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

The Australian Competition and Consumer Commission (ACCC) has announced Optus has entered into a court-enforceable undertaking that will see the telco refund customers using fibre-to-the-node (FttN) and fibre-to-the-building (FttB) services on the National Broadband Network (NBN) that were sold speeds not technically possible on their connection.

Over the course of almost two years, Optus sold a "Boost Max" package that offered speeds of up to 100/40Mbps, however figures from the ACCC show over 5,400 of all Optus FttN customers on a 100Mbps plan could not hit the maximum speed, representing 48 percent of all 100Mbps customers. Of those on a 100Mbps plan, more than 2,300 customers could not hit 50Mbps.

Similarly, 26 percent of all 50Mbps customers could not hit 50Mbps, and 3 percent of all 25Mbps customers could not reach the mandated 25Mbps minimum in the statement of expectations handed down by the Coalition government to the company responsible for building the NBN.

Optus has admitted it engaged in misleading or deceptive conduct and therefore convened Australian Consumer Law, the ACCC said, and the telco will be contacting affected customers before March 2, 2018.

"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," ACCC Chairman Rod 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."

As part of the undertaking, Optus is bound to check within four weeks that customers are getting the speeds they are paying for.

Last week, NBN CEO Bill Morrow said it was not prudent for NBN to conduct line tests prior to customers signing up for service.

Speaking to the Joint Standing Committee on the National Broadband Network, Morrow said he would rather customers continue asking RSPs for data, who in turn need to get the data from NBN, and said he didn't want the government-owned wholesale to becoming the "data speed police".

"If a product is chosen with your retailer, and that product can be different based on what they now know around the attainable line rate, most RSPs will adjust your speed on the spot if you want something different," he said.

Morrow said that if a user is unhappy with the speeds attained from the retailer once connected, it is a matter between the retailer and the customer to determine whether they are able to receive a refund.

The NBN CEO said undertaking line tests to each premises was a costly affair, and would diminish the economic returns the government would get from the 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," he said.

Last month, NBN decided to cease sales on its hybrid fibre-coaxial (HFC) network, with Morrow saying on Friday the issues are fixable and were not a result of a technical issue, rather it was being unable to handle the problem at scale.

"We knew that there would be some sort of remediation that was required; we did not anticipate that it would be this much remediation that was necessary, otherwise we would have done a far different job before we released it for customers to connect to," Morrow said.

NBN CFO Stephen Rue said the HFC delay would set NBN back by AU$50 million for the current financial year, and theoretically delay up to AU$500 million in revenue.

Optus is the second telco that ACCC has gained an undertaking from to refund customers and address speed issues on the FttN and FttB parts of the NBN, with Telstra being first cab off the rank in early November.

In the case of Australia's incumbent telco, 56 percent of Telstra's FttN customers on the 100/40Mbps speed tier could not receive the speeds they had bought, 45 percent of its 50/20Mbps customers were in a similar position, and 2 percent of its 25/5Mbps customers could not receive those speeds.

Sims said the ACCC is continuing to look at other NBN retailers.

Related Coverage

• Not prudent to have NBN line tests prior to service: Morrow
• NBN CVC pricing likely to discount 50Mbps speeds: MyRepublic
• TPG to roll out 10Gbps fibre broadband in Adelaide
• NetComm Wireless unveils FttC network connection device
• Vodafone launches NBN services
• ACCC appoints SamKnows to monitor NBN speeds
• ACCC examines Telstra FttC migration plan
• NBN HFC pause will cost Telstra AU$600m in FY18 EBITDA
• HFC was fine when Telstra had it: Penn
• HFC not as 'mature' as fibre: Fifield
• NBN delays HFC rollout until customer experience issues fixed
• NBN trialling fibre to the traffic light