What are consumers complaining about?
The National Broadband Network (NBN) project has been in the public spotlight since it was first announced. An area that is receiving increasing attention is consumer complaints. As more consumers are migrating to the NBN, the number of complaints is increasing. These complaints tend to be concentrated in two areas:
- Poor migration experiences: Data, including that provided by the Telecommunications Industry Ombudsman, indicates complaints arise from difficulties in obtaining information, failure by relevant entities to take responsibility for migration problems, long lead times for connections and missed appointments.
- Slow broadband speeds: Consumers are also complaining about slow speeds. The Australian Competition and Consumer Commission (ACCC) believes that these complaints have two main causes. First, consumers may not realise that the plans they have purchased may not meet their needs because those plans only deliver the speeds they had previously received from ADSL services. Secondly, slower speeds than promised may be experienced, including in peak usage periods.
The Government is concerned by the increase in consumer complaint numbers, particularly given it is anticipated approximately 4.5 million premises will migrate to the NBN in the next two years.
To find a solution to migration complaints, the Minister for Communications recently convened a “round table” of the key telecommunications companies, NBN Co, Government agencies and regulators. It is hoped that the solutions implemented following that roundtable, together with initiatives already undertaken (such as the recent release by the Government of a framework document setting out the roles and responsibilities of the different participants in the migration process), will be successful in assisting consumers. A Ministerial CEO forum is due to report on progress by the end of 2017.
The job of tackling concerns regarding slow speed claims has largely been left to the ACCC. The ACCC has announced three related strategies to deal with this issue, namely, independent monitoring, advertising guidance and increased enforcement activity. The ACCC believes these three strategies will address the underlying causes of consumer complaints by providing more information to consumers, that is easy for them to understand, and by ensuring that speed claims are able to be substantiated.
Speed claims: Not a new issue
Consumer complaints about slow internet speeds is not a new issue, even though greater attention is being paid to this problem in the context of the NBN. The ACCC has in fact been concerned about inaccurate broadband speed claims made by telecommunications retail service providers (RSPs) since at least 2007, well before the rollout of the NBN commenced. Reflecting this concern, the ACCC released information papers in 2007 and 2011 outlining its recommended approach to advertising broadband speeds.
The 2007 paper concentrated on advertising for ADSL2+ services, warning RSPs not to use hypothetical speeds in headline claims. The ACCC suggested, as an alternative, that typical speeds, or typical speed ranges, should be specified in advertising. It was recommended that maximum or “up to” speeds should only be included in advertising where substantiated by tests of network performance and where those speeds were possible for a high number of users of the service. The ACCC’s 2011 information paper looked at advertising of fibre-to-the-premises (FTTP) networks (noting that, at that time, it was expected the fixed line NBN would be an FTTP network) and hybrid fibre-coaxial (HFC) networks. That information paper, which the ACCC stated was not intended to be a prescriptive marketing manual, adopted the same approach as the 2007 ACCC paper. In other words, the ACCC stated that headline speeds in advertising material should represent attainable speeds and should not be speeds that were theoretically attainable. The ACCC stated that specific claims should be able to be substantiated, preferably by testing network performance.
The ACCC has also, from time to time, taken action alleging that claimed broadband speeds were misleading. For example, in 2015, Optus was fined $51,000 for advertising that its HFC network speeds were “NBN-like speeds” and (amongst other things) agreed with the ACCC to cease using that advertising.
New approach by the ACCC
The ACCC has announced that it is adopting three strategies to address consumers concerns regarding speed claims:
- Introduction of a broadband monitoring program: The ACCC Chair, Mr Rod Sims, believes this program will encourage RSPs to compete on performance, not just price, given that information on speeds achieved will be publicly available. The program should draw out whether issues with slow speeds are caused by poor performance of the NBN or by a lack of provisioning by RSPs. This will be the case as the speeds consumers achieve will be tested in discrete areas. If consumers consistently achieve slow speeds in one area, irrespective of the RSP used, then it would be likely that the problem is caused by the NBN itself. On the other hand, if consumers in the one area achieve very different speeds then it would be more likely that the problem had been caused by RSPs not providing the service that had been promised. A commencement date for this program has not been confirmed – though it is expected that the results will start to be available from towards the end of 2017.
