Optus hauled to court over allegations of misleading NBN HFC customers

Optus misled customers by giving them a shorter timeframe to migrate to NBN services than contractually allowed, the ACCC has alleged, and by implying that they could only buy NBN services from Optus.

The Australian Competition and Consumer Commission (ACCC) has begun proceedings against Optus in the Australian Federal Court, with the consumer watchdog alleging that the telco misled customers about having to move from its hybrid fibre-coaxial (HFC) network to the National Broadband Network (NBN).

According to the ACCC, between October 2015 and March 2017, Optus had 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 has argued, because the timeframes it advised were shorter than those contractually permitted.

As a result, the ACCC is seeking injunctions, pecuniary penalties, declarations, a publication order, compliance orders, and costs from Optus.

"We allege that Optus' misrepresentations put pressure on customers to move to the NBN sooner than they were required to," ACCC Chair Rod Sims said.

"This is particularly concerning, as Optus received a significant financial payment from NBN Co for each customer that moved from its cable network to the NBN.

"We are also concerned that Optus cut off some of its customers' internet services when it had no contractual right to do so. Telephone and internet are essential utilities, and it is unacceptable for Optus to treat its customers this way."

During the period between October 2015 and September 2016, Optus is also alleged 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).

"As the NBN rollout continues throughout Australia, people will be making decisions about which provider to go with. ISPs must not mislead consumers when competing for business," Sims explained.

"We are keeping a close eye on this sector, and will take action where we see wrongdoing."

ACCC action against Optus saw the telco earlier this week 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.

Over the last two years, Optus had sold a "Boost Max" package offering 100/40Mbps speeds; however, the ACCC said around 5,400 of all Optus FttN customers on a 100Mbps plan could not hit maximum speed, while 2,300 could not even hit 50Mbps speeds.

At the same time, 26 percent of its customers on its 50Mbps plan could not attain speeds of 50Mbps, while 3 percent of all 25Mbps customers could not reach 25Mbps.

Optus admitted to engaging in misleading or deceptive conduct, and is now required to check within four weeks of connecting a customer that they are getting the speeds being paid for.

"This undertaking is yet another step towards an industry standard of providing accurate information to consumers about the speeds they can achieve in real-world conditions, and ensuring that consumers get what they pay for," Sims said.

"Affected customers should carefully consider the remedies Optus is offering them to assess which best suits their needs. In some cases, consumers may consider it preferable to simply exit their contract with a refund rather than accept a service that does not meet their needs."

The Optus refund followed Telstra having to refund around 42,000 customers for the same issue last month, with Sims saying the ACCC is continuing to investigate other RSPs.

Earlier this week, NBN set up 50Mbps as the flagship speed for its services, unveiling a new wholesale pricing structure designed to provide discounts for retailers offering services on its 100Mbps and 50Mbps speed tiers.

Under the changes, NBN's access and bandwidth charges will be bundled together across connectivity virtual circuit (CVC) and access virtual circuit (AVC) for the two top-tier plans.

The 50Mbps wholesale bundle will cost retail service providers AU$45 per month -- a 27 percent discount -- and include 2Mbps of bandwidth, while the 100Mbps wholesale bundle will be reduced by 10 percent to cost AU$65 for 2.5Mbps of included capacity.

According to NBN, the bandwidth being included amounts to "nearly double" the capacity that is currently being purchased by RSPs, with additional capacity available for AU$8 per megabit per second per month -- a 40 percent reduction on its previous pricing.

However, NBN CEO Bill Morrow last week claimed it would not be "prudent" for NBN to provide line speed test results to customers before they sign with an RSP for service.

"I just wouldn't think it was prudent," Morrow told the Joint Standing Committee on the National Broadband Network.

"It is completely impracticable, and you've got to realise this is taxpayers' money that is invested in this, and to go out and do an each resident test on this thing for something of this nature is impracticable, and it would [be] exorbitant in the cost to do that.

"If the government mandated: 'Go spend heaps more taxpayer money on this, diminish the economic returns to address the issue' -- that, quite frankly, isn't as material as what we are having this discussion sounding like it to be."

Instead, Morrow suggested that customers ask their RSP for speed data, who would in turn get that data from NBN, saying he doesn't want the government-owned wholesaler becoming the "data speed police".

NBN ceased sales temporarily on its Telstra-provided HFC network this week following customer drop-out issues, two years after revealing that the Optus HFC network was "not fully fit for purpose".

With 3.1 million premises in the HFC footprint, Morrow told ZDNet that 370,000 are already connected and an additional 50,000 are queued to be connected. All remaining premises slated to be connected by HFC will see delays of between six and nine months.

Citing concern over rising consumer complaints, the ACCC last month also announced that it will conduct a public inquiry into NBN's wholesale service standard levels to determine whether regulation, including resolutions for consumers when wholesale standards are not reached, is necessary in order to improve customer experience.

Related Coverage

Telstra spends AU$72m on mobile broadband spectrum

Telstra has spent AU$72.5 million on mobile broadband spectrum, including more than AU$55 million in Brisbane alone, while NBN, TPG, Vodafone, and Optus also purchased additional spectrum during the auction.

NBN sets up 50Mbps as flagship speed under new wholesale pricing

NBN will be offering bundled AVC and CVC pricing to retailers as of Q2 next year, with discounts across the 50Mbps and 100Mbps tiers designed to drive uptake of higher-speed plans.

Telstra acquires managed services provider VMtech

VMtech currently provides managed services across hybrid cloud offerings to government and enterprise customers including Coca-Cola and Sydney's Inner West Council.

Optus to refund NBN FttN customers for slow speeds due to technical limits

Almost half of all customers on an Optus FttN connection could not hit 100Mbps, and over 20 percent could not get 50Mbps.

Not prudent to have NBN line tests prior to service: Morrow

It would be impracticable to conduct line tests prior to Australians signing with a retailer to connect to the NBN, CEO Bill Morrow has said.

NBN CVC pricing likely to discount 50Mbps speeds: MyRepublic

With NBN's decision on CVC pricing due any day now, RSP MyRepublic has said it is anticipating the broadband company will discount the 50Mbps speed tier in an effort to encourage higher speeds.

Show Comments