The Australian Competition and Consumer Commission has launched Federal Court action against telco giant Optus over its use of the word “unlimited” in relation to phone and broadband plans, alleging it has breached sections of the Trade Practices Act.
The case comes a year after the ACCC warned the telco industry over misleading advertising for download plans, saying it would crack down on underperformers.
“The ACCC alleges that certain television, radio and print advertisements run recently by Optus which advertise “unlimited” calls on its $70 pre-paid Turbo Max plan are misleading because the offer is subject to a number of limitations and restrictions,” it said in a statement.
“The ACCC also alleges that certain recent television and print advertisements which advertise “unlimited” broadband and “unlimited” calls on Optus broadband and home telephone plans are misleading because the offers are subject to a number of limitations and restrictions.”
The ACCC claims while Optus advertises “unlimited” downloads, the restrictions imposed on users actually limits how much bandwidth, or call-time, they can use.
Most ISPs offer limitless downloads, but they don’t market these plans as “unlimited” because after a certain amount of data usage users’ internet speeds are “shaped” or reduced to be extremely slow.
While these plans technically allows users to download as much as they want, these “shaped” speeds are very slow and users often have trouble performing even low-bandwidth tasks such as checking email.
In Optus’ case, the “Turbo Max” fine print specifies unlimited calls are only unlimited up to a maximum of 3,000 minutes. The ACCC says these restrictions negate the “unlimited” offer used in advertising.
But the company said in a statement that it has a “different view” to the ACCC regarding the use of the word “unlimited”.
“We believe our advertising is clear, it is not misleading, it complies with all laws and our customers understand it.”
“The Optus team goes to great lengths to explain the great value customers get with each offer. The information is prominent in our advertising and highlights the features to our customers.”
One industry expert, who wished to remain unnamed, says a number of ISPs could market their plans as “unlimited”. However, because of the caps they impose on these plans, he says doing so would constitute misleading advertising.
“There were a number of marketing techniques cracked down on awhile ago. Telcos used to advertise speeds “up to” 124kbps, or whatever it happened to be. The ACCC cracked down on that.”
“So I’m not surprised the ACCC is doing the same thing is here. If you look at Optus’ advertisements it says “unlimited” but is capped after a certain amount. On that basis, a lot of internet plans are “unlimited” because you can download as much as you want, but they slow your speeds.”
A scheduling conference in the Melbourne Federal Court is set for June 25.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
