Australian Consumer Watchdog Puts Internet Service Providers on Notice

Recently, headlines have been dominated by reports of broadband users across Australia getting less than they paid for. National Broadband Network (NBN) customers across the country have been experiencing less than stellar broadband speeds. In fact, speeds were far less than promised by Internet Service Providers (ISPs) and far less than customers paid for.

NBN Australia

Since the news broke, the Australian Competition and Consumer Commission (ACCC) has come forward to warn retail ISPs like Optus and TPG. Head of the consumer watchdog organization, Rod Sims, has urged internet providers to implement refunds for overcharged customers and claims they face potential litigation if not.

Understanding the Problem: Telstra First Identifies Over-Charge Issue in Late Spring 2017

In short, certain telcos across Australia have been accused of knowingly selling broadband packages to customers using fibre-to-the-node (FTTN) NBN connections, that we’re simply incapable of offering any top-tier bandwidth speeds over 50 Mbps.

Leading ISP, Telstra first went public in May, announcing that it was aware of customer overcharges and would start a process to identify, contact and refund eligible customers. Following suit, ISP Optus claimed that they too would undertake the same process. However, ACCC head Rod Sims claims that while Optus made an effort publicly to right the wrong, they’ve offered limited plans for action since.

“We are pleased that Telstra proactively reported this serious problem to the ACCC and has co-operated in creating a remediation plan for affected customers,” said Sims.

“Optus were more engaging publicly than they were with us,” added Sims. “They were saying things in public about what they will do, but the ACCC will start engaging directly with them right now. I think most of the other ISPs are in a similar position but you think given those statements, Optus should have no problem providing a similar undertaking [to Telstra].”

Most of the customers eligible for a refund will likely be connected to the NBN via the most common fibre-to-the-node connection (FTTN). FTTN connections help to provide broadband connection and other data services through a common network box, which is often called a node.

Who’s to Blame? Understanding How Australian Telco’s Obtain Broadband Capacity from NBN Co.

The failed promises on broadband speeds have left many customers wondering who their disappointment and anger should be directed at. While they purchased broadband packages from ISP’s like Telstra and Optus, fingers were initially pointed at the National Broadband Network Corporation for failing to provide adequate speed to providers.

However, to better understand the problem and ensure blame games don’t cloud the issue, let’s explore the process for how Australian ISPs purchase broadband capacity from NBN and what that means for consumers.

  • NBN Co. is the company responsible for building and implementing a wholesale broadband network to service the entire country.
  • Retail ISPs like Telstra and Optus are required to purchase necessary amounts of bandwidth from NBN to adequately serve their customers.
  • Retail ISPs are required to purchase enough NBN bandwidth to match the service agreements and promised download speeds they offer to customers.
  • When promises of lightning-fast download speeds are made, but an ISP hasn’t bought enough NBN capacity to support it, the service package simply will not live up to the hype.
  • Simply put, NBN serves as the on-ramp and various Internet Service Providers are the highways.

Solving the Problem: Putting Activation Processes in Place to Avoid Future Rip-Offs

Widespread warnings to ISPs by the ACCC come in response to Telstra’s submission to the consumer watchdog, outlining how it will provide refunds or special offers to roughly 42,000 customers who over-paid for unattainable speeds on their NBN service.

With Telstra setting the bar high, Sim’s claims that remaining Australian ISPs should follow suit quickly if they want to avoid direct legal action.

“We’ve been warning [ISPs] for some time that we were concerned about this kind of behaviour,” said Sims. “Now that we’ve got this undertaking from Telstra, we’ll be approaching most other ISPs to say we’d like an undertaking in similar terms and if we don’t get it, there’s a very real chance there will be litigation to follow.”

In part of Telstra’s submission to the ACCC, the ISP said from now on, when connecting new customers, hard-line policies will be in place to test the connection and ensure end-users can reach and maintain the download speeds they paid for. If the test fails, Telstra will know right away that something must be remedied.

Ending the Blame Game: Getting to The Bottom of Broadband Speed Issues to Protect Consumers

Sims and the ACC claim that Telstra’s new policy will be a critical force in ending the blame-game between NBN Co. and the various ISP’s across Australia.

“For example,” says Sims. “If you can’t get 25 Mbps download speeds on your service, you’ll be almost certain it’s because the retailer didn’t buy enough capacity. Fibre-to-the-node has difficulty supporting 100 Mbps or even 50 Mbps. But 98% of the time, it can support speeds of 25 Mbps.”

“So it will become very likely that if you’re on a connection speed of 25 Mbps – even if its fibre-to-the-node – if you’re having problems it’s very likely your retailer hasn’t bought enough capacity from the NBN.”

With Telstra leading the charge, the ACCC is strongly urging other Australian ISPs to be transparent, identify customers eligible for a refund and get policies in place for remedying the issue. As mentioned, without swift and deliberate action on the part of all relevant ISPs, retailers could leave themselves open to litigation, not to mention damaged reputations.

For Australian broadband consumers, voicing your dissatisfaction is critical. If you’ve recently purchased a broadband package from any of Australia’s Internet Service Providers, make sure that your connection and download speeds have been living up to what you paid for. If you’ve experienced less-than-promised speeds, you should contact your service provider directly and ask them what’s being done to remedy the bandwidth issue.

Consumers have rights. In an increasingly technology-driven consumer landscape, it’s critical that these rights are protected and that customers are getting exactly what they paid for.

If you’re confused by the technical jargon or would just like an expert’s perspective on the issue, reach out to a local technology firm for consultation and guidance. Technology should make your life easier – it should never rip you off.

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