Telecom has admitted a software error has caused overcounting of broadband usage since November, affecting 35,000 customers who will now be provided with compensation.
"This fault has emerged over the last six to seven months since November and it has probably affected 7% of our total base," Telecom retail chief executive Alan Gourdie said.
"Our first step is to apologise to those customers. We're in the process of identifying them and we'll be providing compensation for them."
Mr Gourdie said the fault, which was fixed a week ago, had progressively developed across a number of the network's broadband radius access servers.
"Initially, it was a fault in one box and it moved on to other boxes."
The radius access servers managed data flow through the network and served clusters of customers. The software fault developed in the servers' line cards and had occurred nationwide.
"Because these boxes are throughout the country, when a certain condition was met in the network - effectively let's call it a reset - that's when the software fault emerged and that wasn't geographically specific," Mr Gourdie said.
He said Telecom had applied other audits across the network to ensure its broadband metering was now accurate. All customers connected to the faulty servers would have had their data usage over-rated but only those who exceeded their monthly data cap would be contacted.
"Customers would have experienced a slowing down in their broadband speed or they would have gone overage (over their limit) faster - so we want to make sure both sets of customers are identified," Mr Gourdie said.
Compensation is likely to be either discounts for overcharging or increased monthly data caps.
"It's regrettable and a lot of work for us to do but we're committed to getting it sorted out in the next couple of months."
The problem came to light a week ago when two Telecom broadband customers - Mark Peisker, in Dunedin, and Alister Lambert, from New Plymouth, - produced detailed data logs showing overcounting of their usage by between 30% and 60%. Both customers have since been contacted by Telecom and report that their usage is now being recorded correctly.
However, Mr Lambert said since the fix was applied his download speed at dropped significantly, from about 15 megabits per second to 1.5 megabits per second.
Mr Gourdie said Telecom technical staff were working through the issue.
Since the story broke a week ago, other broadband users across the country have complained about overcounting. Telecommunication dispute resolution manager Derek Pullen said the service had recognised an issue with data metering for some time and had received 87 data usage meter complaints in the past two years.
"On the basis of complaints we have received, this is not a problem isolated to any one provider," he said.
"We are in the process of raising this as a systemic issue with the industry and will shortly be publishing the report."
