Watchdog warns Telstra over broadband

The Australian Competition and Consumer Commission warned telecommunications companies today that they should inform the regulator when making major changes to the way they were doing business, especially in sensitive markets."The ACCC was concerned and surprised when, on a Sunday in mid-February Telstra announced a number of new retail prices for cable and ADSL broadband plans," ACCC chairman, Graeme Samuel, told the Australian Telecommunications User Group conference today.

The Australian Competition and Consumer Commission warned telecommunications companies today that they should inform the regulator when making major changes to the way they were doing business, especially in sensitive markets.

"The ACCC was concerned and surprised when, on a Sunday in mid-February Telstra announced a number of new retail prices for cable and ADSL broadband plans," ACCC chairman, Graeme Samuel, told the Australian Telecommunications User Group conference today.

"As I have told Telstra since - to advise the ACCC of a major change in what is clearly a sensitive market, on the day it happens, is not good enough. This is particularly so when the relevant market is one that the ACCC has previously signaled its interest in -- and in the clearest way possible -- by issuing a competition notice. The ACCC's response to Telstra's price changes and their lack of notification should send a message to the industry - and this is a message I have provided to Telstra directly".

Samuel added that if major changes are to be made to service offerings that have the potential to have anti-competitive impacts - a dialogue with the ACCC is crucial. Without a dialogue, the ACCC will act quickly to stop competitive harm in the industry.

Samuel also noted that the ACCC has also been monitoring broadband advertising by Internet service providers - both the use of the term "unlimited" in a number of advertisements for broadband services and how the advertised broadband speed compared with the actual download speed.

"Terms such as 'unlimited' have a powerful persuasive effect on consumers and the ACCC wants to ensure that consumers are not misled by claims that services are 'unlimited' when in fact there are limitations, such as time limits, download limits and excess download costs," Samuel added.

It has been alleged that whilst ISPs are advertising broadband services that offer specific download rates, the download speed when accessing Internet sites is often considerably less than this.

Samuel reiterated that advertising that makes false claims about the standard, quality and value of products and services is a breach of the Trade Practices Act and will not be tolerated by the ACCC.

The ACCC has obtained redress for consumers in the past for changes where carriers implemented changes to fixed term and casual consumer contracts (for example, to impose usage limits on previously uncapped download plans, or to change pricing rates) which resulted in detrimental effects to consumers.

"Telstra has recently developed a policy which sets out the processes its staff should follow when making changes to the terms and conditions of contracts for consumer and small business products. While it remains to be seen how the policy will be implemented in practice, its development is a step towards addressing the issues relating to unilateral variations of contracts. I would encourage other service providers to take similar initiatives to ensure greater compliance with the Trade Practices Act," Samuel said.

The ACCC also released a report today shows that as of the end of September 2003, there were 610,800 broadband services connected across Australia, an increase of 94,000 since June 2003. The growth rate across the quarter from April-June 2003 was 22 percent whilst the growth rate across the quarter from July-September 2002 was 21 percent.

"While broadband take-up is increasing at a steady rate, this is still an emerging and developing market," Samuel said.