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ACCC cracks down on 'misleading' NBN speed claims

Lucy Battersby

Telecommunications companies are misleading customers over broadband internet speeds and the worst offenders will likely face prosecution over dodgy advertising by the end of the year, the consumer watchdog says.

Chairman Rod Sims said the Australian Competition and Consumer Commission (ACCC) would conduct "compliance sweeps" of broadband marketing and telco websites later this year in a bid to keep telcos honest about speeds available on the national broadband network.  

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The NBN: How fast is fast?

With the roll out of the National Broadband Network, we clear up some of the wholesale services the NBN is going to provide.

"Right now, consumers are not getting the basic information they need to make an informed choice. Indeed, they are often being misled," Mr Sims said on Thursday.

"We want to see consumers presented with information based on the realistic speeds they can expect to experience, particularly during busy periods. Not just best-case scenarios."

Broadband was an ACCC compliance and enforcement priority this year, he told a telco industry conference.

"We are investigating and expect to be taking action in respect of misleading conduct around broadband speeds," he said.

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As more Australians migrate to the government-owned NBN, tensions are building between consumers and telcos over download speeds, particularly during peak evening periods.

In turn, NBN Co and telcos are blaming each other for bandwidth pricing and provisioning, or pointing the finger at consumer equipment, modem placement and habits.

However, the government-owned NBN Co already knows exactly how much capacity each telco purchases and how often their network reaches congestion.

"We advise the [retailers] when they are hitting capacity levels but it is a matter for the [retailers] to decide whether to purchase more [capacity]," a spokesman said.

NBN Co also provides telcos with weekly reports on actual speeds being reached at each active copper connection on its fibre-to-the-node network, but does not share this information with consumers or the ACCC.

Mr Sims told Fairfax Media consumer expectations were shaped by marketing. If telcos told consumers a 12 megabit per second [Mbps] connection on the NBN was "superfast', this could be considered misleading because it was similar to pre-NBN speeds.

"Of course, there is something lodged in the consumer mind that says 'NBN is coming here to provide you with fast speeds'."

But he told consumers not to expect faster speeds unless they were prepared to pay more.

The ACCC had the power to gather information for legal actions, but the upcoming broadband monitoring scheme was "the big hope" for solving the speed mystery, Mr Sims said.

He said telcos had told the commission they didn't like selling faster plans because consumers expected to pay only $60 a month for internet, which was not enough to cover bandwidth fees.

However, one smaller retailer, Aussie Broadband, has a growing reputation for consistently delivering NBN speeds consumers had paid for. It does this by restricting excessive use and adding new customers only when sufficient bandwidth is available. And unlike some telcos, it does not offer unlimited plans.

"Unlimited service makes it very difficult for us to predict usage, and thus difficult to control the network quality," acting managing director John Reisinger said.

"Unlimited services tend to attract people who use very large amounts of data, which can affect other users in their area."

Aussie Broadband's prices are higher for 100 Mbps speeds - ranging from $80 a month for 500 gigabytes to $170 a month with 3 terabytes of data. In comparison, TPG offers unlimited data at that speed for $100 a month while Optus charges $110 a month.

Market reports published by the ACCC show smaller telcos - outside the big four providers of Telstra, Optus, TPG (which owns iiNet and Internode), and Vocus (which owns iPrimus) - are growing their market share on the NBN.

"Other" providers increased their market share for fibre-to-the-premises connections from 2.4 per cent at December to 2.8 per cent in March, and on fibre-to-the-node connections it was up from 1.8 per cent to 2.1 per cent in the same period. The next ACCC report is expected before the end of July.