Telstra (TLS) has suffered a blow with the Federal Court ruling that the company has misled consumers about the coverage available on its Next G mobile network.
The ACCC brought proceedings against Telstra in September, arguing that the Telecommunications giant had engaged in misleading or deceptive conduct by representing that the Next G mobile network had "coverage everywhere you need it" and would give customers the same or better coverage than the outgoing CDMA system.
Telstra's technical experts revealed that coverage on the Next G network was limited by a number of factors such as terrain, physical structures and handset selection.
Nevertheless, Justice Gordon said these significant qualifications to the accuracy of the "everywhere you need it" claim were not explicitly mentioned and could not have been inferred from Telstra advertising.
Justice Gordon said Telstra was found to have deceived consumers because "whether a user could obtain coverage depended in part upon where that person was, what handset that person was using and in some cases whether that handset had an external antenna attached."
ACCC Chairman Graeme Samuel said that all telecommunications companies should ensure, when promoting the coverage of their services, that claims reflect real-world experience.
"We are constantly on the look-out for claims of this nature that are made and cause consumers, for example, to sign up to contracts, purchase handsets, enter into arrangements for something that's fairly essential today – and that is mobile phone coverage," said Mr Samuel.
However, Telstra Country Wide managing director Geoff Booth says the company is standing by its advertisements.
"We're amazed and disappointed with this decision," he said.
"We do intend to appeal this decision."
Telstra will not face any penalties for breaching the Trade Practices Act but the ACCC will seek injunctions preventing further similar representations and orders requiring Telstra to publish corrective advertisements.
Telstra rose by 2 cents to close the day at $4.71.
