Telstra has admitted it may have charged 42,000 customers extra fees for NBN speeds it could not deliver.
The Australian Competition and Consumer Commission (ACCC) investigated Telstra charging extra for a “speed boost” that claimed to offer customers speeds of up to 100Mbps download and 40Mbps upload.
The enquiry found the amount of copper involved in fibre-to-the-node (FTTN) and fibre-to-the-building (FTTB) connections meant those who paid for such speeds were never capable of receiving it.
“Even worse, many of these customers could not receive the maximum speed of a lower-speed plan,” said ACCC chair Rod Sims.
“In essence, people were paying more to get higher speeds that they just weren’t able to get.”
According to Telstra’s former NBN plans, the practice would have resulted in some customers sold $30 in extra charges per month for speeds that were never going to be delivered.
The ACCC said Telstra admits this conduct was “likely” to be in contravention of Australian Consumer Law, and has promised to compensate affected customers – by offering refunds, the chance to change speed plans, or exit from contracts without penalty.
The latest revelation comes after Telstra announced in May that it would compensate 8,000 customers for the same issue. The subsequent ACCC investigation has uncovered that the problem affected 5 times more customers than the telco first suspected.
The ACCC investigation found 26,497 (56%) of FTTN customers on the 100/40Mbps plan could not receive 100Mbps down and 40Mbps up. Of that group, 9,606 couldn’t even receive 50/20Mbps, which was the next tier down.
Meanwhile, 6,352 (45%) of FTTN customers on a 50/20Mbps plan were not capable of receiving that speed, and 9,342 (2%) of FTTN customers on a 25/5Mbps plan couldn’t receive that level, which the NBN considers the lowest level of fast broadband.
Telstra consumer and small business group executive Vicki Brady said today’s ACCC announcement meant her company was one of the first to be compliant with the watchdog’s NBN industry guidance document.
“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,” she said.
Sims said the ACCC is “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 said.
“We will continue to investigate other retail service providers selling broadband plans over the NBN and take enforcement action where appropriate… 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.”
Telstra announced in May that it will continue to monitor the first month of speed boost for customers to check if the performance matches the promise. If it doesn’t, then the customer will be notified and compensated.
The ACCC said there is also a separate issue of retailers not buying enough wholesale capacity from the NBN to avoid congestion in evening peak hours.
“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,” said Sims, adding that this disclosure is “expected” to start by next month.