A Federal Court judge has found that Telstra ads that use the term “unlimited” “falsely convey the representation that Telstra offers a mobile product or service that is unlimited”.
The court found that the ads falsely represented that the telco offered a mobile product or service that is unlimited, with no limitations on speeds, the volume of data able to be downloaded at unrestricted speeds and a user’s ability to download without interruption or delay.
Telstra engaged in conduct “that is misleading or deceptive” and likely to mislead consumers, Justice Gleeson ruled.
The judge ordered Telstra to pay the court costs incurred so far by Optus, which brought the action.
The parties agreed on orders compelling Telstra to remove its ads. A further hearing on 1 June will address a damages claim by Optus.
Optus launched the court action against Telstra earlier this month, and the two parties appeared last week before Justice Gleeson.
Optus targeted a Telstra billboard and online advertising campaign that uses the slogan “One word from Australia's best mobile network. Unlimited.”
The ads don’t make reference to a product — instead they encourage a potential customer to visit a Telstra store or click through to its website — but were launched alongside Telstra’s $69 per month “endless data” plan.
That plan offers unlimited downloads — but only 40GB of full-speed data, following which usage is capped at 1.5Mbps.
At last week’s hearing counsel for Optus Richard Lancaster SC said that the term “unlimited” has “is a word of clear meaning” when it comes to modern telecommunications.
“The offer of an unlimited service is dangled out in front of the consumer” as an invitation to come and visit Telstra, the lawyer argued said – it creates a misleading impression “to draw a consumer into the marketing web.”
Telstra, represented by Anthony McGrath SC, argued that the word “unlimited” merely acted as a prompt for a consumer, leaving an individual wondering “What is unlimited?” – not a reference to any particular product or particular service.
A spokesperson for Optus said the telco welcomes the result.
“Optus took this action because it felt the advertisement was likely to mislead consumers and our actions have been comprehensively vindicated by this judgement,” the spokesperson told Computerworld.
“We will comply with the Federal Court decision, which applies to only a small part of our overall advertising and promotional material for our mobile data plans,” a Telstra spokesperson said.
“We will carefully consider the judgment before deciding our next steps.”
The Telecommunications Consumer Protection code states that telcos must not “use the term ‘unlimited’ or an equivalent term in an unqualified manner when referring to usage, unless the ordinary use of the service in Australia is genuinely unlimited and not subject to exclusions, including exclusions for various types of calls or usage, or selected parts of the network”.
The case follows Telstra launching legal action against Optus in the Victorian Supreme Court battle over the latter’s advertising, which claims it offers the best Australian mobile network.
Vodafone has also launched “unlimited” data plans, that like Telstra’s “endless data” offering have their speeds throttled after hitting a data cap (of between 30GB and 100GB). Vodafone says it does not expect to be affected by today's judgement.
This morning the Australian Competition and Consumer Commission (ACCC) announced that Optus would fork over $1.5 million for misleading its HFC customers about NBN migration timeframes.
Telstra yesterday revealed that a “software fault” and the failure of supposedly redundant systems were behind the major outage of 4G voice and data services earlier this week. That outage followed problems with 4G voice services at the start of the month and a disruption to the Triple Zero emergency service due to a cable break.