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Optus fined AU$1.5m for misleading NBN customers

Optus has been forced by the Federal Court to pay AU$1.5 million in penalties after misleading its customers about switching over to NBN's HFC network.

Optus has been ordered to pay AU$1.5 million in penalties by the Australian Federal Court, after having been found to make misleading representations to its fixed broadband customers about their shift to the National Broadband Network (NBN) hybrid fibre-coaxial (HFC) service.

In proceedings begun by the Australian Competition and Consumer Commission (ACCC) last December, the consumer watchdog had alleged that between October 2015 and March 2017, Optus advised its customers in writing that they would be disconnected from the Optus HFC network within a specified period due to the availability of NBN in their area.

This constituted false and misleading representations, the ACCC had argued, because the timeframes it advised were shorter than those contractually permitted.

During the period between October 2015 and September 2016, Optus was also found to have misled customers about NBN plan purchase options; it "created the impression" that customers had to buy their NBN connectivity with Optus as their retail service provider (RSP).

Optus had benefited by approximately AU$750,000 due to the conduct, according to the ACCC.

"Optus pressured customers by misrepresenting the time period in which services could be disconnected," ACCC Chair Rod Sims said.

"Businesses should not make false representations which distort customers' decision making. This is particularly important when many Australians are moving to the NBN for the first time.

"It is illegal for businesses to mislead their customers and create a false impression through their communications. Today's penalty serves as a warning to all businesses that such behaviour will be met with ACCC action."

Since the legal proceedings kicked off, Optus had compensated its customers by around AU$833,000, the ACCC said.

ACCC action against Optus saw the telco late last year also enter a court-enforceable undertaking to refund thousands of fibre-to-the-node (FttN) and fibre-to-the-building (FttB) customers who were sold speeds not technically possible on their NBN connection.

The ACCC has also forced Telstra, TPG, iiNet, Internode, Dodo, iPrimus, and Commander to compensate tens of thousands of customers for not providing them with the NBN speeds they were paying for.

However, the ACCC's first NBN speed-monitoring report at the end of March revealed that RSPs are actually delivering up to 90 percent of their speed tier promises during peak hours.

On download speeds, Optus scored lowest, providing its customers with 80.7 percent of their maximum speeds during busy hours and 81.8 percent overall; Telstra came in third, delivering 88.1 percent of maximum speeds during peak hours and 88.6 percent in total; iiNet placed second, delivering 88.6 percent of maximum speeds in busy hours and 89.1 percent overall; and TPG scored highest, delivering 90.7 percent of the maximum download speeds to its customers in busy hours and 91.5 percent the rest of the time.

The percentages equate to RSPs delivering download speeds of around 90Mbps on the 100Mbps tier; 45Mbps on the 50Mbps tier; and 22.5Mbps on the 25Mbps tier.

Despite scoring lowest in download speeds, Optus came first in upload speeds, delivering 98.1 percent of maximum speeds during busy hours and 98.3 percent overall; TPG came in second, delivering 97.9 percent of maximum upload speeds during busy hours and 98.1 percent overall; iiNet came third, providing its NBN customers with 91.9 percent of their maximum upload speed during busy hours and 92.1 percent the rest of the time; and Telstra came last, delivering 86.7 percent in peak hours and 86.8 percent overall.

According to Sims, the results "reflect significant and recent changes in the market", including NBN's connectivity virtual circuit (CVC) discounts and the ACCC's own speed advertising guidance.

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