ACCC clamps down on broadband advertising

The Australian Competition and Consumer Commission has issued a warning to internet service providers about misleading advertising regarding speeds for mobile broadband and wireless networks.

Along with an Information Paper released yesterday, chairman Graeme Samuel said in a statement that companies must comply with the consumer protection provisions in the Trade Practices Act when advertising mobile and wireless internet programs.

“The ACCC is concerned by companies over-promising and under-delivering the speeds available on mobile and wireless internet, particularly in the context of network upgrades and increasing wireless internet subscriptions,” he said.

“This Information Paper is intended to assist the whole industry – mobile and wireless internet retailers, resellers and network owners – to comply with the law.”

The paper states that companies must advertise “maximum”, “up to” or “peak network” speeds if these speeds are not available or are not likely to be achieved by consumers.

Additionally, Samuel said internet speed claims should be based on “appropriate tests of network performance”, and that factors affecting performance, such as congestion and a users’ location, must be clearly detailed.

Warren Chaisatien, managing director and principal analyst of Telsyte, says while misleading advertising has not been a big problem in the industry, the ACCC is taking a “pre-emptive move” in issuing a warning.

“What is happening is that as more and more 3G networks pop up, wireless and broadband internet will become a commodity and prices will eventually come down. So the discerning factor between products will be speed, so the ACCC is just taking a pre-emptive move in issuing a warning regarding an issue that will prove important.”

“As it becomes popular, price will not be the main issue, but speed will become more important, so the ACCC is getting on fast.”

Nathan Burley, research analyst at Ovum, says the changes mean ISPs will have to watch how they advertise speeds in fine print.

“They’re trying to get rid of the words “up to” or “maximum”, and it’s the same problem that ADSL had when it was introduced. The ACCC did this when ADSL was introduced, and now they’re just trying to do the same thing. It means operators will have to be careful about how they market their speeds.”

The warning comes after Telstra, Vodafone Hutchinson and Optus gave a court-enforceable undertaking to the ACCC that they will review their advertising practices to become clearer.