Exetel cuts off unlimited internet claiming 'unfair' heavy use

Exetel has terminated service for hundreds of data-hungry customers, claiming other customers shouldn't have to subsidise "unfair" usage. But the consumer watchdog has warned the ISP could be breaking consumer law.

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Hundreds of Exetel customers have had their Internet service terminated after being deemed "exceedingly heavy users," despite the ISP offering unlimited data allowances as part of its plan offering.

The Australian Internet service provider opted to "let go" the data-hungry users, sending notice to "around 400" customers and warning them that they had 30 days to find a new ISP before their service would be cut off.

But while Exetel dubbed the move a "difficult decision to let go a small number of users," Australia's consumer watchdog has warned that "undisclosed fair use policies" and details hidden in fine print are potentially breaking consumer law.

In a statement to CNET, Exetel said the cut-off comes after an internal review into customers' consumption habits, which identified a select group whose usage patterns were deemed "unfair" to other customers.

"In order to ensure that each of our customers is receiving the best possible broadband performance in a climate of rapidly accelerating download growth and increasing demand for streaming video services, Exetel regularly review our customer usage, network performance and cost.

"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. 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."

Exetel advises that the affected customers represent a "very small proportion" of the ISP's total customer base, but that the number was "higher than we'd expect, or like to see." The ISP says these users are operating on legacy plans, are no longer on a current contract with the ISP and have been contacted directly.

Exetel has advised that 25 percent of terminated users were operating on unlimited plans and that customers on its "current unlimited plans have an unlimited data allowance."

But while Exetel states in its terms and conditions document [PDF] that it may cancel service for customers on a "non Fixed-Term Agreement" by giving at least 30 days notice, the consumer watchdog has warned against this kind of fine print.

The Australian Competition and Consumer Commission told CNET that ISPs and telco businesses need to tread carefully around offering "unlimited" plans that are qualified with conditions, particularly when it comes to the Australian Consumer Law (ACL).

"Telco businesses that make sweeping offers of unlimited services while concealing the true extent of the service in the fine print or undisclosed 'fair use policies' risk being in breach of the ACL, regardless of the length of the customer contract," an ACCC spokesman said.

"The ACCC would be concerned if restrictions were being placed on certain customers, including non-eligibility for 'unlimited' services, where the potential for there to be such restrictions was not clearly identified in advertising materials."

It's certainly not empty rhetoric on the part of the ACCC -- the consumer watchdog has a solid history in chasing after ISPs and telcos for misleading customers. iiNet was fined more than AU$200,000 for misleading customers in its Naked Broadband ads, while a case against TPG went all the way to the High Court, resulting in a AU$2 million penalty over misleading advertising of "unlimited" plans.

For its part, Exetel was positive about its legal position after terminating customers.

"We are confident that the difficult decision to part company with around 400 customers who are off-contract fully meets our obligations under Australian telecommunications law."

Updated at 5.05 p.m. AEST to include further comments from Exetel.