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ACCC cracks down on Exetel over "unfair" broadband contracts

After kicking customers off its network for "excessive" broadband use last year, Exetel has been forced to read the fine print in its own contracts with the ACCC saying its terms were "unfair".

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It's probably fair to say that most Australians don't pore over their mobile phone or internet plan contracts with a fine-tooth comb. But the consumer watchdog is cracking down on telcos that include sneaky fine print in their contracts or change terms on a whim, and one local provider has already received the first reprimand.

The news comes following a six-month-long investigation by the Australian Competition and Consumer Commission into Internet service provider Exetel over "unfair" contract terms.

In June 2015, Exetel contacted "around 400" customers indicating that, due to their excessive data usage, they were being "let go," and they had 30 days to find a new ISP before their service would be cut off. (This week, the ACCC put the number of customers contacted at "more than 2,000").

"We believe it is unfair for current users to subsidise a handful of exceedingly heavy users who have not re-contracted with Exetel at our current, and very competitive prices," the company said in a statement to CNET at the time. "So for the benefit of all of our customers who love cheaper broadband we've taken the difficult decision to let go a small number of users."

However, the ACCC has ruled that the ISP was only able to cut these customers loose because of a clause in its contracts that meant "Exetel could vary any part of that agreement for any reason." According to the watchdog, Exetel didn't play fair with customers, and it has forced the ISP to offer refunds.

"The ACCC considers that contract terms which allow a supplier to unilaterally vary the agreement for any reason are likely to be unfair," said ACCC Acting Chair Dr Michael Schaper said.

While the ruling comes 6 months after the fact, Exetel will still be required to remove the unfair terms from its standard contract, to refund additional costs for consumers who were forced to change plans and refund activation charges paid by customers who terminated their contracts after being given the Exetel ultimatum.

But it's not just Exetel in the crosshairs. Schaper said the ACCC would also be "writing to other telecommunications providers with similar outdated terms in their consumer agreements, to put them on notice of the ACCC's concerns and encourage them to review and update their standard agreements."

Exetel confirmed that it had been "co-operating fully" with the ACCC's investigation and that it had "relied on a clause in its standard terms that is adopted widely throughout the telecommunications industry." The ISP has agreed to refund affected customers.

"We apologise to customers who were impacted by this decision and have already made a number of changes to address this situation," said Exetel CEO Richard Purdy.

"All ISPs have been forced to react to the introduction of streaming services like Netflix which have fundamentally changed Australian internet usage patterns and spurred a large increase in data usage. Our strong network performance over this period reinforces the need to manage our network for the benefit of all customers."