Telecom has admitted breaching the Fair Trading Act after misleading some customers about the amount of broadband data they used.

Telecom said the inaccurate readings for approximately 97,000 customer accounts between November 2010 and June 2011 were due to a software fault in broadband data usage meters. Telecom discovered the fault following complaints from a number of their customers.

The result of the inaccurate readings was that around 47,000 of the customers were impacted in one or more of the following ways:

• Customers had the speed of their broadband service reduced (or ‘throttled’) to dial up speed once the reading reached their data cap.
• Customers upgraded to a more expensive monthly broadband plan to increase their monthly data allowance due to an incorrect perception about their data usage.
• Customers were charged overage fees for the amount of data that they used above their data cap.
• Customers reduced their data usage so as to not exceed their monthly data allowance.
• Customers were charged early termination fees for changing providers as a result of incorrect perceptions about their data usage.

Telecom issued a public statement in June 2011 outlining the fault and their intention to refund affected customers. To date, Telecom has written to their affected customers and has refunded more than $2.7 million.

“We’re pleased to have reached a settlement with Telecom and that they have made prompt refunds directly back to the customers who have lost out,” said Stuart Wallace, Commerce Commission Competition Manager.

“Telecom brought this issue to our attention as soon as they were made aware by their customers and have co-operated fully with the Commission. Due to Telecom’s immediate admission of a breach of the Fair Trading Act, followed by appropriate compensation to customers, the settlement is the best possible outcome for those customers and avoids potentially lengthy and costly court hearings paid for by taxpayers,” added Mr Wallace.

A copy of the settlement agreement can be found on the Commission’s website at: www.comcom.govt.nz/fair-trading-act-enforcement-actions-register