Thousands of Telstra’s NBN customers will be compensated for slow internet connections after being sold unattainable speeds following an investigation by the consumer watchdog.

Telstra agreed on Wednesday to offer remedies to about 42,000 customers for promoting NBN plans as capable of delivering specified maximum speeds, when in fact those speeds could not be achieved.

The Australian Competition and Consumer Commission (ACCC) found that 56 per cent of Telstra’s fibre-to-the-node (FTTN) NBN customers were sold substandard speeds over a “super fast speed boost” plan of 100/40 Mbps.

About 20 per cent of those paying for the 100/40 Mbps plans received less than half of that speed – slower than the next speed tier down, 50/20 Mbps.

Meanwhile, almost half – 45 per cent – of those who opted for middle tier 50/20 Mbps plans were also ripped off, according to the ACCC.

Telstra is the first service provider to provide compensation to customers for NBN speed issues since the ACCC flagged the industry-wide problem in July.

“Our investigation revealed many of Telstra’s FTTN and fibre-to-the-building (FTTB) customers could not receive the maximum speed of their plan,” ACCC Chairman Rod Sims said in a statement on Wednesday.

“Even worse, many of these customers could not receive the maximum speed of a lower-speed plan.

“In essence, people were paying more to get higher speeds that they just weren’t able to get.”

Telstra admitted its conduct was likely to have contravened Australian Consumer Law by engaging in “misleading” or “deceptive conduct” and “making false or misleading representations”.

It has promised to contact affected customers between September 2015 and November 2017 and provide remedies including refunds, the option to change speed plans or exit from contracts without paying a fee; enforceable by the courts.

The ACCC said Telstra had agreed to check each customer’s attainable speed within four weeks of connecting a new service in cases where it advertises certain speeds.

Vicki Brady, Telstra’s consumer and small business group executive, said Telstra would begin contacting affected customers directly over the next few weeks, with no need for customers to contact Telstra.

She said the remedial action applies to less than 5 per cent of Telstra’s NBN customers overall.

“We have changed our advertising, marketing and sales processes,” Ms Brady said.

“We now use the standard ACCC naming convention to describe our speed plans and quote the typical speeds a customer can expect, including for the period when most people tend to use the internet.”

An NBN Co spokeswoman said it provides all retail service providers (RSPs) with estimated attainable line speed data prior to an order being placed over the NBN access network.

“We also provide RSPs with a weekly report on the wholesale speeds available for each of their active services plugged in and connected,” she said.

Telstra refused to comment on questions from The New Daily regarding why the leading Australian telco sold customers unattainable speeds.

Full disclosure of performance during peak times

Mr Sims said telecommunications retailers have a responsibility to ensure speed performance claims are accurate and warned that those that do not cooperate are at risk of breaching Australian Consumer Law.

Telstra began reimbursing some NBN customers in May over false speed promises. Photo: Getty

“Telecommunications contracts are typically 12-24 months in duration and this can represent a serious financial commitment,” Mr Sims said.

“The ACCC is urging all ISPs (internet service providers) to advertise the typical speeds customers can expect in the busy evening period between 7pm and 11pm.”

He said the ACCC expects major ISPs to adopt this approach to their advertising over the next month.

The ACCC will continue to investigate other service providers selling broadband plans over the NBN and indicated it would take enforcement action if required.