Telstra to pay out $25m in refunds over underperforming NBN services

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Telstra to pay out $25m in refunds over underperforming NBN services

Given a 'remedial direction' by the regulator.

Telstra is expected to refund a total of around $25 million to tens of thousands of NBN users that paid for services that their lines could not achieve.

Much of this relates to an issue uncovered back in 2017 and for which Telstra entered an enforceable undertaking with the Australian Communications and Media Authority (ACMA) to fix.

Late last month, however, Telstra self-reported that it had “failed to meet these commitments and rules for many customers.”

“We’re now in the process of contacting all customers who have been potentially impacted to offer them appropriate remedies,” global connectivity and platform products lead Sanjay Nayak blogged.

“As we became aware of these issues, we reported them to the ACCC and the Australian Communications and Media Authority (ACMA) and have developed a comprehensive remediation program. 

“This program started in February 2021 and we’ll contact customers over the next few months.”

The ACMA said today that “between September 2018 and October 2020 Telstra failed to suitably notify up to 49,092 affected customers of their under-performing internet speeds and plan options.”

“The ACMA is very concerned with this conduct as these customers have been paying for a level of service they were not receiving,” ACMA Chair Nerida O’Loughlin said in a statement.

“Telstra denied these customers the opportunity to downgrade their plan or exit their contract.”

“Around $25 million in refunds is expected to be paid in connection with this issue,” the ACMA added, although it noted that the total “comprises additional cases not included in the ACMA’s findings.”

Telstra is now the subject of an additional remedial direction [pdf] issued by the ACMA which requires an uplift of systems and governance processes, under threat of penalties of up to $10 million.

Its compliance with the remedial direction will be independently audited at a later date.

Retail service providers (RSPs) that sell copper-based NBN services all face similar issues, where the maximum line speed is not known until weeks after a service is activated.

RSPs are expected to revisit what customers sign up to and move them to lower speeds if their NBN infrastructure can't support a higher speed plan.

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