Consumer watchdog launches inquiry into broadband speed claims
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Consumer watchdog launches inquiry into broadband speed claims

The consumer watchdog has launched a public inquiry into why internet companies cannot deliver advertised broadband speeds.

It is asking the public what information would be most useful when choosing a new internet plan for fixed and mobile services, with slow data speeds the highest growing area of consumer complaints. And it has called on the industry to explain why it cannot always deliver promised speeds, whether industry prepared for the popularity of subscription video streaming, and what performance promises they could make about mobile broadband speeds.

The APS employment model is built around measuring staff performance on the hours they work, rather than their outcomes.

The APS employment model is built around measuring staff performance on the hours they work, rather than their outcomes.Credit:Louie Douvis

It also wants $6 million in next year's budget to implement a national monitoring system, which would show exactly what speeds households experience, and whether problems are caused by equipment, networks or capacity.

A spokeswoman for Communications Minister Mitch Fifield said: "The government looks forward to considering the outcomes of the ACCC's current consultation on retail broadband speed claims and performance information."

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Australia's residential DSL broadband speeds is proving to be pot luck.

Australia's residential DSL broadband speeds is proving to be pot luck. Credit:Glenn Hunt

Need for speed

The Australian Competition and Consumer Commission (ACCC) is concerned that advertising just the potential maximum speed, such as "up to 100 megabits per second [Mbps]", might mislead or "misrepresent the speeds that the retail broadband service can consistently achieve, especially during peak periods when most consumers will want to use the service".

Or that consumers paying for premium speed packages may not receive the more expensive speeds at all times of day because of network congestion and high video volumes.

"Consumers are entitled to expect clear and accurate information about the performance characteristics of a service they have purchased or are considering switching to," the ACCC's consultation on broadband speeds discussion paper notes.

"We are interested to hear about consumers' experiences and their views on how information about broadband performance and speed can be improved".

ACCC chair Rod Sims is investigating broadband speed claims made to consumers.

ACCC chair Rod Sims is investigating broadband speed claims made to consumers. Credit:Louie Douvis

ACCC chairman Rod Sims said the system was no longer working for consumers.

"I think we have got concerns with how broadband claims are getting advertised. It is a really important consumer issue that we are currently getting a number of complaints about," he told BusinessDay.

Speeds experienced by consumers of four different retail service providers (RSP) on NBN fibre. The yellow line shows an internet provider that has not purchased enough capacity to maintain the high speeds during peak hours, which means speeds over 95Mbps were only available outside peak hours.

Speeds experienced by consumers of four different retail service providers (RSP) on NBN fibre. The yellow line shows an internet provider that has not purchased enough capacity to maintain the high speeds during peak hours, which means speeds over 95Mbps were only available outside peak hours. Credit:ACCC

"There is growing support for having a monitoring system, the main question is how [to implement it]," he said. The monitoring system, which has already been trialled, checks whether speeds were being slowed down by failing infrastructure, or a failure by the internet company to buy enough capacity.

"There will be a whole lot of accusations about what the NBN can and can't do and if you have a monitoring system you will actually know what you can and can't do to fix it."

Range of speeds experienced by broadband users of different retail service providers (RSP), from the ACCC's pilot monitoring program. It shows the huge variety of speeds provided over ADSL connections.

Range of speeds experienced by broadband users of different retail service providers (RSP), from the ACCC's pilot monitoring program. It shows the huge variety of speeds provided over ADSL connections. Credit:ACCC

After an initial set-up fee of $6 million, the monitoring service would cost about $1 million annually to run.

The ACCC noted many companies re-selling NBN services relied on NBN Co's wholesale speed descriptions, and were not "translating the wholesale speed tier information" in a way that accurately described what speeds consumers would experience in their own home. Carriers could buy faster speeds from NBN Co, but consumers would never experience that speed unless the company also bought sufficient capacity.

"We have seen a number of cases where we think that may be happening. We certainly have situations that look as if that is occurring," Mr Sims said.

In 2011, the ACCC successfully prosecuted Optus for advertising "supersonic" speed packages that throttled speeds to below 1 Mbps once consumers exceeded a data allowance. Optus was fined $5.2 million, but had this reduced to $3.6 million on appeal. That year it released an information paper warning telcos about advertising big speed and data claims that were undone by fine print conditions.

On Tuesday, an Optus spokeswoman said it "is investing considerably in its networks to improve customer experience, particularly with the increased take-up of streaming video-on-demand services".

"We always take consumer information seriously and take steps to verify technical claims made in our marketing materials. We indicated some time ago that we'd like to work with the ACCC to ensure a common industry-wide understanding of speed measures."

A Telstra spokesman said it would consider the issues and make a submission.

Global transparency

In the UK, consumers were able to terminate contracts without penalty if their speeds were less than the minimum promised by a retail provider. The UK regulator was also considering automatic compensation for consumers when speeds fall below expectations, the ACCC noted.

In the US, internet providers tell consumers what kind of download speed, upload speed, latency and packet loss (quality) they should expect. And EU regulators insist internet contracts include "a clear and comprehensible explanation of the minimum, normally available, maximum and advertised download and upload speed".

In Australia, the Telecommunications Industry Ombudsman [TIO] saw a 56.8 per cent increase in complaints about slow data speeds in the last quarter of 2015. Many were long-term customers who had experienced a recent decline in speeds, particularly during peak hours.

The ACCC noted slow speeds at peak periods could be due to unexpected system problems or the providers' failure to properly invest in and maintain network infrastructure. Whatever the reason, many retail service providers were not telling consumers that speeds might slow down during peak periods, leading to complaints.

The ACCC will accept submissions from industry and consumers until August 25.

Lucy Battersby has covered trends, technology and telecommunications since joining The Age in 2008.

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