ACCC warns ISPs on misleading speed claims

The consumer watchdog has informed ISPs the must ensure advertised performance speeds are actually attainable by the end user

The Australia Competition and Consumer Commission (ACCC) has warned ISPs against misleading advertising about broadband speed, urging them to base claims on speeds that are realistically attainable.

In an information paper (PDF), issued to assist providers of hybrid fibre-coaxial (HFC) and fibre to the premises (FTTP) broadband services comply with the Competition and Consumer Act 2010, the consumer watchdog has noted providers’ “heavy” reliance on attractive headline claims to market services.

According to the ACCC, ISPs are responsible for any claims about speed and these must be substantiated, not just in theory but also in practice. This means taking into account limits on data transfers based on a consumer’s specific plan, the number of people sharing local fibre, contention ratios and backhaul capacity.

"ISPs that under-deliver on their promises and fail to demonstrate a reasonable basis for their claims will be liable to ACCC enforcement action", ACCC chairperson, Graeme Samuel, said in a statement.

"The increase in the availability of high-speed broadband services can offer significant benefits to consumers and an opportunity for greater competition between retail ISPs.

"However, for these benefits to be fully realised, ISPs must ensure that they do not market their services in a way that misleads consumers and results in an unfair competitive advantage."

The ACCC expects ISPs to provide accurate information to consumers about the quality of service likely to be reached by end users both in advertisements and at point of sale. This advertising must also take into account factors beyond the ISP’s control including the number of end users at a residence using the service simultaneously, the end user’s hardware, the connection type within the premises, and the type of content downloaded.

In order to make specific ‘speed’ claims around data transfers, ISPs must be able to demonstrate a reasonable basis for that performance level, meaning the network must be tested. The testing must be designed to encapsulate data transfer speeds attained by the end user while experiencing any number of these factors.

“While retail ISPs acquiring Layer 3 FTTP services are unlikely to have any influence on the contention ratio adopted by their wholesale ISP or the available backhaul capacity for their service, such retailers should obtain relevant information from their wholesale ISP to assist them in accurately marketing their service,” the paper reads.

“These factors have the potential to significantly impact the data transfer rates achieved by end-users in the ordinary day-to-day use of their service. ISPs must therefore ensure they are adequately disclosed to the extent that they will impact on end-user services.”

Late last year following an ACCC investigation, Optus was ordered to issue corrective advertising relating to its ‘Think Bigger’ and ‘Supersonic’ plans for HFC plans, and to pay civil penalties for misleading advertising of the plans. Commenting on his decision to find the Optus ads to be misleading, Federal Court judge, Justice Perram, said at the time that the ads failed to properly inform potential customers that their broadband speeds would be throttled to 64 kilobits per second (Kbps) -- or “sub-broadband” -- once they reached their monthly data quota.

Follow Chloe Herrick on Twitter: @chloe_CW

Follow Computerworld Australia on Twitter: @ComputerworldAU

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