Telstra is facing court action over the mass-downgrade of 100Mbps NBN customers of its Belong brand to a service with lower upload speeds, allegedly without notice or compensation.
The Australian Competition and Consumer Commission (ACCC) alleges just under 8900 Belong customers had their plans reduced from 100/40Mbps to 100/20Mbps, but only 2500 were compensated with a one-off $90 credit.
The ACCC wants a court order “requiring Telstra to pay compensation” to the remaining customers, whom it alleges still haven’t been notified of their shrunken upload speeds.
In a concise statement [pdf] filed with the Federal Court, the ACCC wrote that “speed, and its relationship with price, is a key consideration when choosing and remaining on an internet plan and is a key differentiating factor between plans and pricing.”
“For residential customers, understanding the features of broadband services and the quality or performance characteristics of services that they actually receive can be complex, confusing and time consuming,” the ACCC wrote.
“Accurate information about internet speed is important for consumers to make informed choices as to the services that may best suit their needs and budgets - both at the time they originally acquire a service and during the period they acquire and pay for that service.
“In not informing … customers that they were being migrated to an alternative service with a lower upload speed, Telstra defeated or diminished genuine consumer choice, undermined competition, and impacted decisions made by customers,” the ACCC alleged.
A Telstra spokesperson told iTnews: "We don’t agree with the ACCC’s views on this issue and look forward to resolving it."
"When our communications with some of our customers have fallen short, we’ve let them know and made things right," the spokesperson said.
ACCC commissioner Liza Carver said in a statement that the commission expected “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.”
The ACCC said it would seek “declarations, penalties, consumer redress, costs and other orders” from the Federal Court, should it win the case.
NBN Co added a 100/20Mbps tier to its product range after a previous pricing consultation. It had contemplated making 100/40Mbps a ‘business only’ tier but ultimately decided not to specify how each 100Mbps service be sold.
Cutting the upload speed was seen as a way to fund increased connectivity virtual circuit (CVC) bandwidth inclusions that would make 100Mbps services look more performant, cheaper and attractive to users.
NBN Co retained the 100/40Mbps tier, with the improved upload speed sold as an add-on speed boost.
Telstra predicted at the time that having two 100Mbps residential products would create complexity.
The case appears likely to test the extent to which so-called pass-through mechanisms should exist with respect to NBN pricing - particularly, if wholesale prices are reduced, how much of the reduction should flow to the customer.
The issue has previously come up in connection to rebates and the extent to which money paid by NBN Co to an internet provider for a service level breach should flow through to the end customer whose service is impacted.
