Nearly 9,000 Australians affected as Telstra downgrades internet without notice

When you log on expecting smooth video calls or instant uploads, the last thing you expect is a secret slowdown.

Yet nearly 9,000 Australians were left paying for something they weren’t actually receiving.

Now, the Federal Court has delivered a $20.3 million verdict that could change how telcos treat customers.

Telstra has been ordered to pay an $18 million penalty for breaching Australian Consumer Law, following a case that began in December 2022.

Between October and November 2020, the company quietly downgraded 8,897 Belong customers from NBN plans with 40 Mbps maximum upload speeds to just 20 Mbps—without any notification.

Download speeds remained at 100 Mbps, but customers were effectively losing half the upload capacity they had signed up for.

Belong saved $7 per month per customer at the wholesale level, yet Telstra did not pass this saving on, leaving users paying full price for a reduced service.

Even more brazen, Telstra continued marketing the plans as having 40 Mbps upload speeds, despite the reduction.

Upload speed is crucial for many everyday activities, including sending emails with attachments, video calling, uploading photos to cloud storage, streaming live video, and backing up files online.

For seniors relying on video calls to stay connected, or Australians working from home, the difference between 40 Mbps and 20 Mbps could make video calls choppy, uploads slower, and multiple devices struggle to perform simultaneously.

A pattern of problems at Australia's biggest telco

This is not Telstra’s first brush with consumer protection authorities.

In 2022, it paid $15 million for misleading statements about NBN speeds, offered compensation to 42,000 customers in 2017 for slow services, and more recently, faced penalties for spam breaches, emergency call disruptions, and issues with emergency call relay services.

These repeated penalties suggest ongoing problems with transparency and customer communication, which particularly affect older Australians less likely to notice technical changes.

Affected Belong customers will receive compensation through a court-enforceable undertaking.

Each impacted user will get $15 for every month they were on the downgraded plan, with total remediation exceeding $2.3 million.

While Telstra notified over 2,500 customers in 2021, more than 6,000 are still being contacted.

The implications for consumer protection

ACCC Commissioner Anna Brakey highlighted that the $18 million penalty sends a strong message that businesses cannot mislead consumers by altering key service aspects without notification.

She added: 'Misleading pricing and claims in relation to essential services, with a particular focus on telecommunications, is one of ACCC's current enforcement priorities.'

The case illustrates a hardening stance from consumer protection authorities on telecoms, especially for essential services older Australians rely on to stay connected.

Users can protect themselves by regularly checking bills for unexplained changes, testing speeds with online tools, reading all communications, knowing their rights, and contacting the ACCC if necessary.

The Telstra case proves that even the largest Australian telecommunications company is not above the law when it comes to transparency and customer fairness.

If the Telstra case has you thinking about how major telecoms handle their customers, there’s another eye-opening example worth exploring.

Optus faced a massive $100 million penalty for misleading conduct, showing that regulatory authorities are cracking down on poor business practices across the industry.

This story provides further insight into how companies can be held accountable when service promises don’t match reality.

Read more: 'Unconscionable conduct’: Optus’s $100m penalty sends a powerful warning to big business about how they treat customers

Have you noticed any unexplained changes to your internet service recently?