Too Slow to Be 'Unlimited'

The legal world is slowly trying to catch up with the digital world.

The Federal Court has held that Optus has been guilty of misleading and deceptive conduct because of its advertisements stating that its internet services were 'unlimited'. Services were not unlimited in the literal sense and were slowed down after the customer's web usage limit was reached.

Background

In advertisements, Optus claimed that its services were 'unlimited'. 'Unlimited' in this context meant that customers did not have to pay extra fees when they exceeded the usage limit. However, once the limit was reached, services would slow down to 256kps.

The ACCC argued that the ordinary definition of the word 'unlimited' meant use without restriction. Optus' small print qualification did not correct the misleading effect. Alternatively, even if Optus wanted to place conditions on the meaning of the word 'unlimited', the disclaimer was too small in comparison to the text of the advertising message to be effective.

Optus is not the first company to be targeted by the ACCC in relation to the misleading use of the word 'Unlimited'. Previously in Australia, Dodo was fined for its misleading unlimited plans and TPG was taken to court for similar claims, although the case was later dismissed.

The Why - What Can You Do With 256kps

Justice North was quick to point out why capping internet usage to 256kps did not equate to 'unlimited' usage. He concluded that at 256kps:

  • Skype video calls would be jumpy and high resolution settings may not work at all.
  • Youtube videos would have interruptions with frequent starting and stopping.
  • Facebook messages would be able to be sent but standard sized photos would take a few seconds to download.
  • Downloading large software and playing complex games would be near impossible.
  • An average movie of 1.6GB would take 14 hours to download.
  • A standard song would take 20 seconds or more to download.
What Optus Said

Optus claimed that the internet plan was in fact unlimited if one defined unlimited in terms of download volume and not download speed. They argued that even the most minimal speed restriction could be a breach of Australian consumer laws.

Optus asserted that ordinary consumers would know that 'unlimited' broadband plans usually have a reduction in speed after the download limit is reached. To back this assertion up, Optus referred to similar advertising campaigns by competitors. Optus also referred to a similar case in which the court held that a capped plan was not misleading. This finding was based on the fact that consumers have a certain kind of background knowledge about basic internet use and usage limits.

An Easy Decision

In dealing with Optus' arguments, Justice North found that the visual impression of the advertisements made the advertisements misleading; the printed quantifications of the term unlimited were not in prominent print. To make matters worse, there was also a lack of qualifications for the use of 'unlimited' and Optus did not distinguish between internet speed and volume.

However, the days of adverts for 'unlimited' capped plans are not gone. Justice North held that the use of 'unlimited' in internet advertising is fine as long as disclaimers limiting use are sufficiently noticeable.

ACCC...Why So Late?

So what was the practical effect of this decision for consumers and for bele communication providers? Well... not much unfortunately. The ACCC brought these proceedings long after Optus' advertising campaigns were over.

The court held that vindicating the view against general use of the word 'unlimited' in broadband services was a worthy cause. However, Justice North maintained that this should not be at the expense of consumers who might be harmed by ongoing misleading advertisements. One of the purposes of the new Australian consumer protection legislation is to monitor and eliminate unfair selling practices.

There is little deterrent effect if the ACCC only initiates proceedings after misleading campaigns are completed.

However, it is good to see that the ACCC makes an effort to respond to consumer complaints.

Conclusions

Although this was a relatively straightforward case, Justice North made some interesting observations about the activities of a regular net user. He quantified how slow is too slow in regards to internet speed.

This is just another case of how Australian courts are indirectly acknowledging the growing impact of the internet. We may one day go as far as other western countries such as Finland and France who have proclaimed that internet access is a legal and human right.

What Does This Mean For You?

Thanks to this case we now have a standard for 'too slow' in the internet world. So for those with low internet providers, you now have a right to complain thanks to Justice North!

However, on a more serious note, those of you thinking of advertising should be wary of buzz words even if you're not in the internet business. Words like 'unlimited', 'unconditional' or 'no questions asked' should have an easily seen disclaimer (unless the words are true). How prominent the disclaimer must be will depend on the context of the advertisement and professional advice should be sought. It is not enough to look upon your competitors to give you an adequate guide.

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