Contract cancellations and refunds will be offered to more than 40,000 Telstra customers who were sold NBN plans with speeds they couldn't achieve, following an investigation by the Australian Competition and Consumer Commission (ACCC).
The announcement comes at a time when the NBN faces stiff criticism for
receiving a 159% surge in complaints for the year, resulting in the launch
of an inquiry into the quality of the NBN and fuelling concerns that
the $49 billion investment won't be recouped with the upcoming launch of 5G mobile internet.
This is the second time this year Telstra will offer remedies to its
customers for advertising speeds they could not achieve, after the
telecommunications carrier told the ACCC it needed to refund 8000 customers in May.
But the ACCC's follow-up investigation revealed more customers were misled
than Telstra represented, with almost 10,000 on its top plan receiving
speeds that were at least half as slow.
Telstra has since proposed an approved enforceable undertaking,
where it will offer waivers for contract cancellations, refunds and the
option to change plans to the 42,000 customers that are affected under its
brand and that of its subsidiary, Belong.
More than half (56%, or 26,497) of the customers signed up to its top-tier
100/40Mbps NBN plan are affected, as are 45% (6352) of the customers on its
50/20Mbps plan and two percent (9342) of the customers signed up to its 25/5 Mbps
The problem was described as being systemic to the industry by Rod Sims,
the chair of the ACCC.
"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," he says.
"We will continue to investigate other retail service providers selling
broadband plans over the NBN and take enforcement action where
Telstra, which is the largest telecommunications provider in Australia,
says the slow speeds are a result of "the underlying technology being
rolled out by Nbn and other factors", before asserting rival carriers will
have to face similar action from the ACCC.
"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," says Vicki Brady, group
executive of consumer and small business at Telstra.
"The ACCC is conducting an industry-wide investigation and we're pleased to
be the first to reach a resolution."
The watchdog warned retailers in August they'll need to begin advertising the minimum speeds customers can expect during peak hours or face possible
legal action as a consequence.
Telstra is one of the first carriers to conform to the standards set out in
the industry guidance. Its revised advertising claims customers can expect
typical speeds during 7.00–11.00pm of 15Mbps, which according to Sims, could
indicate it's not buying enough bandwidth from the network wholesaler to
reach its previously advertised speeds of up to 100Mbps.
"To address this ... problem of under provisioning, the ACCC is urging all
internet service providers to advertise the typical speeds customers can
expect in the busy evening period," he says.
Telstra will now contact customers to check their real-world speeds within
four weeks of connecting a new service; if they're receiving less than
what was advertised, they will be offered a remedy.
The communications body representing consumer rights, the Australian
Communications Consumer Action Network (ACCAN), says people should start
with a base plan to get an idea of real-world speeds.
"We advise consumers on these technologies to sign up to low to medium
speed tiers to start with," says Teresa Corbin, chief executive of ACCAN.
"After a week or two with the service we recommend that they then make
contact with their retail provider to confirm the maximum speeds and
discuss any changes to the plans that they are on."
It says wholesale provider NbnTM is keeping key information from customers
that is resulting in them buying speeds that are theoretical.
"Unfortunately, consumers are not able to see what the maximum speed that
is achievable at their premises – only NbnTM and retailers are aware of this
information. ACCAN calls on NbnTM to provide this information to consumers
through their online website address function.
"Not having this information is resulting in consumers being sold