The Federal Court has today found that Telstra made false or misleading representations relating to the upload speed of residential broadband internet services supplied to nearly 9,000 of its Belong customers, following court action by the ACCC.
In October and November 2020, Telstra migrated 8,897 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.
Telstra did not notify customers of the reduction in the maximum upload speed in their service. "Telstra's failure to inform customers that their broadband service had been altered denied them the opportunity to decide whether the changed service was suitable for their needs," ACCC Commissioner Liza Carver said.
"There was no reduction to the price Telstra charged its customers even though the cost charged by NBN Co to Telstra was $7 a month less for the new, lower speed service."
Telstra admitted that it had represented to 2,785 of the Belong customers, who acquired the 40 Mbps plan between 1 May 2017 and 19 September 2018, that they were receiving a Belong NBN Broadband service with a maximum upload speed of 40Mbps, when they were not.
Telstra continued to make these representations by failing to update customers once the unilateral migration had occurred. Telstra acknowledged its failure in 2021 and provided a one-off $90 credit to these consumers.
The Court also found that Telstra had made false or misleading representations to a further 6,112 Belong customers who had acquired the 40mbps plan between 20 September 2018 and October 2020.
While Telstra never stated the maximum upload speed to these customers, the Court found that these consumers would have reasonably construed the service to which they were bound was the same in all material aspects, including upload speed, as it had always been.
"It is simply unacceptable for a supplier of essential services to mislead consumers when reducing the quality of the services it is providing to its customers," Ms Carver said.
"We expect better from the country's largest retail broadband internet service provider and believe these customers, who ultimately received a service they did not agree to, should be compensated."
The ACCC is seeking declarations, penalties, consumer redress, costs and other orders.
The Court will determine the penalty and any consumer redress after a hearing on a date to be fixed.
Background
Telstra is Australia's largest telecommunications supplier, supplying the largest number of retail broadband internet services and owning the largest mobile network over which it supplies both retail and wholesale services. It is a publicly listed company, incorporated in Australia.
Belong was launched by Telstra in 2013 as a low-cost mobile and internet service provider, operating semi-independently in a number of areas, including products, marketing, service, billing and parts of IT.
Upload speed refers to the speed at which an internet connection can allow data to be sent from personal devices to the internet, such as sending files, presentations or media content when working or studying from home or sharing photos and videos.
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.
The ACCC instituted these Federal Court proceedings against Telstra in December 2022.
The ACCC has previously instituted proceedings against Telstra on several occasions, including in August 2021 for making alleged false or misleading representations in their promotions of some 50Mbps and 100Mbps NBN plans. Telstra was subsequently ordered to pay $15 million in penalties in that case.
