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Telecom has admitted a software error has caused over-counting of broadband usage since November - affecting 35,000 customers who will be now be offered compensation.

"This fault has emerged over the last 6-7 months since November and it has probably affected seven per cent of our total base," said Telecom retail chief executive Alan Gourdie.

"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."

Gourdie said the fault, which was fixed last Friday, had progressively developed across a number of the network's broadband radius access servers.

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