ASIC Warns ISP’s About Dodgy Speed Claims

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The Australian Competition and Consumer Commission has warned Internet service providers that claims of Internet delivery “speed” claims that can’t be achieved by normal users in everyday practice will face legal action under the Competition and Consumer Act.

In a just-released information paper, the ACCC says it aims to make sure everyone is singing from the same hymnbook. It says that ISPs who make speed claims must have a reasonable basis for asserting their performance levels are attainable in practice, not just in theory.

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

“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 said it was concerned that as high-speed Internet became available over the NBN, ISPs would increasingly focus on marketing the speeds at which data could be transferred. With ISPs accessing the NBN on similar terms, “they may have incentive to overstate the real-world performance of the network or particular services so as to gain a competitive edge”, the ACCC paper said.

“ISPs may also have an incentive to reduce costs by under-provisioning their network capacity to offer more aggressive prices and/or increase profit margins.”

Samuel vowed to take action against ISPs that “under-deliver on their promises and fail to demonstrate a reasonable basis for their claims”.

The information paper aims to provide guidance to ISPs on the factors to consider when making representations regarding the data transfer rates – or “speeds” – available to customers acquiring HFC or FttP services.

The ACCC will hold seminars at its Sydney and Melbourne offices, on July 19 and 21 respectively, to engage with industry and other stakeholders on the information paper.

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