Dodo and iPrimus misled consumers by publishing inaccurate information about the typical evening speeds provided in their residential NBN broadband services, the Australian Federal Court has ruled.
From March 2018 to April 2019, the Vocus-owned telcos claimed to provide certain internet download speeds on their respective websites despite not having reasonable grounds to make those representations.
The misleading speeds listed on the websites were for the "busy evening period", from 7pm to 11pm, with Dodo promising 11 Mbps for 12/1Mbps NBN plan, 24 Mbps for 25/5Mbps plan, and at one point 47 Mbps for its 50/20Mbps plan.
Meanwhile, iPrimus claimed it could provide 11 Mbps for its services on the 12/1Mbps speed tier and at one point 47 Mbps for its 50/20Mbps plan during the busy evening period.
According to Justice Bernard Murphy, the telcos did not have a testing methodology in place that could appropriately measure the speeds typically or usually received by customers.
"It suffices to note that the statement of agreed facts identifies various deficiencies in the Vocus Methodology and Dodo and iPrimus admit that the methodology did not provide reasonable grounds for the Typical Evening Speed Statements," he said.
"[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."
The lawsuit was raised by the Australian Competition and Consumer Commission (ACCC) last year as it found via an investigation that the telcos' testing methodology determined internet speeds by only using the daily 75 fastest speeds observed across Vocus' entire network in the busy period.
In light of these findings, the court has ordered Dodo to be penalised AU$1.5 million while iPrimus will have to shell out AU$1 million for the misleading conduct.
After the ruling, ACCC chair Rod Sims said 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 pick the best service for their needs.
"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."
In the ACCC's latest broadband speed report [PDF] released in May, Dodo and iPrimus were dead last among RSPs in their ability to deliver the average download speed of their plans. For upload speeds, the pair placed in the middle of the pack.
This is the second time in as many years that Dodo has been found to have misled customers about its NBN services. In 2019, Dodo agreed to refund up to AU$360,000 to around 16,000 customers over misleading claims that its entry-level NBN broadband plans were "perfect for streaming".
The misleading statement about streaming was used in Dodo's advertising campaigns for certain NBN broadband services, including plans that could only provide maximum speeds of 12Mbps. Some of these plans also only provided 10GB of data per month.