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Tuesday, 15 February 2011 09:34

Optus in hot water over unlimited claims

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The ACCC has, again, dropped the hammer on the use of the word 'unlimited' in advertising for broadband plans. Optus has raised the ACCC's ire but there's a message for all ISPs with shaping now coming under scrutiny.

The ACCC has labelled Optus ads using the word "unlimited" as 'misleading and deceptive'. The plans in question offered data allowances of 15GB or 30GB but the fine print stipulated that the speed of their service would be throttled back to 256 kbps once the monthly quota was exceeded. Optus was censured in October 2010 over similar claims with regards to its $70 pre-paid mobile Turbo Max offer, $40 pre-paid mobile Turbo Text offer and Fusion home telephone and broadband bundle plan.

Evidence established that at that 356 kbps, the service is practically unusable for popular internet usages including downloading movies and television programs, YouTube and video calls using services such as Skype. No explanation was given by Optus in the advertisements as to the effect that throttling would have on the functionality of the consumer's user experience.

Federal Court Justice North declared that Optus had contravened section 52 of the Competition and Consumer Act 2010 as it failed to sufficiently and prominently disclose the throttling condition and that at the throttled speed, some uses would be either unworkable or significantly impaired.

In a ruling that will have other ISPs sitting up and paying close attention  ACCC chairman Graeme Samuel said that "Telecommunications providers should think very carefully before claiming that their service offerings are unlimited.  If there are any limitations, then they run the risk that the advertisements are misleading and that they will receive unwanted attention from the ACCC. 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'.

The signal being sent to ISPs by the ACCC is clear - just disclosing the existence of a condition may not be enough. ISPs will be expected to explain the effect of the condition on the functionality of the service being provided to consumers. The word 'unlimited' has typically indicated the availability of a connection. However, the ACCC is making it clear that 'unlimited' applies to service quality.

 

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