Telecom's competitors say a fine of $500,000 for breaches of the Fair Trading Act by the company is not enough of a deterrent.
The 'Go Large' plan marketed in 2006 advertised unlimited internet at maximum speeds, but consumers complained the service was often only dial-up speed.
The fine print in the contracts warned that Telecom would manage traffic at peak times, but an investigation by the Commerce Commission found this happened constantly.
The Internet Service Providers Association says the promotion lured customers away from other ISPs and the fine does not reflect the commercial damage done.
Consumer New Zealand says Telecom knew when it launched the plan that it could not provide the service as promised.
Telecom says it made a mistake and the company now carefully tests products to make sure they match what is advertised.
Telecom stopped offering the 'Go Large' plan to new customers in February 2007. The company has paid about $8.4 million in compensation to approximately 97,000 customers.
The Commerce Commission says the fine is reflective of the fact the company is a repeat offender.