Broadband and Telecoms: Pricing and Charges


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Published
Apr 4th '24
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General pricing information

Committee of Advertising Practice (CAP) Advertising Guidance on ‘telecommunications price claims’ was drafted to assist marketers with how to present their pricing claims in this sector. Whilst the technology has moved on significantly, the themes included are still of relevance.

 

  • Exaggerated savings claims 

It discusses how price claims should not exaggerate the availability or extent of benefits likely to be obtained by consumers, and how ‘up to %’ and ‘from £XX’ savings claims should be utilised in ads. However, the CTSI Guidance for Traders on Pricing Practices has since been published, and the Advertising Standards Authority (ASA) is now likely to have regard to the rules within the CTSI Guidance when considering such claims.

 

Further information on the use of ‘up to’ and ‘from’ is available at Prices: General and Promotional savings claims.

 

  • Compulsory charges

It also makes clear that marketers should explain any charges or conditions likely to affect a consumer’s understanding of a price claim, and provides examples explaining when prominent qualifications are likely needed. However, in 2016, a newly updated approach setting out how to present compulsory fees and charges was implemented (see below under ‘Compulsory charges’).

 

  • Price comparisons

The guidance details in depth how price comparisons should be set out, including how to compare bills, savings claims for call patterns, and tariff comparisons. It also explains how marketers should not compare their promotional prices with their competitors’ usual prices if that competitor has a more comparable promotional offer running, and that ads comparing two usual prices when a competitor has a promotion running should make the existence of the promotion clear.

 

To illustrate this point, in 2023, Sky compared a promotional price for one of their broadband packages with the usual price of an equivalent package offered by BT, despite BT’s package being on offer when the ad appeared. The ASA deemed that in the absence of any clear information indicating differently, consumers would understand the BT package was only available at the standard price. The ad was deemed misleading (Sky UK Ltd, 26 July 2023).

 

Price comparison claims also need to be capable of substantiation. In 2024, the ASA found that Zzoomm’s claim that consumers could save over £240 a year by switching from BT to their broadband offering lacked the required substantiation, as the potential saving had been extrapolated over 24 months, despite their being no guarantee that the consumers would be able to take advantage of the offered price for the final 12 months of their contract (Zzoomm plc, 10 January 2024).

 

Further information on price comparisons is also available, as is further Advertising Guidance on retailers’ price comparisons. Online advice focusing on comparative claims in general can also be accessed. More information on the use of comparisons in broadband and telecoms claims is available at Broadband and telecoms: comparisons [INSERT NEW LINK].

 

  • Reference or ‘usual’ prices

Any reference price used to advertise potential consumer savings as part of a promotion must represent a genuine established selling price. Reference prices must not mislead. These issues have been considered in recent rulings against both Sky and Voxi.

 

In 2021, Sky advertised Sky TV and Superfast Broadband for a combined price of £39, with a crossed out ‘£52’ displayed beside this offer. The ASA considered consumers would understand this to represent a £13 saving against the usual price of buying Sky TV and Superfast Broadband together. In fact, the package price was £39, regardless of the promotional period. The £52 figure represented the cost of buying both TV and Broadband individually. The ASA concluded £39 was the established selling price of buying the package, and that the ad misled, as it implied a genuine saving would be made when purchasing the package. There was no genuine saving against a usual selling price (Sky UK Ltd, 17 February 2021).

 

In 2021 Voxi advertised a 12GB data plan for £10 per month. A reference to 8GB had been crossed out, alongside the statement ‘EXTRA DATA’. It transpired the plan was a new one, albeit one that was identical to the plan offering 8GB, save for the difference in data. When considering the pricing history for the plan that had been running up until that point, the ASA found the 8GB for £10 plan had been on promotion more often than not, meaning there was no established selling price against which to make a ‘12GB for £10’ comparison. Given the wording of the ad was also insufficient to make clear that the savings claim was against a future price, the claim was misleading (Vodafone Ltd t/a Voxi, Vodafone, 13 October 2021).

 

Further detail regarding how the ASA will determine whether a price is the usual selling price can be found in both this AdviceOnline and news articles.

 

  • Best or lowest price

This Advertising Guidance on lowest price claims contains various points to consider in respect of such claims, as does Lowest price claims and promises. Advertisers in the telecoms sector should familiarise themselves with these resources, to avoid breaching the CAP Code like Sky did in 2018 when the ASA considered the use of ‘best’ in the context of ‘our best prices’.

 

BT challenged Sky’s ‘Get Unlimited Broadband At Our Best Prices’ claim. The ASA said consumers would understand the claim to mean that the advertised packages were at a lower price than they had been for a reasonable amount of time prior to the offer. Whilst the package prices were the lowest available for the products at the time of the ad, the month before, Sky had offered the product alone at lower prices. As such, the ASA found the ‘best prices’ claim to be misleading (Sky UK Ltd, 21 March 2018).

