Telstra, Australia’s largest telecommunications firm, was fined 18 million Australian dollars by the Federal Court for reducing internet speed plans for nearly 9,000 clients without informing them. The penalty was announced by the competition watchdog on Friday. The firm transferred 8,897 clients from its cheap brand Belong to slower internet plans and reduced their top upload speed by half without informing anyone. This was done between October and November 2020.
Federal Court Slams Telstra with a Million-Dollar Fine
The Australian Competition and Consumer Commission launched the case against Telstra after finding out what the company had done to Belong customers. The Federal Court ruled Telstra should be fined heavily for not informing customers of significant changes to their internet service. It is one of the largest fines imposed on a telecom firm for misleading customers in recent times.
The imposition of this fine is important since Australian telcos are now subject to much stricter regulation from the authorities. Following the Optus emergency call failures last month that were connected with four fatalities, the government is looking more carefully at the operations of these telcos. Current Australian news indicates that telcos can no longer abuse their customers or conceal critical information on service modifications.
What Telstra Got Wrong and How Consumers Lost Out
The ACCC explained that Telstra transferred these customers to a slower-speed plan without letting them know their service was being altered. Commissioner Anna Brakey said the company’s silence deprived consumers of the ability to choose whether or not the altered service was appropriate for their requirements. Individuals were paying for internet service but are now receiving half the upload speed they originally received.
Telstra has conceded the court’s ruling and reported it was making the payments to rectify the issue. In addition to paying the fine, Telstra has either already refunded money to impacted customers or will pay them with a credit or payment of 15 Australian dollars per month they spent on the reduced upload speed plan. Shares in Telstra fell 0.7 per cent following the announcement of the fine.
Key Points Summary
- Telstra fined 18 million Australian dollars for secretly reducing internet speeds for 9,000 customers
- The company transferred Belong brand customers to slower plans without notice in 2020
- Customers lost their top upload speed by half without notice
- Telstra has to pay off affected customers 15 dollars for each month on a slower plan
- A fine is issued as Australian telecom companies are under more scrutiny after recent Optus outages
FAQs
- Why was Telstra fined by the Federal Court?
Telstra secretly transferred 9,000 customers to slower internet plans and halved their upload speed without informing them.
- How much money will Telstra customers receive back?
Impacted customers will be reimbursed 15 Australian dollars for every month they were on the slower internet plan.
- When did Telstra reduce customer internet speeds?
The changes occurred between October and November 2020, but customers were never informed of the slowdown.
- Who were the Telstra customers impacted by the speed reductions?
Around 8,897 Telstra low-cost brand Belong customers had their internet speeds cut without notification.
- Are Australian telecommunications companies currently being investigated?
Yes, telecommunication companies are being subjected to increased scrutiny following Optus’ emergency call outages last month that were associated with four fatalities.
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