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Telstra offers customers compensation for slow internet speeds

Sheep Central, November 8, 2017

AUSTRALIA’s peak communication consumer and competition bodies have demanded the National Broadband Network and retailers make achievable internet speed data available to customers at their premises.

The call comes after Australian Competition and Consumer Commission today said Telstra had agreed to compensate or offer remedies to about 42,000 customers offered unachievable NBN speed plans.

The ACCC said between September 2015 and November 2017, Telstra offered internet services through 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, the ACCC said.

“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.”

Other communications retailers to be investigated

ACCC chairman Rod Sims

Mr Sims said the ACCC 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 retail service providers 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 said 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.

Telstra action a warning to the industry

ACCAN CEO Teresa Corbin

Australian Communications Consumer Action Network chief executive officer Teresa Corbin welcomed the proactive move by Telstra and the ACCC.

“It should be a warning to the industry that they should be actively looking after their customers and ensuring that the services they are selling can be delivered.”

Ms Corbin urged other retail service providers to take similar action for consumers who are unable to receive the maximum speeds.

“Consumers should not be paying for speeds that cannot be achieved by their services.

“The maximum achievable speed over NBN FTTN and FTTB networks will often not be known until after the service is connected.

“We advise consumers on these technologies to sign up to low to medium speed tiers to start with,” she said.

“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.”

Ms Corbin said unfortunately, consumers are not able to see what the maximum speed that is achievable at their premises – only NBN and retailers are aware of this information.

“ACCAN calls on NBN to provide this information to consumers through their online website address function.

“Not having this information is resulting in consumers being sold unachievable services.”

Ms Corbin said customers who believe they have been affected should get in contact with Telstra, especially if they have changed their address and contact details and even if they are no longer with Telstra.

“Consumers currently connected but not able to achieve the maximum speed at all who are with other providers should call their retail service provider to discuss refunds to their monthly payments and to change their plan to match the speeds they can actually receive.

“RSPs should be willing to do this, at no extra fee. Consumers can take their complaint to the telecommunications industry ombudsman if there are any issues with the RSP.”

All businesses should ensure product claims are accurate

Mr Sims 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.”

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

  • 26,497 (56pc) of FTTN customers on the 100/40 Mbps plan could not receive 100/40 Mbps. Of those customers, 9606 could not receive 50/20 Mbps, which was the next speed tier plan down.
  • 6,352 (45pc) of FTTN customers on a 50/20 Mbps plan could not receive 50/20 Mbps.
  • 9,342 (2pc) of FTTN customers on a 25/5 Mbps plan could not receive 25/5 Mbps.

The ACCC said Telstra came to it to notify it of issues relating to some, but not all, of the affected customers, which the ACCC investigation subsequently uncovered.

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

“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.”

Mr Sims said 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.”

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 internet service providers to advertise the typical speeds customers can expect in the busy evening period between 7pm and 11pm.”

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.

Telstra’s undertaking to the ACCC requires the telco 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.

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