Telstra Slapped with $11.6 Million Fine After Quietly Downgrading Belong Customers’ Broadband

Key Takeaways

• Federal Court Penalty: Telstra fined $11.6 million (AUD 18 million) for misleading nearly 9,000 Belong customers.
• Upload Speeds Halved: Customers were shifted from 100/40 Mbps to 100/20 Mbps plans without notice, slashing upload capacity.
• Customer Remediation: Affected users are being reimbursed, with total payments exceeding $1.5 million (AUD 2.3 million).
• Cost-Cutting Motive: The 100/20 Mbps wholesale tier saved Telstra $4.50 (AUD 7) per customer per month.

Deep Dive

It turns out broadband speed isn’t just about how fast your Netflix loads, it’s also about trust. Australia’s Federal Court has ordered Telstra to pay $11.6 million (AUD 18 million) after the telecom giant quietly shifted nearly 9,000 Belong customers onto lower upload speed plans without so much as a heads-up.

Back in late 2020, Telstra moved 8,897 customers off their 100/40 Mbps plans and onto a cheaper 100/20 Mbps option. Download speeds stayed the same, but upload capacity, crucial for Zoom calls, cloud backups, and pretty much anything work-from-home, was cut in half. Customers weren’t told, and many only learned after the fact that they’d been paying for something different than they thought.

For the Australian Competition and Consumer Commission (ACCC), that silence crossed a line.

“The $18 million penalty sends a strong message to all businesses that they cannot mislead consumers by making changes to key aspects of a service without informing customers,” said ACCC Commissioner Anna Brakey.

On top of the penalty, Telstra will have to pay back affected customers. Each will receive $15 per month for the time they were stuck on the downgraded plan, with the total remediation bill surpassing $1.5 million (AUD 2.3 million).

The move wasn’t just a technical hiccup, it reflected a cost-saving play in a highly competitive broadband market. In mid-2020, NBN Co rolled out a new 100/20 Mbps wholesale speed tier that cost Telstra and other providers $4.50 (AUD 7) less per customer than the 100/40 option. By switching customers to the cheaper tier without telling them, Telstra pocketed the difference while customers lost out on service quality.

As Brakey put it, Telstra’s failure “denied them the opportunity to decide whether the changed service was suitable for their needs.”

Telstra’s Cooperation

To its credit, Telstra didn’t fight the findings. The company made joint submissions with the ACCC on the penalties and has been working through remediation, contacting affected Belong customers via email. Payments are already underway, some of them made even before proceedings began in December 2022.

Belong, Telstra’s budget offshoot launched in 2013, was meant to offer a no-frills option for consumers. But this case shows that even in low-cost brands, trust and transparency are not optional extras.

The GRC Report is your premier destination for the latest in governance, risk, and compliance news. As your reliable source for comprehensive coverage, we ensure you stay informed and ready to navigate the dynamic landscape of GRC. Beyond being a news source, the GRC Report represents a thriving community of professionals who, like you, are dedicated to GRC excellence. Explore our insightful articles and breaking news, and actively participate in the conversation to enhance your GRC journey.