ISPs put on alert over broadband speed claims

Releases guidelines to keep ISPs' broadband claims in check
Rod Sims - ACCC chairman

Rod Sims - ACCC chairman

The Australian competition watchdog has laid out a new set of guidelines aimed at making sure local internet service providers (ISPs) don’t make false or misleading claims over broadband speeds.

The Australian Competition and Consumer Commission (ACCC) released the new set of principles on 10 February, with the intention of helping ISPs stay in line with Australian Consumer Law when it comes to speed claims.

According to the ACCC, complaints to the Telecommunications Industry Ombudsman (TIO) about internet data speeds increased by 48 per cent during 2015-16, making it the single largest issue for consumer complaints during the year.

In response, the ACCC began a public consultation on broadband speed claims issues in July last year, calling for industry feedback over the matter. The Commission received over 400 individual responses to the consultation discussion paper.

“The ACCC is concerned that the use of vague speed claims is not providing consumers accurate, comparable, or useful information. Four out of five consumers have trouble comparing broadband speeds and this is causing a high level of complaints, confusion, and dissatisfaction,” ACCC chairman, Rod Sims, said in a statement.

“It is time the industry met consumer demand for accurate information about broadband speeds so consumers can compare offers and make informed decisions about their internet services,” he said.

Now, the ACCC has developed six principles to guide ISPs on marketing best practice when it comes to broadband speeds, including how to make a clear statement on the typical speeds consumers can expect during busy hours.

“The ACCC will now work with industry and issue more detailed guidelines to ensure they are able to use this framework to provide better information to their customers. It’s the first step of a longer-term plan to bring about meaningful change,” Sims said.

“Greater transparency around broadband speeds will enable consumers to make clearer comparisons on product choices, further encourage ISPs to compete on speed and save consumers money,” he said.

According to the ACCC, ISPs should endeavour to make accurate information about broadband speeds available to consumers during sales processes and on their websites to help their end customers compare plans, identify performance, and provide support if services fall short of expected speeds.

Below are the ACCC’s six principles:

  • Consumers should be provided with accurate information about typical busy period speeds that the average consumer on a broadband plan can expect to receive.
  • Wholesale network speeds or theoretical speeds taken from technical specifications should not be advertised without reference to typical busy period speeds.
  • Information about the performance of promoted applications should be accurate and sufficiently prominent.
  • Factors known to affect service performance should be disclosed to consumers.
  • Performance information should be presented in a manner that is easily comparable by consumers, for example by adopting standard descriptive terms that can be readily understood and recognised.
  • RSPs should have systems in place to diagnose and resolve broadband speed issues.

In addition to these new principles, the ACCC is set to publish a best-practice broadband speeds advertising guide for ISPs in the "coming months".

Meanwhile, the Commission is also in discussions with the Federal Government about the possible introduction of a fixed broadband performance monitoring and reporting program in Australia.

The Australian Communications Consumer Action Network (ACCAN), has supported the move by the ACCC to ensure ISPs do not provide misleading information about broadband speeds.

“At the moment consumers are unable to tell what speed they can expect from a service during busy periods, to compare providers or pick the plans which meet their speed needs," the organisation said in a statement.

"When speed and performance issues are encountered, there is often limited assistance to resolve problems."

The new guidelines come as the company behind the rollout of Australia's National Broadband Network embarks on an effort to educate the market about its various speed tier products.

During nbn’s half-yearly financial results presentation on 9 February, nbn CEO, Bill Morrow indicated that the company was seeing more growth in its 25Mbps tier and lower-speed product segments than its higher-speed offerings.

He put this down, in part, to a low awareness among end customers of the speed options available, as well as a limited need among consumers for nbn’s higher-seed products.

In a bid to educate end customers and potentially boost the number of higher-speed services on offer, nbn has introduced a marketing program with its retail service providers to educate and inform end users of the different speed tiers available on the network.