The ACCC threatens to take Telstra and other ISPs to court over misleading NBN speeds

Rod Sims, Chairman of the Australian Competition & Consumers Commission (ACCC) has signalled that it is going to take a tougher stance against internet service providers like Telstra, Optus and Vocus about misleading consumers about NBN broadband speeds. In particular, Sims has said that Telstra’s continued use of terms like “Very Fast” and “Super Fast” to describe theoretical, but often unobtainable, broadband speeds need to stop.

The ACCC has indicated that it is likely to bring court cases before the end of the year if these practices don’t stop.

In a speech at the Unwired Revolution Conference, the ACCC talked of the findings of a review into the Australian communications sector. In particular, he drew attention to the fact that the Australian public were opting for slower speeds on the NBN mainly because ISPs were unwilling to sell faster speeds because of the high costs of the connections (CVC) provided by NBN Co.

The pricing of wholesale connections provided by NBN Co are set in order for them to recoup money that has been invested, in large part by the Australian federal government, and so unless NBN Co directed to do something different by the government, the situation is unlikely to change.

Part of the problem is the lack of transparency with regard to the extent of the problem of NBN customers not getting what they thought they had paid for. Many properties that are being supplied with a Fibre to the Node (FTTN) connection may never be able to get the fastest connection plan of 100 Mbps because they are too far from the node. As the chart below shows, speeds of 100 Mbps can only be achieved if the house is within 500 meters of the node.

A map of properties in Australia highlights that 2 houses on opposite sides of a road can have very different maximum speeds because of the nodes they are connected to. Telstra has previously admitted that some customers were sold plans for speeds they would never be able to attain at their premises.

In addition to this, there are the number of connections to that node and in particular the capacity of the ISP to handle peak demand by having spare CVC capacity. There is also other factors that would affect a property’s connection including the state of the copper wiring between the node and the house.

What the ACCC wants ISPs to do is to tell customers not only what the theoretical maximum speed may be for their property using a given technology, but also what the speeds may drop to during peak demand.

NBN Co has this data and could make it public, but it won’t because it claims that it is the responsibility of the ISPs to tell their own customers. Shadow communications minister Michelle Rowland has filed a freedom of information request for the NBN data of theoretical speeds for each property.

The ACCC is recruiting volunteers to install special hardware and software to monitor speeds and quality of internet connections at their homes. The results of a pilot trial reported in 2015 showed that the problems with peak demand and variability of internet speeds existed on pre-NBN internet services like Telstra’s HFC cable service. As the figure below highlights, even fibre to the premises (FTTP) connections from one provider varied dramatically, dropping significantly every evening.

Whilst the data that the ACCC is collecting will be useful and will ultimately assist in highlighting ISPs that are not providing promised services, it would be far better if NBN Co provided this data publicly in the first place.

If the politics and economics of the NBN means that consumers are going to mostly stick to slower speed plans, many of the proposed economic and social outcomes that were originally envisioned will not be realised. Whilst it may represent a slightly better situation for some people who currently have a poor connection via ADSL, it is hard to justify the AUD 20.3 billion that has been invested by the Australian government in the network so far.