Cable.co.uk comments on seismic shift in broadband pricing rules, coming into effect 31 October
- From Monday (31 October 2016) all UK broadband providers will be obliged to change the way they advertise fixed-line broadband packages
- The ruling by the the Advertising Standards Agency (ASA) will force providers to include line rental in the headline price, as well as prominently display any up-front costs
- Original ruling came on 4 May this year, but will not be enforced until 31 October
- Ruling based on findings of research commissioned jointly by Ofcom and the ASA
- Sky and BT have changed the way their costs are advertised today (28 October 2016)
- Commenting on the data, Dan Howdle, consumer telecoms expert at broadband comparison site Cable.co.uk, said: "This change to a more honest pricing policy is a good start, but we have a long way to go yet"
Friday 28 October 2016: Monday 31 October will mark the deadline for UK fixed line broadband providers to comply with a ruling that represents one of the biggest shake-ups the UK broadband market has ever seen.
The ASA ruling forces providers to include line rental in the advertised price, rather than list it as a separate cost, which has been the case up until now.
The decision to force fixed-line broadband providers to comply with these new advertising guidelines was made by Ofcom and the ASA in May this year, after findings of a joint research project, conducted in June 2015, found that 81% of people shown a broadband advert were unable to calculate the total contract cost.
Commenting on Ofcom's findings, Dan Howdle, consumer telecoms expert at broadband comparison site Cable.co.uk, said:
“Even under these new rules, providers are still able to splinter off costs like internet security and whether you’re able to watch your TV service in high definition. It’s the nature of the industry: Providers will always do whatever they can to make things appear cheaper than they actually are.
“But the real elephant in the room here is that, even if we do reach a stage where the prices advertised match those customers actually pay in all cases, broadband remains the only essential utility we buy without knowing exactly what we’re paying for.
"No one pays a flat tariff for a mystery quantity of gas or an unknown number of kilowatt hours, and yet this is exactly the situation with broadband: Advertised ‘up to’ speeds are simply fiction for many.
“Ofcom and the ASA are going to announce possible changes to the way speeds are advertised later this year. It all seems like tremendously hard work just to get the broadband industry to act with honesty and integrity. This change to a more honest pricing policy is a good start, but we have a long way to go yet.
“Providers concerned that these rules somehow pull the claws from their marketing efforts need to ask themselves: If the prices advertised match exactly those customers are expected to pay, and a realistic speed range is offered, would anyone buy any less broadband?”
More on the Ofcom and ASA announcement:
- Ofcom announcement of commencement of work, 11 Jan 2016
- ASA announcement of ruling/results, 4 May 2016
- Actual result of the consumer research conducted by Futuresight, first published November 2015
Highlights from the Ofcom and ASA research:
- Ofcom and ASA set out to assess whether current advertising for broadband was confusing to the average consumer
- They tested whether customers were able to correctly identify and calculate the total cost per month, including line rental, along with any other costs that contribute to the overall cost of the contract, and involved respondents offering in-depth assessment of a representative sample of TV, press and outdoor broadband advertising
- Around a quarter (24%) of the total sample were unable to correctly state the total cost per month, despite viewing the ad twice and being asked to focus on the deal
- Around a fifth (22%) of the sample did not identify the total cost per month correctly, when asked to focus on the deal and state the total cost per month. This was evident for advertising in all four media represented in the research, and particularly so when exposed to multiple deals online and in press advertising (compared to single deals in other tested media)
- Almost a quarter (23%) of the total sample focused on and noted the total cost per month correctly in their spontaneous recall, after their first look at the advertising
- Around half (53%) identified and calculated the total cost per month correctly when asked to focus on the deal and state the total cost per month after the second look (communication test).
The providers that have moved on this so far and what they did:
- 9 August – Vodafone announces it is “abolishing home broadband line rental charges”. It is actually including them in the price of its broadband packages – but only on its fibre products. Its standard 17Mbps package is still advertised as costing £4 plus £18 line rental
- 3 October – TalkTalk switches to what it calls ‘all-in pricing’. It also offers to guarantee no broadband price rises if customers sign up to an 18-month contract. Those not committing to a new contract face increases of around £2 a month. Customers who’ve been with TalkTalk for more than three months are also given the opportunity to take advantage of deals previously only available to new customers
- 24 October – Hyperoptic combines its broadband and line rental fees to a single monthly price. But the headline figures on its deals only last for the first nine months of a 12-month contract. After that, the price of its premium 1Gbps package more than doubles from £31 to £63 a month.
- 26 October – EE becomes the latest provider to fall in line with the ASA’s new pricing policy, merging the cost of broadband and line rental while increasing the underlying line rental cost by £1 a month
- 27 October – Post Office said it would update its website to adhere to the new rules
- 28 October – Sky and BT change the way their costs are advertised, combining their fees into a single monthly price
Notes to editors
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Dan Howdle has been plugged into the attitudes of UK broadband, TV and mobile customers for over two decades, running research fieldwork both nationally and internationally on behalf of the biggest players in the industry. Dan is now consumer telecoms analyst at Cable, as well as more formally operating in the role of its Director of Communications and Content.
An experienced broadcaster, commentator and writer, Dan has appeared on BBC TV and radio, ITV, Sky and in the national papers. Dan has advised Ofcom on issues surrounding service quality, administered Cable’s Broadband Service Quality Awards and sat on the panel of judges for the Internet Service Providers Association annual awards.