Australia’s consumer watchdog, the ACCC, is taking Telstra, Optus and TPG to court, alleging they misled hundreds of thousands of consumers over NBN speeds.
- The ACCC alleges the telcos made false or misleading representations in their promotions of NBN plans
- It said the telcos promised customers they would test line speeds and offer remedies such as cheaper plans with refunds, but had failed to do so
- The telcos are now contacting consumers to give them a refund or offer an alternative plan, but they could still face big fines if the ACCC wins in court
The Australian Competition and Consumer Commission (ACCC) has brought three separate cases before the Federal Court.
If it succeeds, the companies could each be forced to pay millions of dollars in fines.
The ACCC alleges the three telcos had promised some customers they would test line speeds and offer remedies such as cheaper plans with refunds, but had failed to do so.
The watchdog says the companies will be taken to court for making alleged false or misleading representations in their promotions of some 50Mbps and 100Mbps NBN plans, in breach of the Australian Consumer Law.
It is also alleged Telstra, Optus and TPG wrongly accepted payments from certain customers for NBN plans when they were not provided with the promised speeds.
“Collectively, hundreds of thousands of consumers were allegedly misled by these three big internet providers, Telstra, Optus and TPG, which accepted payments for NBN speeds they could not provide,” ACCC chairman Rod Sims said.
“We want declarations that this is illegal. We want penalties.”
ACCC says telcos did not have systems in place to test speeds
The ACCC alleges Telstra, Optus and TPG did not have adequate systems in place to implement the speed checks, notifications and remedies they said they would carry out.
Mr Sims said the behaviour was highly concerning because the companies were aware of these issues and had in 2017 given undertakings to the ACCC to provide remedies to consumers who purchased NBN plans with speeds that could not be delivered.
He said Telstra, Optus and TPG each promised to tell consumers within a specific or reasonable time frame if the speed they were paying for could not be reached on their connection.
“They also promised to offer them a cheaper plan with a refund if that was the case,” Mr Sims said.
“Instead, we allege, they failed to do these things, and as a result many consumers paid more for their NBN plans than they needed to.”
He said he was “extremely disappointed” the companies did not seem to have taken the undertakings they gave to the ACCC seriously.
“We’ve lost patience here. And we think it should be taken to court. And we’ll be seeking very high penalties.”
Consumers to get refund or alternative plan
The three companies have been contacting affected consumers to give them a refund, offer an alternative plan, or offer them an opportunity to leave their contract without a penalty.
Michael Ackland, Telstra group executive consumer and small business, apologised to customers who were impacted, saying it was a “complicated issue” and the company accepted there were “some things that we didn’t do right”.
“We’re already taking steps to make sure customers are offered remedies and our processes are improved.
Mr Ackland said Telstra self-reported the matters to the ACCC, but the issues were occurring more broadly across the industry because the NBN left issues of speed to retail service providers (RSPs), which are third-party providers of retail broadband services to end users.
“At the point of moving across to the NBN for the first time, the speed a customer can get at their premises is unknown – by both the NBN Co and the RSP.”
“In most cases, if NBN Co sells an RSP a connection that fails to deliver the speed the customer wants, and the RSP has paid for, the RSP is left to wear it.”
“The customer doesn’t receive what they want, the RSP still pays full price, and NBN Co have limited obligations to do anything about it and continue to charge RSPs for a plan they know the connection may not deliver.”
An Optus spokeswoman said the company was “carefully considering this matter”.
“The speed that is achievable on some NBN connections can be impacted by issues including the length and quality of the copper line that connects a customer to the NBN,” she said.
“Unfortunately, not all NBN connections can deliver the same speeds.”
A TPG spokeswoman said the company would “be making things right with the impacted TPG Internet customers who didn’t receive a notice about the maximum attainable speed (MAS) of their NBN service”.
“For the oversight, we are sorry,” the spokeswoman said.
She said there was “no intention whatsoever by TPG Internet to avoid its obligations and its processes were intended to provide the correct MAS information to customers”.
Sims says companies have responsibility to test speeds
Mr Sims said companies could test lines to know what speeds they were capable of delivering after they had signed customers up.
“That’s what they undertook to do. And that’s what they didn’t do,” he said.
He said the telcos were the “three dominant players in this market” and the lack of competition could mean they had got “a bit too comfortable”.
The allegedly false and misleading statements were made on the companies’ websites and in emails to consumers from at least April 1, 2019 to April 30, 2020 by Telstra and TPG, and from at least January 1, 2019 and December 31, 2019 by Optus.