- Updated industry guidance on advertising speeds: The ACCC issued updated guidance on advertising speed claims in August 2017. Compliance with that guidance is not mandatory, but the ACCC does expect RSPs to comply – those that do not do so are likely to be subject to close scrutiny. The key points from that guidance are discussed in the next section of this note.
- Investigations and actions: The ACCC is actively investigating conduct which it believes may be misleading in relation to broadband speed advertising and expects to take action if it finds breaches of the Australian Consumer Law.
It is no surprise that the approach outlined in the ACCC’s August 2017 industry guidance reflects the approach from its 2007 and 2011 information papers. The key principles are summarised as follows:
- RSPs should advise consumers of typical busy period speeds. Theoretical fastest speeds should not be advertised without reference to those busy period speeds. For consumers, busy periods are between 7pm and 11pm, every day.
- Factors which are known to impact service performance should be disclosed to consumers. This includes not only information about general factors that impact performance but factors that are specific to the type of technology used to supply the service and/or specific to the actual line used. This applies not only to information known at the time a service is made available to a consumer, but information that becomes available after that time.
- RSPs should use standard descriptive terms to enable consumers to easily compare plans offered by different providers. The ACCC’s suggested standard descriptive terms are outlined further below. As in the case of previous guidance issued by the ACCC, the ACCC has been at pains to point out that RSPs should measure and verify busy period speeds before advertising services as falling within any of the tiers outlined below.
- RSPs should have systems in place to enable them to diagnose and resolve broadband speed issues. This will require RSPs to take all reasonable steps to resolve issues. However, where an issue cannot be resolved consumers should be offered a refund or rebate, moved to a more appropriate speed tier plan and/or provided with the opportunity to exit their contract.
The ACCC has recommended that RSPs adopt the following standardised advertising of speed tiers:
- “Basic evening speed”: This tier would be the lowest speed tier available on the NBN (or other similar networks), with minimum wholesale service speeds of 12 Mbps (download)/1 Mbps (upload). The ACCC has not suggested a minimum typical busy period speed, given this is the lowest speed plan a consumer could purchase.
- “Standard evening speed”: This tier would have minimum wholesale service speeds of 25 Mbps (download)/5 Mbps (upload) and a minimum typical busy period speed of 15 Mbps (download).
- “Standard plus evening speed”: This tier would have minimum wholesale service speeds of 50 Mbps (download)/20 Mbps (upload) and a minimum typical busy period speed of 30 Mbps (download).
- “Standard evening speed”: This tier would have minimum wholesale service speeds of 100 Mbps (download)/40 Mbps (upload) and a minimum typical busy period speed of 60 Mbps (download).
It is very unusual for the ACCC to be this prescriptive as to a recommended form of advertising. In releasing the guidance, Rod Sims commented that this approach had been taken both because the ACCC believes industry itself has not ensured that speed claims are accurate and because consumers have no choice regarding migration to the NBN in the fixed line rollout areas, which will cover approximately 92% of the Australian population.
The peak telecommunications industry body, Communications Alliance, has been cautious in its response to the ACCC’s industry guidance. The industry, of course, supports the aim of the guidance to ensure that consumers are well informed regarding broadband services they may acquire and that remedies are available where those services do not provide the promised speeds. However, there have been concerns expressed as to whether the guidance will create additional complexity and therefore have the potential to confuse, rather than assist, consumers.
What does this mean for telecommunications service providers?
In a sense there is nothing new arising from the ACCC’s proposed approach to broadband speed claims. In essence, the ACCC guidance may be summarised as a requirement that RSPs must not mislead their actual and potential customers. This should be done by ensuring that accurate claims are made in advertising, which are able to be supported by evidence, and that remedies are provided where the service promised is not delivered. RSPs will need to assess compliance with the guidance. However, it should be remembered that the very prescriptive suggestions for industry standardised advertising NBN speeds contained in the ACCC’s guidance are suggestions only. Provided that statements made by an RSP are accurate, as a matter of law there is nothing to prevent that RSP from marketing in a way that differentiates their services in order to win customers.