Internet providers should "immediately" change their advertising for National Broadband Network speeds, according to new guidance issued by the competition watchdog.
The regulator is finally biting down on what it calls "frankly terrible" practices of advertising speeds at their theoretical maximum, a situation that has seen complaints about NBN speeds skyrocket in the past year.
It now wants retailers to describe minimum download speeds during peak hours as either less-than-15 megabits per second (Mbps), 15 Mbps, 30 Mbps or 60 Mbps. This compares to NBN Co's wholesale maximum speed tiers of 12 Mbps, 25 Mbps, 50 Mbps and 100 Mbps.
"With the NBN now hitting [peak rollout] a significant number of people are now affected," chairman of the Australian Competition and Consumer Commission, Rod Sims, said on Monday.
"ADSL services just weren't sold on the basis of speed. They were sold in other ways. Now you have got this new product on the market and the advertising practices are frankly terrible."
NBN Co currently has 2.68 million active connections and has passed nearly 6 million premises.
Telcos should "immediately implement measures" set out in the guide, which include adopting standardised labelling of peak evening speeds, offering customers discounts or refunds if they cannot get the speeds they expect, and making it clear to consumers on fibre-to-the-node and fibre-to-the-basement that they may not get typical NBN speeds.
The head of the Australian Communications Consumer Action Network, Teresa Corbin, said consumers had no way of knowing what speeds they would get during busy periods from current advertising.
"The ACCC has recognised the frustrations consumers experience when services don't work as advertised and expected, and is suggesting that retail providers can do better in these areas," she said.
"We fully support this initiative and hope retail providers will get behind it."
However, chief executive of reseller Inabox, Damian Kay, warned that hundreds of retailers had no way of knowing their customers' speeds.
"Anything that we told the customer we would be pulling out of our arse," he told Fairfax Media.
The ACCC's decision to have 121 exchanges built into the NBN is to blame for misinformation because only four companies - Telstra, Optus, TPG, and Vocus' wholesale arm - can afford the infrastructure to all 121 exchanges, he said.
Mr Kay's company buys NBN services off Telstra Wholesale and then resells them as a white-label product to 450 smaller retail service providers. However, Inabox has no control over the service Telstra Wholesale provides and getting individual speed information is impossible.
"We have 450 retail service providers buying NBN from us and if we don't know [speeds], how are we going to help them know?" Mr Kay asked.
While the ACCC acknowledged resellers did not have control over speeds, it warned they were still responsible for advertising claims.
Telcos have three months to change their advertising or risk being named and shamed by the regulator. Mr Sims said his agency had active investigations into all the major telco providers.
"Now that we have got this tiger by the tail we are not going to let go of it. I accept we have taken time to get onto this - as I say we can't do everything. This is now almost our top consumer priority and we are going to stay with it until we get significant change," he said on Monday.
He admitted the ACCC took a long time to react to rising complaint levels, but said it had been focused on setting up a broadband monitoring scheme, which took a long time to secure funding from government.
The ACCC wants telcos to avoid selling 25 megabits per second (Mbps) to households connected with FTTN until they can guarantee "actual maximum attainable line speed information after activation". It also wants telcos to adopt labels for minimum attainable evening speeds of "basic", "standard", "standard plus", and "premium".
The minimum speeds will be determined by testing 75 random lines of each speed tier every hour between 7pm and 11pm over 14 days, then taking the third lowest average hourly speed to determine the minimum average. Telcos must do this testing four times a year.
"There is no qualifying minimum speed for a plan labelled as 'basic evening speed', given there is no slower speed tier to which a consumer could move," the ACCC's guidance notes.
A "standard" evening speed should be an average of about 15 Mbps while "standard plus" is about 30 Mbps and "premium" 60 Mbps.
An Optus spokeswoman welcomed the guide on broadband speed claims, in light of a recent "substantial increase" in broadband services during evening peak periods.
"Optus believes consumers should be provided with a greater level of transparency about both theoretical and real world network speeds," she said.
It is understood Optus is still determining how it will implement the ACCC's advice in its advertising.
Telstra said it would also review the ACCC's guidance, and pointed to its own online speed explainer guide. "Setting the right speed expectations ... is a high priority for us. We have taken an industry lead to ensure our customers receive the service and experience they expect on the NBN," a spokesman said.
Telstra has already committed to reimburse customers who have paid for a speed boost they may not have benefited from.
Industry peak body Communications Alliance welcome the guidance but warned it might add to the "cost and complexity" of selling broadband services in Australia.
"The guidance appears self-contradictory in parts - calling on service providers to 'discontinue' any promotion of the speeds that consumers will experience outside the evening 'busy hours', but later appearing to permit this," chief executive John Stanton said.
"Questions as to the practicality of the processes that the guidance calls for will become clearer as [service providers] attempt to comply with it."
A spokeswoman for Vocus, which owns Dodo, said it recently changed wording about speeds, but might have to do more to abide by the ACCC's guidance.
Dodo offers "standard", "turbo" and "maximum" speeds, but warns these are based on NBN Co's line speeds and "should not be relied upon as a constant performance level".
