Recently, headlines have been dominated by reports of broadband users across Australia getting less than they paid for. National Broadband Network (NBN) customers across the country have been experiencing less than stellar broadband speeds. In fact, speeds were far less than promised by Internet Service Providers (ISPs) and far less than customers paid for.
Since the news broke, the Australian Competition and Consumer Commission (ACCC) has come forward to warn retail ISPs like Optus and TPG. Head of the consumer watchdog organization, Rod Sims, has urged internet providers to implement refunds for overcharged customers and claims they face potential litigation if not.
Understanding the Problem: Telstra First Identifies Over-Charge Issue in Late Spring 2017
In short, certain telcos across Australia have been accused of knowingly selling broadband packages to customers using fibre-to-the-node (FTTN) NBN connections, that we’re simply incapable of offering any top-tier bandwidth speeds over 50 Mbps.
Leading ISP, Telstra first went public in May, announcing that it was aware of customer overcharges and would start a process to identify, contact and refund eligible customers. Following suit, ISP Optus claimed that they too would undertake the same process. However, ACCC head Rod Sims claims that while Optus made an effort publicly to right the wrong, they’ve offered limited plans for action since.
“We are pleased that Telstra proactively reported this serious problem to the ACCC and has co-operated in creating a remediation plan for affected customers,” said Sims.
“Optus were more engaging publicly than they were with us,” added Sims. “They were saying things in public about what they will do, but the ACCC will start engaging directly with them right now. I think most of the other ISPs are in a similar position but you think given those statements, Optus should have no problem providing a similar undertaking [to Telstra].”
Most of the customers eligible for a refund will likely be connected to the NBN via the most common fibre-to-the-node connection (FTTN). FTTN connections help to provide broadband connection and other data services through a common network box, which is often called a node.
Who’s to Blame? Understanding How Australian Telco’s Obtain Broadband Capacity from NBN Co.
The failed promises on broadband speeds have left many customers wondering who their disappointment and anger should be directed at. While they purchased broadband packages from ISP’s like Telstra and Optus, fingers were initially pointed at the National Broadband Network Corporation for failing to provide adequate speed to providers.
However, to better understand the problem and ensure blame games don’t cloud the issue, let’s explore the process for how Australian ISPs purchase broadband capacity from NBN and what that means for consumers.
- NBN Co. is the company responsible for building and implementing a wholesale broadband network to service the entire country.
- Retail ISPs like Telstra and Optus are required to purchase necessary amounts of bandwidth from NBN to adequately serve their customers.
- Retail ISPs are required to purchase enough NBN bandwidth to match the service agreements and promised download speeds they offer to customers.
- When promises of lightning-fast download speeds are made, but an ISP hasn’t bought enough NBN capacity to support it, the service package simply will not live up to the hype.
- Simply put, NBN serves as the on-ramp and various Internet Service Providers are the highways.
