ACCC should stop Conroy's 100Mbps claims

Summary:The Australian Competition and Consumer Commission (ACCC) has put a stop to telco's marketing "theoretical maximum" speeds to consumers. Should Conroy be banned from making speed claims too?

commentary The Australian Competition and Consumer Commission (ACCC) has put a stop to telco's marketing "theoretical maximum" speeds to consumers. Should Conroy be banned from making speed claims too?

The $43 billion taxpayer funded National Broadband Network (NBN) is bigger than just high speed broadband. It's about providing competition in under-serviced regions, restructuring the telecommunications market, ending Telstra's monopoly and upgrading broadband technology — all important and worthy goals.

But, to sell the network, Conroy has repeatedly trotted out the line that the NBN will deliver speeds of "up to 100Mbps". The last time he used that line was in Tasmania on 1 March. "Ultimately, 200,000 homes, businesses, schools and hospitals in Tasmania will have access to optic fibre and superfast broadband speeds of up to 100 megabits per second."

'Up to' or 'peak network speeds' are likely to be misleading if in fact only a small proportion of consumers using the network can expect to achieve the stated speed.

ACCC

This claim, for any telco, could attract a $1 million fine if the government passes the Trade Practices Amendment (Australian Consumer Law) Bill 2009 this month. The impending Bill prompted September's guidance by the ACCC to telcos over mobile speed claims, which put an end to, for example, Telstra using a 21Mbps "theoretical maximum" speed to sell Next G. But the reason for the ACCC's guidance appears to have escaped Conroy.

"A speed claim that conveys the representation that consumers will achieve 'up to' a stated speed is misleading if the stated speed is no more than a technical speed achievable in controlled conditions but otherwise unachievable in the real world," the ACCC wrote in its September guidance on the issue.

The ACCC, of course, was referring to technical limitations, but surely the "real world" includes people's ability to pay.

At this week's press briefing announcing the mainland NBN trial suburbs, I asked Conroy: would the government be willing to subsidise access to 100Mbps services on the NBN, if it would cost at least $130 per month to access such speeds? (Other ISPs offer similar or higher pricing for 100Mbps services.)

Conroy's fine print became clear.

"If a [retail service provider] wanted to charge $130 for 100Mbps, people would be free not to take it out. There will be a whole range of pricing points. You picked the premium end."

I certainly did pick the premium end. But it's the same 100Mbps premium end that Conroy has been trotting out all along, not the 20Mbps fibre connection that the majority of Australians will realistically end up with.

As the ACCC explains: "Representations of maximum, 'up to [speed]' or 'peak network speeds' are likely to be misleading if in fact only a small proportion of consumers using the network can expect to achieve the stated speed."

If Conroy complied with the same rules that apply to the country's telcos in the name of consumer protection, then he should make a choice: either stop using the "up to 100Mbps" claim for the NBN since it's not going to be available to most "real-world" Australians, or subsidise the retail cost so that it is.

Fortunately for Conroy, while he is a kind of proxy for NBN Co, he is not a telco, leaving him as probably the only person in the entire telecommunications sector that has the liberty to make ridiculous speed claims.

Topics: NBN, Broadband, Government, Government : AU, Telcos

About

Liam Tung is an Australian business technology journalist living a few too many Swedish miles north of Stockholm for his liking. He gained a bachelors degree in economics and arts (cultural studies) at Sydney's Macquarie University, but hacked (without Norse or malicious code for that matter) his way into a career as an enterprise tech, s... Full Bio

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