Telstra to pay back $25m for underperforming internet speeds

Telstra will be paying out around $25m in refunds for failing to notify almost 50,000 customers that the maximum speeds advertised in their internet plan were unattainable with the NBN infrastructure available to them, said the Australian Communications and Media Authority (ACMA).

Under ACMA rules, telcos must verify maximum internet speeds and notify customers when speeds cannot meet those advertised in their plan. In these circumstances, customers are entitled to move to a lower speed tier plan at a lower price or exit the contract without cost.

The ACMA has issued Telstra with a Remedial Direction under which it must commission an independent audit of the systems it has in place to notify customers of their maximum attainable speeds. The company must also implement a range of systems, processes and reporting to assure future compliance. Failure to comply could lead to penalties of up to $10 million.

ACMA Chair Nerida O’Loughlin said, “The ACMA is very concerned with this conduct as these customers have been paying for a level of service they were not receiving.

“Telstra denied these customers the opportunity to downgrade their plan or exit their contract.”

An investigation found that between September 2018 and October 2020 Telstra failed to suitably notify up to 49,092 affected customers of their underperforming internet speeds and plan options, said O’Loughlin.

Telstra is in the process of providing remedies to the impacted customers, including providing refunds where appropriate. Around $25 million in refunds is expected to be paid in connection with this issue, although that total comprises additional cases not included in the ACMA’s findings. 

Telstra, said ACMA, also breached rules that do not allow a telco to charge for an NBN service unless 10 working days have passed since customers were advised of their options and they have not taken up an available remedy.

“We will take a very close look at the results of the independent audit to make sure we are satisfied that the action Telstra has taken will adequately address the flaws that led to the problems,” O’Loughlin said.

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