Telstra’s move to refund over 40,000 customers over poor NBN speeds is “only the tip of the copper iceberg” according to Labor, as other telcos are set follow suit and also offer refunds.

Telstra, the largest reseller of the NBN, last week announced it had entered into a court-enforceable undertaking with consumer watchdog the ACCC, which will see it offering refunds to customers that have not been able to reach speeds on the NBN that were advertised in their plans.

The telco admitted that it had likely gone against Australian Consumer Law through misleading or deceptive conduct and making false or misleading representations with its advertisements of NBN speeds.

For the last two years, Telstra has offered a “super fast speed boost” with maximum download speeds of up to 100 megabits per second (mbps) and maximum upload speeds of up to 40 mbps (100/40 mbps). The ACCC found that more than half of customers that went on this plan have been unable to reach those speeds, and nearly half of consumers on the slower 50/20 mbps plan also couldn’t reach those speeds.

“In essence, people were paying more to get higher speeds that they just weren’t able to get,” ACCC chairman Rod Sims said.

“Limitations on the affected customers’ NBN fibre to the node or fibre to the building internet connections meant that many customers’ internet services were not capable of receiving the maximum advertised speeds of the plans.”

As part of the undertaking, Telstra will be offering all current and former customers who couldn't achieve the maximum speeds advertised in their plans a costless exit from the contract and a refund; a move to a different speed plan and a refund; or to remain on the current speed plan and no refund.

The federal opposition has welcomed the news, with Shadow Minister for Communications Michelle Rowland saying Telstra’s move is “only the tip of the copper iceberg”.

“[These] developments are a stunning rebuke to the second-rate technology decisions Turnbull has imposed on the nation,” Rowland said.

“The copper NBN has been exposed as a dud. It’s a tragedy that Turnbull is spending $50 billion of taxpayers’ money on a second-rate network that is denying consumers the speeds they are willing to pay for.”

The ACCC’s investigation began when Telstra initially notified the watchdog that 9000 customers might be impacted. The ACCC’s investigation then revealed the true extend of the impacted customers.

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

“All businesses have a responsibility to ensure that claims about the performance of their products or services are accurate.”

Telstra group executive of consumer and small business Vicki Brady said the telco has already changed the way it advertises NBN plans.

“We have changed our advertising, marketing and sales processes. 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,” Brady said.

“The ACCC is conducting an industry-wide investigation and we’re pleased to be the first to reach a resolution with the ACCC.”

While Telstra will be the first telco to offer refunds for poor NBN speeds, the other major players are likely to quickly follow in its footsteps.

“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,” Sims said.

“We will continue to investigate other retail service providers selling broadband plans over the NBN and take enforcement action where appropriate. Our message to retailers is that if you advertise a particular speed and customers cannot get that speed, you will risk breaching Australian Consumer Laws.”

Optus has already confirmed that it is “working with the ACCC” and has responded to the watchdog’s requests for information and data.

“We are examining the detail of the announcement by the ACCC, but can confirm that Optus is taking action to provide appropriate remedies to those customers where it has been confirmed that the underlying NBN service cannot deliver the speed they signed up for,” an Optus spokesperson said.

“Optus is considering a range of measures for customers depending on their individual circumstances.”

TPG said it will be in discussions with the ACCC “in the coming days”.

The ACCC has also recently launched an inquiry into the NBN wholesale service standards after complaints against the service increased by more than 150 percent in the last year. The Telecommunications Industry Ombudsman received more than 27,000 complaints in the last 12 months.

The inquiry will be investigating whether regulation is needed to improve the NBN’s service.