Who: Advertising Standards Authority (“ASA”), Ofcom
Where: UK
When: late January 2016
Law stated as at: 17 February 2016
What happened:
Broadband has been under the spotlight in January 2016, with Broadband price claims research commissioned by Ofcom and ASA giving cause for deep concern and Ofcom publishing a “Voluntary Business Broadband Speeds Code of Practice”.
ASA and Ofcom’s research into broadband pricing
The ASA and Ofcom have released the findings of their joint research into the advertising of broadband prices. The overall finding is that the approach currently taken by broadband providers in their ads is likely to confuse and mislead customers as to the actual cost of the broadband service.
The research tested consumers’ understanding of how broadband prices were presented in typical ads, particularly those which feature the price of the broadband alongside the monthly line rental. Amongst other finds, the research revealed that:
- only 23% of participants correctly identified the total monthly cost after the first viewing of the sample ads;
- 22% were still not able to correctly identify the total cost per month after two viewings of the sample ads – proportionately, if reflected across the UK population of fixed broadband subscribers, this would mean that 4.3 million UK households would be unable to work out what they would be paying;
- 64% of those who couldn’t identify the cost after two views thought the headline price for the broadband element constituted the total cost and did not appreciate that line rental costs would also be applied; and
- 74% of participants believed information about one-off and on-going costs was either fairly or very unclear.
Ofcom publishes Voluntary Business Broadband Speeds Code of Practice
On 26 January, Ofcom released its Voluntary Business Broadband Speeds Code of Practice, which aims to ensure that business customers purchasing broadband services are provided with more detailed and transparent information on broadband speeds.
The code has been signed up to by a number of broadband providers, who collectively commit to adhere to the principles set out in the code regarding information at the point of sale, managing speed-related problems and allowing customers to cancel broadband contracts without penalty in the event that speeds fall below a minimum threshold.
Why this matters:
Broadband is clearly an area of focus for the regulators at the moment. Broadband service providers who are advertising their services need to ensure that they are as transparent as possible to avoid being clamped down upon.
The ASA and Ofcom have said that they will be asking broadband providers to amend their advertising approach so as not to mislead customers by 30 May 2016. While the regulators have said that they remain open-minded as to how broadband prices are advertised, they have made the following suggestions:
- advertise an all-inclusive up-front monthly costs (i.e. do no separate out line rental);
- give greater prominence to contract length and post-discount pricing; and
- give greater prominence to up-front costs.
Although further guidance may be forthcoming in the near future, broadband providers would be well advised to bear these suggestions in mind in their advertising going forward.
