Telstra has offered to compensate around 42,000 customers who experienced slow National Broadband Network (NBN) speeds.

Key points: Telstra admits it may have misled customers over NBN speeds and breached consumer laws

Telstra admits it may have misled customers over NBN speeds and breached consumer laws Around 42,000 customers to be offered compensation

Around 42,000 customers to be offered compensation ACCC says maximum speeds marketed by Telstra could not be achieved in "real world conditions"

The telco has admitted it may have engaged in misleading or deceptive conduct and made false or misleading representations, in breach of the Australian Consumer Law.

Over the last two years, Telstra mentioned in its NBN advertising it could provide download speeds of up to 100 megabits per second (Mbps), and maximum upload speeds of 40 Mbps.

After investigating this claim, the Australian Competition and Consumer Commission (ACCC) concluded many customers were not receiving the high speeds they had paid for.

The corporate regulator said these maximum speeds "could not be achieved in real-world conditions", due to the limitations of customers' fibre to the node (FTTN) and fibre to the building (FTTB) internet connections.

"Our investigation revealed many of Telstra's FTTN and FTTB customers could not receive the maximum speed of their plan," said ACCC chairman Rod Sims.

"Even worse, many of these customers could not receive the maximum speed of a lower-speed plan."

The ACCC found that 56 per cent of FTTN customers (26,497 people) on the top 100/40 Mbps plan were unable to achieve those speed levels. Within that category, 9,606 customers could not even reach half of that speed.

Furthermore, 45 per cent of FTTN customers on the 50/20 Mbps plan could not benefit from that full speed.

Telstra has provided a court-enforceable to the ACCC regarding the remedies it will provide affected customers.

In addition to refunds, Telstra will allow them to change their internet plans, or leave their contracts without paying a fee.

It's not just Telstra, but an industry problem

The ACCC said Telstra came forward to notify it of these issues.

"We are pleased that Telstra proactively reported this serious problem to the ACCC and has cooperated in creating a remediation plan for affected customers," Mr Sims said.

"However, we are mindful this is not just a Telstra problem; it is an industry problem where consumers are often not getting the speeds they are paying for."

The corporate watchdog said it would investigate other retail service providers selling broadband plans over the NBN, and take enforcement action "where appropriate".

It also highlighted two separate issues affecting NBN customers.

"First, and the subject of today's action, is the situation where the connection is not capable of delivering the speed that has been sold," Mr Sims said.

Telstra has provided an undertaking to the ACCC that if it advertises to potential customers a particular speed "it will, within four weeks of connecting service, check each customer's attainable speed".

Mr Sims said: "If it is below the advertised speed, Telstra will notify the customer and offer remedies."

The second issue is where the promised speeds can "technically be delivered" but the internet service provider (ISP) has not purchased enough capacity from NBN Co to provide those speeds, particularly during peak times.

To address this "under provisioning" problem, Mr Sims urged "all ISPs to advertise the typical speeds customers can expect in the busy evening period between 7:00pm and 11:00pm".

"We have changed our advertising, marketing and sales processes," said Vicki Brady, the head of Telsta's consumer and small business division.

"We now use the standard ACCC naming convention to describe our speed plans and quote the typical speeds a customer can expect, including for the period when most people tend to use the internet."