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Broadband users on Telecom's Go Large service are in line to receive a refund of at least $130.
Telecom has announced today they are crediting customers of the service for monthly plan charges incurred since last December because of a problem with the management of customer downloads under the plan.
The Go Large plan allows customers unlimited downloading and internet surfing but gives Telecom the right to reduce download speeds between 4.00pm and 12.00am - the peak time for internet traffic.
The original traffic management policy customers signed applied only to downloading large files such as music and movies, but changes to the system in early December meant other forms of traffic such as internet browsing were affected.
Kevin Bowler, Telecom's head of consumer marketing, said the company had discovered the problem a week ago which lead them to a decision to credit the monthly fee back.
"Following customer feedback, our own review has shown that the process involved in managing Go Large internet traffic since early December is not what was originally intended or communicated to customers," said Bowler.
Currently with around 60,000 customers on the Go Large service - approximately 10 per cent of Telecom's broadband customers - the refunds are expected to total $7.5 - $8.5m (incl GST).
Credits will vary depending on how long a customer has been on Go Large. For a customer who has been using the plan since 8 December and is still on the plan the credit is expected to be between $130 - $160.
Telecom say the refund will automatically be credited to customer's bills during March and April. The company will be contacting existing Go Large customers and giving them the option to stay on the plan with revised conditions, to change to other broadband plans provided by Telecom or cancel their service.
Bowler said Telecom has also decided to temporarily stop signing up new customers onto the Go Large plan until it has completed further reviews into the service.
The Commerce Commission say the Go Large plan has been under investigation since December following complaints from customers - around the same time Telecom introduced the new traffic management process.
The Commission's director of Fair Trading Deborah Battell said Commission is pleased that Telecom has withdrawn its Go Large promotion and is arranging to compensate customers.
"However, the Commission is concerned that Telecom's actions may not address the full extent of the problems. The Commission will continue its investigation into whether the promotion breached the Fair Trading Act," said Battell.
"In particular, the Commission is considering whether Telecom's initial representation that Go Large gave customers unlimited access was misleading, as the company's reasonable use policy in effect placed limits on use."
Telecommunications Users Association (TUANZ) chief executive Ernie Newman said it was good that Telecom has "come clean" but news of mismanagement of its Go Large plan means the already low level of trust customers have in phone companies will diminish even further.
"We applaud their openness." he said. "But sadly it is another episode in a chain of events where customers have signed up for broadband services that were advertised as offering attractive speeds or data limits, but in reality have delivered a whole lot less."
Newman said Telecom needs to understand that people make business and lifestyle decisions based on expected telecommunications service quality.
"For a customer it is not just a matter of being let down or disappointed by speeds or services, it can have huge consequential effect on individuals lives.
"Something in Telecom needs to change. There have been too many disappointments, too much over-promising and under-delivering. This simply adds to the concern of many people that when it comes to the impact of broadband on customers lives and businesses, Telecom has not yet got the message."
