Telstra hit with $18m fine over false broadband speed claims
▼ Summary
– Telstra was fined $18 million by the Federal Court for moving nearly 9,000 Belong customers to a slower upload speed plan without informing them.
– The affected customers’ upload speeds were reduced from 40 Mbps to 20 Mbps in late 2020, while download speeds remained unchanged at 100 Mbps.
– Telstra must provide remediation to all affected customers, totaling over $2.3 million, with credits or payments of $15 per month for the duration of the slower service.
– The ACCC emphasized that businesses cannot mislead consumers by altering key service aspects without disclosure, denying customers the chance to assess suitability.
– Telstra cooperated with the ACCC, made joint submissions on penalties, and is compensating customers under a court-enforceable undertaking.
The Federal Court has mandated that Telstra pay an $18 million penalty for violating Australian Consumer Law, following the telecommunications giant’s decision to downgrade the internet plans of nearly 9,000 Belong customers without their knowledge. This substantial fine underscores the serious consequences for companies that fail to be transparent with consumers about significant changes to their services.
Between October and November 2020, Telstra transferred 8,897 customers subscribed to its Belong NBN plans from a service offering a maximum upload speed of 40 Mbps to one capped at only 20 Mbps. While the download speed remained at 100 Mbps, the company did not notify these customers about the reduction in their upload capabilities at the time the change was implemented.
ACCC Commissioner Anna Brakey emphasized that the penalty serves as a powerful warning to all corporations. She stated that businesses cannot mislead consumers by altering fundamental aspects of a service without informing them. The failure to notify customers robbed them of the chance to assess whether the modified service still met their requirements.
As part of the resolution, all impacted customers are receiving remediation from Telstra. Each customer will be credited or paid $15 for every month they were on the lower upload speed plan. The total compensation Telstra is providing to affected individuals exceeds $2.3 million.
Commissioner Brakey further highlighted that misleading pricing and performance claims for essential services, especially in the telecommunications sector, represent a key enforcement priority for the ACCC. Telstra had already begun making payments to some customers before the ACCC initiated legal proceedings. The remaining reimbursements are being processed under a court-enforceable undertaking provided by Telstra to the regulator. Belong will contact the remaining affected customers via email to arrange their payments.
In addition to the penalty and customer remediation, the Court ordered Telstra to contribute to the ACCC’s legal costs. The Court’s full reasoning for the judgment will be released at a future date. Throughout the process, Telstra cooperated with the ACCC, including by making joint submissions to the Court regarding the orders and penalties.
Belong, launched by Telstra in 2013, operates as a low-cost provider of mobile and internet services. It functions with a degree of independence in various operational areas such as product development, marketing, and billing. Upload speed is a critical metric, determining how quickly data can be sent from a user’s device to the internet—a vital function for activities like video conferencing and sending large files.
The background to this case involves a change in the wholesale market. In May 2020, NBN Co introduced new consumer speed tiers, including a 100/20Mbps option. This tier offered a maximum download of 100 Mbps and a maximum upload of 20 Mbps, and it cost retail service providers $7 less per month at the wholesale level compared to the previous 100/40Mbps plan. The ACCC commenced its legal action against Telstra on December 6, 2022, and the Federal Court ruled against the company on February 21, 2025.
(Source: ITWire Australia)