Telstra to refund $25m to customers after NBN rule breaches

Telstra has been hit with a massive $25 million remedial direction by Australia’s communications regulator, after breaching NBN rules and leaving almost 50,000 customers with under-performing broadband plans.

The Australian Communications and Media Authority (ACMA) issued Telstra with the direction after finding that the telco (and its subsidiary Belong) had failed to inform customers that their NBN connection was not compatible with their choice of NBN plan speed. The ACMA requires all NBN providers to advise customers when their maximum attainable speed is less than the advertised maximum speed for their plan; in this case, up to 49,092 Telstra and Belong customers were not adequately notified of various plan speed issues between September 2018 and October 2020.

Alongside failing to suitably inform customers that their plan speeds were too fast for their home’s infrastructure, Telstra also breached ACMA rules by not providing affected customers with a costless exit or appropriate refund. The ACMA also found that some Belong customers were not able to receive more than 30% of their plan’s advertised maximum speed, but were not provided with notifications by email or letter if they were unreachable over the phone.

“The ACMA is very concerned with this conduct as these customers have been paying for a level of service they were not receiving,” ACMA Chair Nerida O’Loughlin said.

“Telstra denied these customers the opportunity to downgrade their plan or exit their contract.”

While Telstra self-reported these breaches to both the ACMA and Australian Competition and Consumer Commission (ACCC), the telco will still be required to issue refunds to affected customers. Telstra has indicated that it is currently in the process of contacting customers to offer remediation.

“This is a complicated issue that we are managing proactively, and we are very sorry to have let these customers down,” said Sanjay Nayak, Global Connectivity and Platform Products Lead at Telstra.

“Our continued commitment to our customers is when things go wrong, we pick it up and aim to fix it. We are committed to always acting responsibly, while being transparent and accountable.”

ACMA findings: how Telstra fell short

Despite paying for a fast NBN plan, some customers are only able to experience limited speeds due to the NBN connection type used at their address. There are multiple technologies used to connect homes to NBN infrastructure, with most neighbourhoods connected by fibre; how the fibre connects to your home, and whether you’re still using existing copper wire alongside that fibre, can affect how fast your NBN plan will be.

The fastest connection type in Australia is Fibre to the Premises (FTTP), followed by Hybrid Fibre Coaxial (HFC). Most providers limit their faster NBN plans to customers on these connection types, as homes using other technologies (such as Fibre to the Node, Fibre to the Building, or Fibre to the Curb) won’t have access to super-fast speeds.

The ACMA requires all NBN providers to verify the maximum plan speeds available to customers, and notify those customers if their speeds fall short. Customers are then to be given the option of moving to a slower, but cheaper NBN plan, or exiting their contract at no cost and – where applicable – receiving a refund.

In this case, the ACMA found that Telstra did not notify a significant number of customers with under-performing NBN services of their true plan speeds within a reasonable timeframe, and in some cases, failed to notify customers completely. Some customers were also not informed of the option to move to a lower speed plan, or were not given the choice to cancel their plan without penalty.

Overall, almost 50,000 Telstra and Belong customers were likely overcharged under ACMA guidelines, meaning Telstra is now required to refund those affected – a process that has already begun and will continue over the next few months. The telco will also need to undertake an independent audit of of its systems and processes to maintain compliance with ACMA regulations.

While the total refund amount stated by the ACMA is $25 million, this includes both refunds for the impacted 49,092 customers, plus additional cases not included in the ACMA findings. Telstra has already implemented improvements to how it communicates NBN speed information to customers: the telco has introduced a new system for processing data from NBN Co, and can now provide more reliable speed information at point of sale for FTTN, FTTB and FTTC customers via its new Dynamic Service Qualification tool.

Telstra has also previously restricted its NBN 100 or faster plans to FTTP and HFC customers only, due to the limitations of many FTTN, FTTB or FTTC connections. However, the telco currently offers NBN 100 to all eligible fibre and HFC connections, and provides customers with the maximum download and upload speeds available at their address during the signup process.

Is my NBN plan too slow?

It’s also important to note that while the ACMA has singled out Telstra, it’s unlikely that the telco is the only NBN provider who has failed to notify customers that they’re on the wrong plan speed. If you’re an NBN customer, make sure you’re aware of the plan speed you’ll be paying for, and if its compatible with your home’s NBN connection type.

Running a simple NBN speed test during peak traffic hours (7pm-11pm) can be a simple way of assessing whether your performance is up to scratch. If your speed falls short of the typical evening speed listed for your plan, it’s time to contact your provider. There are plenty of DIY options for improving your internet speed, but it may be time to look for a better NBN deal.

NBN plans compared

If you’re ready to switch – or you’re already on the NBN, but unhappy with your current plan – we’ve compiled a range of plans across four speed tiers in the below table.