Telecom has been fined $500,000 for Fair Trading Act breaches in the Auckland District Court today.

The giant telco pleaded guilty to 17 charges of breaching the Fair Trading Act over claims made in 2006 when promoting Xtra's Go Large broadband plans.

In December 2006, the Commerce Commission launched an investigation following complaints from Xtra customers who found that their internet speed was constrained, in some cases to dial-up speed.

Xtra's campaign gave the impression that the plan would offer unconstrained faster speeds and no data caps, said the commission.

But in the advertising fine print was the disclaimer "as fast as a user's line will allow" and outlined the possibility of constraints such as a "traffic management policy" for use during peak times.

The commission found out that the traffic management policy was applied at all time and in some cases customers weren't experiencing unconstrained speeds.

Commission fair trading manager Graham Gill said there was increasing choice in the broadband market.

"It is important that all relevant information is disclosed to consumers so that they can make informed decisions."