Telstra offers to compensate 42,000 customers for slow NBN speeds

8 November 2017

Telstra has agreed to offer remedies to around 42,000 customers for promoting and offering some of its National Broadband Network (NBN) speed plans as being capable of delivering specified maximum speeds, when those maximum speeds could not be achieved in real-world conditions.

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 megabits per second (Mbps) and maximum upload speeds of up to 40 Mbps (100/40 Mbps).

Limitations on the affected customers’ NBN fibre to the node (FTTN) or fibre to the building (FTTB) internet connections, however, meant that many customers’ internet services were not capable of receiving the maximum advertised speeds of the plans.

“Our investigation revealed many of Telstra’s FTTN and FTTB customers could not receive the maximum speed of their plan. Even worse, many of these customers could not receive the maximum speed of a lower-speed plan,” ACCC Chairman Rod Sims said.

“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 has provided a court-enforceable undertaking to the ACCC detailing the remedies it will provide affected customers, 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. 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.”

The issue affected a range of customers across a number of different tiered speed plans, including:

  • 26,497 (56%) 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%) of FTTN customers on a 50/20 Mbps plan could not receive 50/20 Mbps.
  • 9,342 (2%) of FTTN customers on a 25/5 Mbps plan could not receive 25/5 Mbps.

Telstra came to the ACCC to notify it of issues relating to some, but not all, of the affected customers, which the ACCC investigation subsequently 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,” Mr Sims 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 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.  

Mr 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 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.

Background

The ACCC’s investigation commenced when Telstra notified the ACCC that approximately 9000 of its customers on 100/40 Mbps and 50/20 Mbps plans could not receive speeds above the next lower- speed plan. 

The undertaking requires Telstra to contact current and former customers who could not receive the maximum speed stated in their speed plan. Telstra will inform those customers of the maximum speed they are able to receive and offer customers who have not already been remediated options which include:

  • 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.

The undertaking is available at: ACCC Public Register

Consumers should be aware that a consumer’s Maximum Attainable Speed may not change if the consumer chooses to exit their contract and purchase an NBN internet plan from another provider.

The ACCC has previously published guidance for retailers on how to advertise speeds for NBN broadband services, including clearly identifying typical minimum speeds during peak periods. The ACCC has also announced broadband performance monitoring program to provide Australian consumers with accurate and independent information about broadband speeds.

Table 1 – Telstra’s FTTN customers

Table 1 shows, between 1 September 2015 and 30 June 2017, the number of Telstra’s FTTN customers on each speed plan, and the maximum speed those customers were able to achieve (those customers’ Maximum Attainable Speeds).

 

 

 

 

Speed Plan

 

 

Number of consumers on Speed Plan

Number and percentage of consumers on each Speed Plan who have Maximum Attainable Speeds less than:

100 Mbps download and 40 Mbps upload

50 Mbps download and 20 Mbps upload

25 Mbps download and 5 Mbps upload

12 Mbps download and 1 Mbps upload

100/40 Plan

47,076

26,497 (56%)

9,606 (20%)

954 (2%)

96 (<1%)

50/20 Plan

14,032

 

6,352 (45%)

343 (2%)

20 (<1%)

25/5 Plan

413,153

 

 

9,342 (2%)

749 (<1%)

12/1 Plan

23,028

 

 

 

93 (<1%)

Table 2 – Telstra’s FTTB customers

Table 2 shows, between 1 September 2015 and 30 June 2017, the number of Telstra’s FTTB customers on each speed plan, and those customers’ Maximum Attainable Speeds.

 

 

 

 

Speed Plan

 

 

Number of consumers on Speed Plan

Number and percentage of consumers on each Speed Plan   who have Maximum Attainable Speeds less than:

100 Mbps download and 40 Mbps upload

50 Mbps download and 20 Mbps upload

25 Mbps download and 5 Mbps upload

12 Mbps download and 1 Mbps upload

100/40 Plan

3,815

375 (10%)

44 (1%)

29 (<1%)

29 (<1%)

50/20 Plan

563

 

6 (1%)

3 (<1%)

2 (<1%)

25/5 Plan

17,711

 

 

48 (<1%)

35 (<1%)

12/1 Plan

6,024

 

 

 

13 (<1%)

Release number: 
MR 199/17
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