Telstra has offered to compensate 42,000 customers after failing to provide customers with the fast National Broadband Network speeds they promised.
The telco will offer remedies to those who purchased internet services through both Telstra and Belong brands between September 2015 and November this year after admitting it may have breached consumer law by promoting NBN speeds that it was not capable of delivering.
An Australian Competition and Consumer Commission investigation found many of Telstra's customers could not receive the maximum speed of their plan, nor could they receive the maximum speed of a lower-speed plan.
The investigation was prompted by an alert from Telstra to the ACCC that approximately 9,000 of its customers on two of its plans could not receive speeds above a lower-speed plan.
ACCC chairman Rod Sims said Telstra customers were paying more to receive higher speeds that they just weren't able to get.
"All businesses have a responsibility to ensure that claims about the performance of their products or services are accurate," Mr Sims said.
Telstra has admitted it was likely to have breached the Australian Consumer Law by engaging in misleading or deception conduct and making false or misleading representations.
Mr Sims said while he was pleased Telstra had reported the issue to the ACCC, he is mindful that it is not just a problem for Telstra.
"It is an industry problem where consumers are often not getting the speeds they are paying for," he said in a statement on Wednesday.
"We will continue to investigate other retail service providers selling broadband plans over the NBN and take enforcement action where appropriate."
Affected customers will be offered the option of a costless exit from their contract and a refund, moving to a different speed plan and receiving a refund, or remaining on their current plan and not receiving a refund.