Telstra offshoot Belong scraps coverage references

Telstra’s budget offshoot, Belong, has scrapped references to the telco’s mobile coverage, following accusations Telstra has ‘tricked’ people.

Telstra has been accussed of overstating its network coverage. Picture: NCA NewsWire / David Mariuz

Telstra’s budget offshoot, Belong, has scrapped all references to the telco’s mobile coverage, following accusations it overstated its retail network by about one million square kilometres, “tricking” people.

Belong’s move comes as Telstra clarifies with its wholesale customers – which include Woolworths, Aldi, Commonwealth-backed More and others – that its long-held “unrivalled” claim coverage was based on using an external antenna, not what people could expect to use on a regular mobile phone.

On Wednesday Telstra’s resellers were working with the telco to work out if they needed to update their own websites and marketing to ensure they were not misleading customers.

Vodafone owner TPG says Telstra has “tricked Australians into paying top dollar”, with the allegations attracting the competition watchdog’s attention.

Australia’s peak shareholder lobby group has also called for Telstra coverage claims to be independently verified, particularly after chief executive Vicki Brady made statements about the size of its network during earnings calls.

Telstra has denied that it had misled people, saying it has always based its coverage on using an external antenna, which cost thousands of dollars.

Former Telstra CEO David Thodey, who left the telco in 2015, said he could not recollect exactly how the coverage was calculated, but understood it was “standard”.

There are no industry standards that compel telcos as to how they should calculate coverage, but TPG group executive in charge of consumers Kieran Cooney said it was simple: “Can you access that coverage using a regular mobile phone or not?”

This is how Vodafone and Optus calculates its coverage.

A TPG spokesman said Telstra was being “disrespectful” to its customers.

“Some of the biggest brands in the country that resell Telstra’s mobile services have been repeating Telstra’s inflated coverage claims for years,” he said.

“By refusing to be transparent about the coverage customers can get with a regular mobile phone, Telstra has allowed its wholesale partners to advertise a mobile coverage area that almost none of their customers will ever access. These resellers must correct the position immediately.

“Telstra’s refusal to cease advertising its misleading population and geographic claims in their entirety has now become disrespectful to its customers. They are effectively saying they don’t care if Australians are being misled, they don’t care about transparency, and they don’t care about accountability.”

A Telstra spokesman declined to answer questions about how many customers used external antennas.

The spokesman said the telco had updated its wholesale website following TPG’s allegations and was communicating with its ­mobile virtual network operator (MVNO) customers or resellers.

Many of these wholesale customers, including Woolworths and Aldi, were still displaying Telstra’s former coverage statements on their websites and other marketing materials on Monday. Several MVNOs said they were seeking clarification from Telstra.

“Telstra Wholesale has updated its website and is in the process of communicating this update to its customers. As a Telstra Wholesale customer, Belong will update its coverage information shortly based on this advice,” the Telstra spokesman said.

He said Telstra’s wholesale network is smaller that its retail footprint, totalling 1.7 million square kilometres versus three million square kilometres. This masthead has asked repeatedly how much of its network can be accessed with a normal mobile phone - not an external antenna - but is yet to receive any clarification.

Telstra has been fined $75m in the past seven years for misleading or unconscionable conduct. If it is proven that it has tricked customers again, it could face hundreds of millions of dollars in penalties.

Australian Shareholders Association chief executive Rachel Waterhouse said: “Allegations that Telstra overstated regional coverage raise serious questions.

“While there has been no finding of misconduct to date, the case highlights the need for a clear, independently verified industry standard.”

Former Australian competition tsar Allan Fels said: “On the face of it, it looks as if Telstra is at risk of breaching the misleading and deceptive conduct provisions of the Australian Competition and Consumer Act.

“It’s obviously been a considerable marketing attribute that it claims to cover three million square kilometres in that it causes them to attract more customers away from other competitors.

“If the allegations are true, I’m surprised that Telstra, with its not infrequent court summons over the years regarding misleading conduct, hasn’t prevented this.”

Companies can be fined up to $50m per breach.

Originally published as Telstra offshoot Belong scraps coverage references