Telstra will refund 8000 of its NBN customers for promising speeds that they can't possibly get

Photo: The Office/ IMDb.

A Telstra executive has confessed that the telco had sold thousands of customers NBN plans promising speeds that could not be realistically matched at their homes.

Telstra retail group executive Kevin Russell made the stunning admission on a company blog post on Thursday, saying about 1% of its NBN customers were oversold in such a way.

“While the vast majority are receiving the speeds they signed up for, we believe a small number of our NBN customers are not,” he said.

According to its half-year results reported in February, Telstra had 792,000 NBN customers by the end of last year, up 292,000 in just six months. One percent of that would equate to 7,920 customers.

Russell said that many factors affected the ultimate NBN speed that the customer experienced, but even if that was taken into account those 7,000-odd premises were signed up to plans on speed tiers that could not practically be achieved.

Telstra retails the NBN on a model where the customer pays extra for a “speed boost” and the executive said affected customers are now “proactively” being contacted to downgrade them to cheaper plans.

“In any cases where we believe that customers may have paid for a speed boost they haven’t benefited from, we’ll be reimbursing the charges,” he said.

From now, any new customers that sign up for speed boosts would have their NBN performance monitored for the first month – and Telstra would make contact if the real speed wasn’t matching the promised speed, offering possible refunds.

“Consistent with our commitment to our customers’ experience, we will then move them to the speed tier their NBN service supports and reimburse any speed boost charges they have incurred. This will help ensure that our customers get the best value from their package and the right speed tier at their address,” said Russell.

With the NBN rollout gathering pace as it moves into metropolitan areas, the end performance people experience in homes and businesses has been a contentious issue. Retailers like Telstra theoretically must purchase enough wholesale capacity from the NBN to provide speeds that customers were promised — but there is no mechanism to enforce this responsibility.

The ACCC announced last month that it would start tracking speeds delivered by each retailer, in order put more pressure on them to do the right thing by consumers.

“This program will see the ACCC test and report on the typical speed and performance of broadband plans provided over the NBN,” ACCC chair Rod Sims said at the time.

“This information will assist consumers in comparing and shopping around, and checking that they receive what they are paying for.”

The NBN, as of the end of March, had reached 4.6 million premises, with 2 million of those actually having subscribed to it through a retailer. According to the ACCC, Telstra had just over 2 million connections purchased wholesale from the NBN.

Read the blog post in full below.

Earlier this year we announced we would be providing our customers more information on the data speeds they could expect to experience after moving to the nbn.

We made this commitment because in talking to our customers, it became clear that the different technologies behind the nbn and what determined the speeds they could get was all a bit of a mystery. Many expected the speed experience would be the same for everyone no matter which service provider they chose, where they lived or what underlying technology nbn was using to connect their neighbourhood.

The fact is, like any network, speeds on the nbn vary due to quite a large number of factors.

Some of these factors are managed by retail service providers like Telstra. Others are designed and controlled by nbn co. Where customers place their Wi-Fi modem and how they use the internet also play a significant part.

Today we’ve introduced a guide that we hope will help customers understand the factors that influence their internet speeds on the nbn. It can be accessed here. It includes some tips when planning the setup of nbn equipment and is part of our pledge to provide our customers with better information about nbn speeds and to help them get the best out of their nbn service.

For our part, we are working to provide the best possible speed performance on the nbn. To do this we actively monitor and manage our capacity on the nbn network to ensure we have the right level of bandwidth to support customer speeds.

Taking an industry approach to nbn speed information

It is clear that helping Australian consumers and businesses understand nbn speed performance requires a co-ordinated industry response. We need to work together to agree a consistent way to present information so Australians can make informed choices.

Earlier this year, we proposed publishing a snapshot of the speed performance of Telstra’s nbn services at a national level. We are committed to providing more information and transparency on nbn speeds and our guide is the first step in this process. And, to ensure industry wide consistency, we are now actively participating in a conversation on nbn speed guidance and measurement that’s being coordinated by the ACCC.

Helping customers select the right speed tier

Providing our customers with a high-quality experience on the nbn is an on-going endeavour. While it is important that our customers are aware of the factors that contribute to the speed they are able to get on the nbn, it is also critical that they are getting the speeds they signed up for. We recently reviewed the speeds our customers are receiving on the nbn. While the vast majority are receiving the speeds they signed up for, we believe a small number of our nbn customers (approximately 1 per cent) are not and we’re in the process of proactively contacting those customers to move them to a speed tier their nbn service supports. In any cases where we believe that customers may have paid for a speed boost they haven’t benefited from, we’ll be reimbursing the charges.

Speeds into homes can vary due to the underlying nbn network technology, however, the precise impact cannot be determined until after connection. Therefore, in the first month after a customer takes up a speed boost we will also review their speeds and proactively contact them if we believe that they are not receiving the speeds they signed up for. Consistent with our commitment to our customers’ experience, we will then move them to the speed tier their nbn service supports and reimburse any speed boost charges they have incurred. This will help ensure that our customers get the best value from their package and the right speed tier at their address.

With these steps, Telstra is taking an industry lead to ensure our customers receive the service and experience they expect on the nbn armed with all the information they need to make an informed choice.

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