The Auckland District Court has fined $500,000 to Telecom New Zealand for infringing the Fair Trading Act to woo customers.

The latest verdict is being seen a warning for other operators who have been placing misleading advertisements about their offerings despite the Commerce Commission's repeated warnings against such exercises.

Telecom has been found guilty to 17 charges including one related to advertising of Xtra's Go Large broadband plan in 2006 in which the firm claimed "unlimited data usage and all the internet you can handle".

Telecom would pay $44,000 as compensation to 1700 eligible Go Large customers who suffered due to misleading advertisements where the firm exaggerated the benefits of its broadband plans. Telecom has already voluntarily paid around $8.4 million to around 97,000 to the affected customers besides making major changes in its broadband portfolio.

Seeking apology from customers, Ralph Brayham, direct of home service at Telecom, added, "Telecom accepts and regrets that some of this advertising at the time was misleading. We failed to adequately disclose various qualifications to our Go Large and Unleashed plans and we apologize for this."