Telstra in court for alleged misleading representations about Belong broadband speed

ACCC

The ACCC has instituted Federal Court proceedings against Telstra for allegedly making false or misleading representations about upload speed to residential broadband customers of its cheaper brand, Belong.

In October and November 2020, Telstra migrated nearly 9000 customers who were on a Belong NBN plan with a maximum download speed of 100 megabits per second (Mbps) and a maximum upload speed of 40Mbps, to a service with a maximum upload speed of 20Mbps.

The ACCC alleges that Telstra failed to notify customers of the reduction in the upload speed, and did not lower their charges, even though the cost charged by NBN Co to Telstra was $7 a month less for the new service.

“We allege 8,897 consumers who signed up to a Belong NBN plan between May 2017 and October 2020 were affected by this change and deprived of the opportunity to make an informed decision about their internet service,” ACCC Commissioner Liza Carver said.

In March and April 2021 Telstra acknowledged this failure in respect of approximately 2,500 customers and provided them with a one-off $90 credit.

“We allege that more than 6,300 Belong customers have still not been informed by Telstra that their plan has changed to a lower maximum upload speed, and that Telstra continues to represent to them that the Belong broadband service supplied to them has not been altered,” Ms Carver said.

“In these circumstances, we are seeking a Court order requiring Telstra to pay compensation to consumers who, we allege, did not get the service they signed up for.”

Telstra’s general customer terms contain the following clause: ‘Our right to migrate your service: If we give you reasonable notice, we may migrate you to an alternative service or pricing plan. If you’re not satisfied with the alternative service or pricing plan, you can cancel your service and any ETCs [early termination charges] will be waived.’

“We expect a company of Telstra’s size and experience to take their obligations under the Australian Consumer Law very seriously, including those prohibiting misleading or deceptive conduct and false or misleading representations,” Ms Carver said.

The ACCC is seeking declarations, penalties, consumer redress, costs and other orders.

Background

Telstra is Australia’s largest retail supplier of mobile telephones and telephony and data services for mobile telephones and tablets, which offers pre-paid and post-paid services to its customers. It is a publicly listed company, incorporated in Australia.

Belong is a division of Telstra providing low-cost mobile and internet services. Belong operates semi-independently in several areas, including products, marketing, service, billing and partly in IT, but is not a separate legal entity.

Upload speed refers to the speed an internet connection can allow data to be sent from connected devices to the internet, including when sending emails or streaming video conference calls. Upload speed is important, as people are increasingly relying on broadband for working, schooling and entertaining at home, and on upload speeds for video conferencing and sharing large files previously done in the workplace and at educational institutions.

In May 2020, NBN Co launched new wholesale consumer speed tiers, including a new 100/20Mbps wholesale speed tier, which costs retail service providers $7 less per month than the 100/40Mbps plan on a wholesale level.

Before migrating Belong customers onto the 100/20 tier, Telstra determined the extent to which they used the upload capacity by measuring the amount of data uploaded at multiple intervals, averaged over a five-minute period. However, this may have underestimated customer’s peak usage as increments of 30 seconds are more commonly used as the period over which speed is measured. This means some customers who use high upload speeds may have received slower upload speeds due to Telstra’s actions.

In November 2022, Telstra was ordered by the Federal Court to pay $15 million in penalties after they admitted making false or misleading representations to consumers when promoting certain NBN internet plans.

In October 2022, the ACCC published revised Broadband Speed Claims Industry Guidance that promotes more transparent information about upload speeds in broadband services provided to consumers.

In May 2022, the Federal Court ordered Telstra to pay $50 million in penalties for engaging in unconscionable conduct when it sold mobile contracts to more than 100 Indigenous consumers, in proceedings brought by the ACCC.

In April 2018, Telstra was ordered to pay $10m in penalties for making false or misleading representations to customers in relation to its third-party billing service known as ‘Premium Direct Billing’.

In November 2017, Telstra agreed to offer remedies to around 42,000 Telstra and Belong customers for promoting some of its NBN speed plans as being capable of delivering specified maximum speeds, when those maximum speeds could not be achieved in real-world conditions.

Concise Statement

The attached document below contains the ACCC’s initiating court documents in relation to this matter. We will not be uploading further documents in the event these initial documents are subsequently amended.

/Public Release. This material from the originating organization/author(s) may be of a point-in-time nature, edited for clarity, style and length. The views and opinions expressed are those of the author(s).View in full here.