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Some Telecom customers are getting slower broadband speeds despite the company's move to promised faster "unconstrained" speeds.
A telecom watchdog group and competitors say it is a result of low investment in the Telecom network.
In publicity for its October launch of unconstrained broadband, Telecom said that its "blazing speeds" would be "powering their way into Xtra's new Go Large" plans.
These super-fast speeds are known as unconstrained in the telecommunications world - the maximum speeds possible for Telecom's broadband ADSL technology.
But Telecom's head of consumer affairs, Kevin Bowler, said 10 per cent of its half a million internet customers - about 50,000 customers - were getting slower speeds than they were before the network went unconstrained. Telecom could not say how many customers were getting faster speeds, but said it was a majority.
The Commerce Commission has said that Xtra may have breached the Fair Trading Act by misleading the public as to the speeds and terms of its ADSL service.
Telecommunications User Association of New Zealand chief executive Ernie Newman said Telecom appeared to be the "only company in the world" that had ignored the explosion of data requirements over the past few years, and the critical need to invest in the network.
"They seem to have sat in their own little world, hoping by constraining the access lines at people's homes and exchanges, they could control New Zealander's level of access to the internet and their own needs of investment."
The Government announced in May that it would force Telecom to open its network to competitors. This caused $2.5 billion to be wiped off the value of its share price and contributed to the public's perception of Telecom as a bad corporate citizen.
Telecom had to "front up and explain" what was going wrong with its network to regain the trust of its customers and New Zealanders, said Newman.
Telecom's Bowler denied the company had misled consumers.
"We have been upfront with our customers and said all along that not all of them would experience faster speeds as a result of Telecom moving to unconstrained broadband," he said in an email after refusing to be interviewed.
Telecom is investing $800 million in capital expenditure, but Bowler would not say if it would invest more as a result of the broadband problems.
He believed customers would see an improvement in speed when Telecom rolled out its next generation network technology ADSL2+ which would enable faster broadband.
Bowler said the network problems were caused by "many factors" including distance from the exchange, quality of house wiring, presence of filters and noise on the line which affected performance. "As the unconstrained plans deliver whatever the network is capable of delivering on each line, and one of the key determinants of line speed is line length, there will be a wide variation in possible line speeds," said Bowler.
Newman said Telecom's network had slowed down due to the pressure caused by it lifting constraints and allowing the traffic to go as fast as the line allowed. "In this particular case there is constraint in the backhaul, the part of the network that runs from the exchange or street cabinet across Telecom's network to the customer."
The network could be fixed by Telecom investing in more software, said Newman.
Speed bumps
* Telecom offered "unconstrained" broadband from late last month.
* Telecom's prices range from an entry-level package of $29.95 for 200 megabits of data to the most advanced package of $149.95 for 50 gigabits.
* But some Telecom customers are getting slower broadband speeds despite the company promising "super fast" speeds.
