Do I have to pay Telstra’s cancellation fee?

Whether a Telstra cancellation fee is payable depends on why you are leaving. If you are exiting because the service failed, chronic outages, speeds far below what was sold, coverage that never matched the promise, the Australian Consumer Law’s guarantees cut the other way: services must be fit for purpose and match their description, and a major failure entitles you to end the contract without paying for the privilege. A termination fee charged to a customer leaving a defective service is exactly the kind of charge the TIO routinely reverses.

Distinguish the components of an exit bill. A genuine device repayment, the unpaid balance of a phone or modem you keep, is generally owed, since you keep the hardware. A contract break fee on the service component is different: under the Telecommunications Consumer Protections Code, fees must be fair, properly disclosed at sale, and proportionate. Fees that were never clearly disclosed, or that bear no relationship to Telstra’s actual loss from your departure, are challengeable on both Code and unfair-contract-terms grounds.

Run the dispute in writing: state the service failures with dates and reference numbers from every fault report, request the fee’s contractual basis and calculation, and state that you do not accept liability for a fee arising from Telstra’s own failure to deliver. If unresolved, the Telecommunications Industry Ombudsman is free, fast and effective, telcos pay escalating fees per TIO complaint, and disputed cancellation fees are core TIO territory. Do not pay a disputed fee to make the calls stop; a disputed amount in the TIO process should not be enforced or listed against your credit while it is being handled.