly at peak times.

“To address this second problem of under provisioning, the ACCC is urging all internet service providers (ISPs) to advertise the typical speeds customers can expect in the busy evening period between 7:00pm and 11:00pm.”

Sims said the ACCC expects 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,” he said.

“All businesses have a responsibility to ensure that claims about the performance of their products or services are accurate. 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.”

Commenting on the court-enforceable undertaking, Vicky Brady – Group Executive, Consumer and Small Business with Telstra – said the telco had taken the industry lead in proactively providing refunds to a small sub-set of customers who were sold nbn services where their nbn line was not capable of delivering the customer’s chosen speed tier. She added that the steps taken by Telstra position it as one of the first RSPs to adopt the ACCC’s Industry Guidance for nbn Retail Service Providers, issued in August 2017.

As it is not possible to accurately determine what speed the nbn can deliver to a customer prior to connection, we have been reviewing the speeds of customers who take up a speed boost on their FTTN or FTTB nbn services after connection,” Brady said.

“We have been undertaking this review since May 2017 and, where we identify they cannot attain the benefit of the speed boost, we have been contacting them to provide refunds. We also give these customers the option to move to a different speed tier, or to cancel their contract altogether.

“The majority of our customers have a service that can deliver the speeds of the plan they’ve chosen, but there’s a small group whose nbn connection isn’t capable of delivering the top speeds and that is who we’ll be in touch with.

“We have changed our advertising, marketing and sales processes. We now use the standard ACCC naming convention to describe our speed plans and quote the typical speeds a customer can expect, including for the period when most people tend to use the internet.

“The ACCC is conducting an industry-wide investigation and we’re pleased to be the first to reach a resolution with the ACCC.

“Our focus is now on contacting affected customers, making sure they understand their options and then getting on with the job of creating an unrivalled customer experience on the nbn.”