A year after the Australian consumer watchdog took them to court over misleading National Broadband Service (NBN) speed claims, internet service providers Dodo and iPrimus have been ordered to pay a combined amount of $2.5 million in penalties.
The Federal Court of Australia has ordered Dodo Services to pay $1.5 million and Primus Telecommunications Services to pay $1 million in penalties for making the misleading claims about their NBN broadband speeds.
Dodo and iPrimus are both subsidiaries of the Vocus Group (Vocus), the fourth largest telecommunications operator in Australia, with 5.2 per cent overall market share of consumer NBN services, and 436,000 retail broadband customers.
The Australian Competition and Consumer Commission (ACCC) launched Federal Court proceedings in June 2020 against Dodo and iPrimus for speed claims made between March 2018 and April 2019.
According to the watchdog, Dodo and iPrimus made false or misleading claims on their websites about their evening speeds due to using a “fundamentally flawed testing methodology”.
Dodo and iPrimus subsequently admitted that their ‘typical evening speed’ claims made between March 2018 and April 2019 were misleading because they were not based on an appropriate testing methodology.
When considering the appropriate penalties to be imposed, Federal Court judge Justice Murphy said that through their parent company Vocus, Dodo and iPrimus, “chose not to adopt the methodology proposed as industry best practice by the ACCC and instead developed and applied the Vocus methodology, which as it eventuated had a number of deficiencies.
“That is material to the penalties imposed,” he added.
However, Dodo and iPrimus cooperated with the ACCC’s investigation, admitting liability and agreeing to make joint submissions to the court in relation to penalties and other orders.
“Accurate information about broadband speeds, particularly during the busy period when consumers are most likely to use their services, is essential for consumers to be able to compare broadband offers and pick the best service for their needs,” ACCC Chair Rod Sims said.
“The ACCC brought this case because we were concerned that the methodology which the Vocus Group used as the basis for its speed claims cherry-picked only the fastest speeds its network could deliver, and ignored the slower speeds many of its customers experienced.”
“These misleading speed claims meant consumers could not accurately compare different offerings and make an informed choice about their broadband provider,” he added.
Over recent years, the ACCC has worked to facilitate improved consumer outcomes through its Measuring Broadband Australia Program, the provision of its Broadband Speed Claims guidance, and taking enforcement action against a range of providers.
“Despite clear ACCC guidance on making broadband speed claims, Vocus Group used a flawed methodology which was inconsistent with that guidance, and misled consumers about the speeds of its plans,” Sims said.
The ACCC said on 23 March 2018 that the three companies had undertaken to offer remedies to customers who couldn’t receive the internet speeds they bought because their NBN connection was incapable of delivering it.
“Affected customers will be offered options for remediation, including moving to a lower speed plan with a refund or exiting their plan with a refund and no exit fees,” the ACCC said in a statement at the time.