Larger issues on the contract situation


I have previously posted about the situation regarding existing contracts particularly around the Telstra contracts, who being the largest player hold the majority of the contracts. Telstra are in a unique position here, because they own and run the existing copper network. It is Telstra who has agreed to dismantle the copper network and is being paid compensation to do this.

It is important to quickly cover what a contract is. A contract is (in this case) an agreement between two parties for one to provide a service (the provider) and the other (the client) to pay for it for a fixed period of time. Under standard contract law, if either side wants to break the agreement it needs to compensate the other for any losses incurred due to this breach. In the telecommunications world given that usually it is the client who wants to break the agreement (by ending it early), this compensation is in the form of an Early Termination Fee (ETF). However the provider can also break the agreement by ceasing to provide the service detailed in the contract. This is the situation with the NBN transition.

The transition is being forced upon you (the client). You have not requested this change. You are most likely incurring significant business costs (in terms of new equipment, administration, probably downtime) due to this. Under contract law you are actually entitled to claim these costs against the provider since they (not you) are breaking the contract.

So for the provider to turn round and attempt to force you to take on their replacement service on the NBN by threatening you with an ETF is completely ridiculous (unconscionable would be the legal term). As an absolute minimum they need to release you from your contract without an ETF.

Many providers (including Telstra) have thrown their hands up in the air and said that this is all out of their control, almost like it was an Act of God. However this is patently untrue. It is not as if the transition timetable was not known well in advance (several years). If the providers had thought about this, they should have not allowed contracts to run past the disconnection date. However, most likely, it was just too hard to work out who was affected by which disconnection date and so they just ignored the dates and continued business as usual with multi year contracts.

However Telstra in particular has even less excuse. They chose to accept the shutdown of their copper network in their agreement with the NBNCo. They chose to accept the compensation offered to them for this. So they definitely cannot stand up and say this is out of their control, they (with NBNCo) set the timetable. It was totally in their control.

One important thing to remember is that these agreements are almost always what are called Standard Form Agreements – which are agreements where one side (the provider) offers the agreement for the client to agree to on a take-it-or-leave-it basis (there is no opportunity for the client to negotiate the terms). Under consumer laws (which cover small businesses too) these agreements cannot have any “unfair” terms – ones that disadvantage one side (well they can, it’s just that they are not enforceable).

So when you talk to your provider about your options regarding the transition and they say you have to do or not do something because it is written into the contract, if you believe this is unfair (remember they are forcing this on you) – talk to the TIO. The TIO have the power to effectively look past the words of the agreement and get a sensible result.

Article Name
Larger issues on the contract situation
Small businesses are incurring significant costs due to the NBN Transition. For providers to attempt to enforce existing contracts using the threat of Early Termination Fees is completely unconscionable - the provider is breaking the contract not the client.

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