Optus loses unlimited broadband dispute

The Federal Court of Australia has ruled advertisements of Optus’ ‘unlimited’ broadband plans to be misleading.

The Australian Competition and Consumer Commission (ACCC) brought Optus before the courts for the third time in 2010, alleging the telco had failed to properly notify customers that their speed would be throttled to speeds of 256 kilobits per second (Kbps) once they reached their monthly data allowance.

Although technically defined as a broadband speed by the Australian Bureau of Statistics, the consumer watchdog argued that the service was “practically unusable” for most uses.

Optus first introduced the plans in April.

Though Optus disclosed the throttling, presiding judge Justice Anthony North found the ISP fail to provide sufficient explanation as to the effects of speed throttling on internet use.

ACCC chairman, Graeme Samuel, said the watchdog would continue to pursue telcos over improperly advertised limitations to services.

"It is simply unacceptable to make bold headline claims like 'unlimited' and then to bury important conditions or qualifications in the fine print as Optus did in this case,” he said in a statement.

“Further, simply disclosing the existence of a condition may not be enough. In this case, the [Telecommunications Act 1974] also required Optus to explain to consumers the effect of the condition on the functionality of the service being provided."

An Optus spokesperson told Computerworld Australia that the telco accepted the judgment and had "long since ceased the advertising in question".

Samuel’s statement served as a warning to competing telcos and service providers, a number of which last year launched an influx of ‘unlimited’ broadband and calling plans, providing the launching pad for numerous court cases from the ACCC and competitors.

Optus faced court against the ACCC twice more during 2010, once for a similar hearing over its ‘unlimited’ call plans, in which Justice North imposed a two-year injunction on Optus advertising such plans.

Optus was also brought before the Federal Court over the possible misrepresentation of its upgraded cable networks which were portrayed in 11 advertisements across online, print, television and billboards as four times faster than “standard broadband”.

Presiding judge, Justice Nye Perram, ruled the ads in the original campaigns were potentially misleading as both on-peak and off-peak speeds were throttled once the user reached their monthly on-peak quota.

An injunction was imposed on the telco for advertising, and orders made to provide corrective advertising as well as letters delivered to those who signed up to the plan.

Challenger provider Dodo was also fined $26,400 by the ACCC in January for its misleading unlimited plans, despite reclusive chief executive, Larry Kestelman, calling for competitors to continue the expansion of unlimited download quotas on broadband services.

The consumer watchdog also took TPG to court last year for similar reasons, but presiding judge Justice Michael Ryan said in an interlocutory ruling that ACCC’s case against the telco was not strong.

Providers have also duelled against one other over the issue, with Optus seeking an injunction on Vodafone advertising its “Infinite” call plans.

Presiding judge Justice Victor Nicholas found the latter telco had provided sufficient information about exclusions to the plans online and in other mediums.

Follow Computerworld Australia on Twitter: @ComputerworldAU

Copyright © 2011 IDG Communications, Inc.

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