ACCC puts big four telcos on notice over broadband speed claims

ACCC puts big four telcos on notice over broadband speed claims

Australia’s competition watchdog expects to take legal action by the end of the year

ACCC chairperson Rod Sims

ACCC chairperson Rod Sims

Credit: ACCC

Australia’s competition watchdog has revealed it plans to take legal action by the end of the year against telcos that are found to have misled consumers over broadband speed claims.

The move to take such cases to court comes as the Australian Competition and Consumer Commission (ACCC) puts Australia’s internet service providers (ISPs) in the crosshairs with its program to monitor the country’s broadband speeds and crack down on dodgy speed claims by network resellers.

“We’ll have a few cases in court by the end of the year,” ACCC chairman, Rod Sims, told the ABC’s Peter Ryan on 20 July.  “But we want to make sure that we solve this problem; we want to bring about broader change within the industry, and give better information to consumers.”

Sims revealed that, at present, the ACCC was focused squarely on the four largest players in the local market: Telstra, Optus, Vocus and TPG.

“We’re really focusing on the big ones. If we find a small one doing something dreadful, of course we’ll take action as well, but the four biggest players are 90 per cent of this market,” he said. “The main focus will be on Telstra, Optus, Vocus and TPG.

“They have been, firstly, put on notice, and some of them know that they are subject to investigation by us. There’s no question, we have a reputation for following through on these things, and we will,” he said.

Ultimately, the ACCC wants to ensure that Australia’s broadband customers don’t end up getting a lesser service than they expect, as a result of ambiguous or false advertising advertising from ISPs.

“The biggest concern…is both their [the ISPs’] advertising, where they’re talking about very fast speeds, which is ambiguous or misleading to consumers,” Sims said. “And secondly, the concern that they’re not buying enough capacity from the NBN [National Broadband Network] to provide the speed they’re selling.

“We’ve [also] got a broadband monitoring scheme in place, so we can actually tell consumers what the speeds are, and we can also check whether those providers are telling the truth,” he said.

Importantly, the broadband speeds monitoring program not only aims to provide consumers with more information about services in their areas, it is also expected to draw out whether issues relating to speed are being caused by the performance of the NBN, or by retail service providers (RSPs) not buying sufficient capacity.

Sims expanded on the ACCC’s concerns in his presentation at the Communications Day Unwired Revolution Conference in Sydney on 20 July, saying that the lack of clear and accurate information about typical broadband speeds is not good for consumers.

“The move to the NBN and the way in which NBN technologies work mean retailers need to dramatically re-think the way they talk about typical speeds and ensure consumers are presented with the information they need,” he said.

Sims also voiced some concern over the pricing structure model for NBN services by the company behind the network, nbn, and how it affects the way retail service providers (RSPs) take the NBN offering to market.

“We are concerned that the uncertainty generated by the CVC [Connectivity Virtual Circuit] charging structure is having an effect on competition in the emerging NBN market,” Sims said. “We will have to look closely at our regulatory options if the industry can’t resolve this uncertainty.

“One issue we are starting to look at closely is whether there are any terms in the wholesale contracts between nbn and retail service providers that are impeding consumers from obtaining redress in the event of NBN-caused connection and service faults,” he said.

In his presentation, Sims suggested that, during consultation with industry, the general view of both large and smaller RSPs was that, with current CVC pricing, many were reluctant to sell higher speed NBN services.

"That is, far from consumers not wanting higher speeds, RSPs were often not seeking to sell them, at least not at prices consumers are willing to pay," he said. "We heard their view that $60 per month is the average price point in the market for NBN services.

"The view clearly expressed was that the current pricing construct is impacting the market’s ability to offer higher speeds. 

"Because of the uncertainty about demand growth and customers’ expectations, RSPs are often not selling higher speed services which would require more CVC," he said.

Sims said that, while the ACCC has "limited rights" in relation to nbn's pricing under the company's Access Undertaking, it is concerned that the uncertainty generated by the charging structure is having an adverse effect on competition and consumers.

"We will have to look closely at our regulatory options if the industry can’t resolve this uncertainty," he said.

The ACCC announced on 7 April that the Government will provide funding for a new broadband performance monitoring program aimed at providing consumers with accurate and independent information about broadband speeds.

According to the regulator, the program is expected to cost around $7 million to deliver over four years.

In May, the agency put the proposed broadband monitoring program to tender.

“We want to see consumers presented with information based on the realistic speeds they can expect to experience, particularly during busy periods, not best-case scenarios,” Sims said.

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Tags TelstraTelcooptusacccTPGVocusRod Sims


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