Optus fined AU$51k for HFC speed lie

Telecommunications provider Optus has been fined AU$51,000 by the consumer watchdog after making false claims about the speed of its hybrid fibre-coaxial (HFC) network.

According to the Australian Competition and Consumer Commission (ACCC), Optus had advertised its HFC broadband as having "NBN-like speeds", despite its service being slower than many National Broadband Network (NBN) plans.

Optus' HFC service provides customers with speeds of just 30Mbps down and 2Mbps up, while NBN can offer plans with speeds of 50Mbps/20Mbps and 100Mbps/40Mbps.

Such advertising could also mislead consumers into thinking it was better to utilise Optus' services than migrate over to the NBN, the ACCC said.

"As consumers migrate to the NBN, the ACCC's action in this matter is a timely reminder to broadband internet providers that they must not misrepresent the performance of the services they are selling," ACCC chairman Rod Sims said on Thursday.

"While businesses may use comparative advertising to promote the superiority of their products over those of competitors, this advertising must be accurate, and businesses should be able to substantiate these claims."

Optus has paid the fine, and the ACCC has also accepted an enforceable undertaking [PDF] from the telco not to use the term "NBN-like speeds" in promoting its HFC network unless it is accurate; to allow customers to cancel their contracts with no fee and refund any costs paid to acquire the service; and to organise an independent third-party review of its advertising practices.

"The ACCC reminds broadband internet providers that they must ensure their advertising and product offers to consumers clearly and accurately represent the download and upload speeds they can expect to achieve," Sims said.

"The ACCC will continue to closely monitor the market for false or misleading claims about internet performance, and will not hesitate to take appropriate enforcement action if necessary."

A spokesperson from Optus added that the telco has also taken steps to inform customers of the matter.

"The Australian Competition and Consumer Commission has raised concerns with Optus regarding advertising for our HFC cable broadband internet service, which referred to 'NBN-like speeds'," the Optus spokeswoman said.

"Optus has taken the following steps to rectify the issues which were identified, including: Writing to customers who purchased the product between 1 January and 23 August 2015; and provided an undertaking not to use the unqualified phrase 'NBN-like speeds' in promotions for Optus HFC cable service."

While Optus has been focusing on its media offerings -- last month acquiring the exclusive rights to broadcast the English Premier League and on Wednesday announcing a 10-year deal that will see it become the "official telecommunications partner" for the Australian Olympic team -- its network has increasingly become under fire.

Last month, a leaked draft by NBN revealed that Optus' HFC network is "not fully fit for purpose", with 470,000 premises in the footprint needing to be overbuilt by either Telstra HFC or fibre services.

A leaked document, called HFC Plan B: Overbuilding Optus, dated November 2015, states that the necessary work of overbuilding Optus' HFC network with fibre to the node, fibre to the basement, or fibre to the distribution point will lead to a peak funding increase of between AU$150 million and AU$375 million, with NBN to miss its FY17 ready-for-service target by 300,000 premises, and its FY18 target by 333,000.

The wide-scale rollout of HFC services was approved by the ACCC in June, with a revised AU$11 billion deal allowing NBN to take ownership of Optus' HFC network and Telstra's HFC and copper assets.

For its part, Optus agreed in November that its HFC network needs to be updated.

"Optus and NBN Co have always acknowledged that parts of the HFC network would need an upgrade to support the NBN's product set," an Optus spokeswoman said.

"In advance of handover, there has been and continues to be major investment into the HFC network to manage subscriber growth and capacity demand."

The ACCC said in August that the original HFC deal would have seen Optus eventually decommission its HFC infrastructure.

Optus customers have also been complaining in higher numbers about the telco's services; the Telecommunications Industry Ombudsman (TIO) released its Telecommunications Complaints in Context report for July to September 2015 earlier on Thursday, reporting that Optus' complaints ratio [PDF], measured per 10,000 services in operation (SIO), stood at 6.7 per 10,000 SIO.

This signalled a rise of 45.7 percent year on year. Meanwhile, the rest of the industry had improved complaints statistics, with the overall ratio being 5.5 per 10,000 SIO -- a drop of 20.29 percent year on year.

The TIO's Annual Report 2014-15, published in October, also revealed that customer complaints about Optus had increased substantially.

Optus saw an increase in total complaints of 31.5 percent over the year, from 14,144 during FY14 to 18,601 in FY15.