Consumer advocates have praised the Federal Court’s decision to slap Optus with a multimillion-dollar fine for misleading consumers about the need to switch to the national broadband network (NBN).
On Friday, the Federal Court ordered Optus to pay $6.4 million in penalties for falsely telling customers of rival broadband services their home internet would soon be disconnected.
The Singtel-owned firm emailed 138,988 of its mobile phone customers in May 2018, telling them their broadband service would be disconnected “very soon” and encouraged them to “make the switch, before it’s too late”.
The customers were not, in fact, facing immediate disconnection of their existing broadband services.
“We took this case against Optus because we were concerned its emails created a false sense of urgency for consumers and may have discouraged them from shopping around for the best deal available,” Australian Competition and Consumer Commission (ACCC) chair Rod Sims said.
Deakin University consumer behaviour and marketing expert Paul Harrison said the Federal Court’s decision would help protect consumers from misleading advertising.
“It’s a relief that we’re finally taking into consideration how a person might interpret an advertising message,” Dr Harrison said.
“I’ve argued for a long time that any advertising is the responsibility of the advertiser to understand the effect of the campaign.
“Businesses are desperate to sell their product, so they don’t want to conduct due diligence. Ultimately they don’t care about detrimental effects.”
The Australian Communications Consumer Action Network (ACCAN) – the peak body for phone and internet users – also backed the decision.
“This is not the first time that Optus has been identified as acting against the interests of consumers and it’s positive to see that the Federal Court has penalised them for this repeated pattern of negative behaviour,” ACCAN director of policy Una Lawrence said.
The process of switching over to the NBN can be difficult enough for consumers to understand without having telcos like Optus sending out misinformation to households.’’
‘A warning to Optus and other telcos’
Optus has been a serial offender when it comes to misleading consumers.
In February, the Singaporean-owned telco was slapped with a $10 million fine for misleading customers over digital purchases.
Last year – just two days before the NBN email for which it was fined was sent – the Federal Court ordered the firm to pay $1.5 million for falsely telling 14,000 of its customers from 2015 and 2017 their services would soon be disconnected if they didn’t switch.
Mr Sims said the consumer watchdog is “concerned about Optus’ recent track record in misleading consumers about the NBN”.
“We expect that this $6.4 million penalty will serve as a warning to Optus and other telcos that they must not mislead consumers about their choices when the NBN is being rolled out,” he said.
Optus said the marketing email was sent by mistake and that it had co-operated with the investigation.
“We reaffirm our apology to customers who received the mistaken communication in 2018,” a spokeswoman said.
“We have already offered a costless exit for those customers who took up the offer.”
Millions of households yet to switch to NBN
Take up of the NBN has been sluggish, with 6.19 million services currently in operation despite more than 10 million being ready to connect.
The $51 billion infrastructure project is slated for completion next year, with the NBN Co promising to have 8.1 million homes and businesses using the service, and a further 11.7 million ready to connect.
ACCAN has repeatedly warned that the high cost of access to the network is creating a digital divide in Australia.
About one million households are at risk of not switching to the NBN due to the high cost of plans, ACCAN analysis has found.
“Affordability is a serious barrier for many households who may want to sign up for an NBN service,” Ms Lawrence said.
With most NBN broadband plans costing more than households’ existing ADSL plans, it’s very likely that some people are choosing to stay on their ADSL plan as long as possible.’’
In August, rankings compiled by the Commonwealth Parliamentary Library revealed that Australia places 36th – last – when it comes to broadband affordability in OECD nations.
Moving to the NBN: What you need to know
Once the NBN is available in an area, most households have 18 months to switch before their existing internet service is disconnected.
However, some internet providers operate on shorter timeframes, so it’s worthwhile double checking with your telco.
For instance, Optus cable customers have just six months to switch to the NBN after it becomes available in their area.
“It’s important to remember that this process will not happen automatically; you will need to sign up for an NBN plan through an internet service provider,” Ms Lawrence said.
“This can be your current provider or you can use this opportunity to shop around.”
The ACCC recommends that consumers:
- Keep informed: Read information about when the NBN is coming to your area. NBN Co will contact you when your area is ready
- Prepare early: Check with your retail service provider whether you need to move your landline and internet services to the NBN. Find out your disconnection date
- Shop around: Compare different providers and plans to find the best option to suit your needs
- Ask the right questions: Find out about fees, equipment, back-up batteries and any special services
- Call for help: If you have a problem that you cannot resolve with your provider, contact the Telecommunications Industry Ombudsman on 1800 062 058.
Households can check the type of service they will have access to, and when it will arrive in their area via the NBN website.