NBN advertising: Stop your speed shenanigans, ACCC tells retailers

Stop advertising ‘up to’ speed claims, ACCC chief says

The Australian Competition and Consumer Commission has issued guidelines that envisage a radical overhaul of how National Broadband Network services are marketed.

The ACCC this morning released detailed guidelines for retail service providers (RSPs) that offer NBN broadband plans that seek to shift away from marketing based on the theoretical maximum speed of a connection.

“Retailers should be very clear with customers about the typical speeds they can expect during busy evening periods,” ACCC chairperson Rod Sims said.

“It is not acceptable to advertise an ‘up to’ speed claim, as this can give the false impression that the speed advertised is achievable at most times, including during the busy period."

When marketing broadband plans, the ACCC says RSPs should indicate “the speeds at which the plans typically operate during the busy evening period,” and adopt a standardised labelling system — basic evening speed, standard evening speed, standard plus evening speed and premium evening speed — “that indicates a minimum ‘typical busy period speed’ for the plan”, the guidance states.

Those labels would be based on the minimum theoretical speed of a connection as well as the actual minimum typical busy period speed achieved; for example a 'standard plus evening speed' plan would deliver at least 30Mbps during a typical busy period and be based on a 50/20Mbps or faster NBN service. 'Premium evening speed' would deliver at least 60Mbps and have to be based on a 100/40Mbps service or faster.

If an RSP’s customer can’t obtain the typical speeds that would be expected of their plan, the retailer should provide remedies including possibly providing refunds, shifting them to a new plan or giving them the option to exit their contract.

Telstra announced in May it would refund some of its NBN customers who had paid for unachievable speeds. Optus has also reportedly said it would refund some of its NBN customers.

When it comes to fibre to the building (FTTB) and fibre to the node (FTTN) connections — which are affected by factors such as the condition of the copper wiring used to connect a household and the distance from a node — the ACCC notes “there is clear potential for some consumers to not receive typical plan speeds” and RSPs “should include clear and prominent disclosure in product descriptions and marketing, and give point of sale or post sale information and assistance to affected customers.”

NBN has previously said that RSPs are often pushing low-speed plans on its network as part of a “land grab” strategy to build market share.

“We have a land-grab environment where retail prices are lower than what consumers are willing to pay,” NBN CEO Bill Morrow wrote in a recent position paper. “The large number of competitors going after the same customer has driven price to be the key attraction and seldom do you see any clarity around speed options or quality during the peak time of day.”

The company’s FY17 results revealed that 53 per cent of end users on its fixed-line network have so far opted for 25/5 megabits per second plans, while 29 per cent have chosen 12/1Mbps.

Determining the cause of poor performance of NBN connections is also complicated by the fact that Internet speeds rely on the infrastructure of both NBN and the RSPs as well as the capacity (CVC) purchased by RSPs to serve their customer base.

The ACCC is rolling out an NBN-focussed broadband performance monitoring scheme that it hopes will help consumers make an informed choice when choosing an RSP. The organisation has been recruiting volunteer households to participate in the program.

The Australian Communications and Media Authority is undertaking its own scrutiny of end user experience on the NBN.

Earlier this year the ACCC also released broad principles RSPs should employ when making broadband performance claims.

Although compliance with the guidance published today is voluntary, the ACCC has indicated it expects to haul RSPs into court over broadband speeds before the end of the year.

The guidance “provides a strong benchmark against which the ACCC, and more importantly the community, will judge the advertising of retailers,” Sims said.

“The ACCC will also be closely monitoring retailer compliance with the Australian Consumer Law.” The ACCC said it would review its guide in 12 months to assess its effectiveness.

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