 

The issue of including contradictory small print as part of ads containing claims such as ‘best price’ and ‘lowest price’ was also considered in 2016 (The Carphone Warehouse Ltd, 3 August 2016).

 

Compulsory Charges

The ASA implemented a new approach to fixed broadband pricing claims in October 2016, with the aim of preventing customers from being misled.

 

By November 2016, the ASA had devised three ‘Key Principles’, which, if followed, are considered likely to produce ads in line with the Advertising Codes:

 

  • Present all compulsory elements of the total financial commitment (up-front costs, ongoing costs and contract length) in close proximity to one another, avoiding undue emphasis on any one element.
  • Present one inclusive price for compulsory up-front costs and an inclusive price for a consumer’s ongoing monthly cost (combining the line rental and broadband cost where line rental is offered by the provider).
  • If an introductory discount period applies to one element of the cost – such as half price broadband for a limited time – the ad needs to make clear the total monthly cost that will apply during and after the discount period, and for how long.

 

In 2017, the ASA clarified that when targeting businesses, advertisers must ensure the overall monthly cost of broadband packages is clear i.e. by merging the monthly cost and line rental into one all-inclusive price, and must ensure all upfront costs that would be paid by most customers are also clear, such as by presenting them together with the total monthly cost (Plusnet plc, 15 November 2017).

 

In 2020, the ASA ruled on the need to make up front costs clear. Complainants contended that Sky ads did not make clear that a set-up fee of £199 applied to existing customers without a Sky Q box. The ASA said that the set-up fees (i.e. up-front costs) were material information required by consumers, and that the information noting this additional charge, ‘Netflix part of Ultimate On Demand Pack. Upfront costs: £20: new customers; up to £219: existing…Prices may change during this period. Usually: £34pm. Kit loaned at no cost. Terms apply’ was likely to cause confusion (Sky UK Ltd, 12 August 2020). Conversely, in 2023, Sky advertised a potential £750 saving when comparing their offering to that of BT’s. BT challenged whether the price comparison was misleading, as they believed a significant proportion of customers would have to pay a £99 installation fee, which had not been factored into the savings claim. Because only those business consumers who were first time users of FTTP broadband would need to pay the £99 installation fee, and because this did not constitute a significant proportion of the total buyers, the ASA said this figure did not necessarily have to be included in the savings claim (Sky UK Ltd, 26 July 2023).

 

For further information on the need to detail all non-optional taxes and fees, see Prices: General and Compulsory costs and charges: general

 

Free claims

Ads must not describe a product as ‘free’ or similar if the consumer has to pay anything other than the unavoidable cost of responding, collecting or talking delivery of the item. ‘Free’ also cannot be used if the consumer has to pay packing, packaging, handling or administration charges.

 

For example, the ASA found in 2012 that the use of the term free in the context of ‘100% guaranteed free handset for everyone’ was misleading, as for those who were required to pay a deposit to secure the handset, the item could not legitimately be described as ‘free’.

 

Conditional purchase promotions, package deals one-off costs and ‘free trials’ are all used to advertise various offerings from telecoms and broadband providers.

 

  • Combined offers: conditional purchase promotions

‘Free’ can be used if customers are required to buy other items, provided the consumer is aware of all the costs they are liable for, the price of the product that must be purchased has been not increased, and the quality of the product the consumer must buy has not been reduced. The ‘free’ item must be genuinely separate from and additional to the item the customer is required to pay for. Ways to evidence this, along with further information, are set out in the Advertising Guidance on free claims.

 

By way of example, in 2015 the ASA investigated numerous ads to consider whether the claim that BT Sport was free was misleading, as consumers were required to either re-contract BT TV and Broadband, or take out a new contract. The ASA determined that the offer was a conditional purchase promotion, and that the ads had to therefore make clear the extent of the commitment consumers must make to take advantage of the ‘free’ offer. With one minor exception, the ads did not make sufficiently clear the extent of the commitment consumers would need to make to benefit from the offer. The ads were misleading. Combined offers: packages

 

Marketers should not describe an element of a package as free if that element is included in the package price, unless consumers are likely to regard it as an additional benefit after being recently added to the package without a price increase.

 

Claims such as ‘free data are common in ads for this sector. Marketers should not confuse the difference between components that are included in the price and those that are genuinely free.

 

An offer is likely to be considered a package if: it offers a combination of features or products for one inclusive long-term price, customers cannot exercise a choice on how many elements of the package they receive for that price, and each element is intrinsic to the quality and composition of the package. None of the elements of a package should be described as ‘free’ If the package price has been calculated to include a certain number of minutes or texts, for example, the term to use is ‘inclusive’, not ‘free’.

 

If an additional element is added to an existing package, without increasing the price or reducing the package’s quality, i.e. ‘sign up by the end of the month and get 50 free texts’, this additional element may be described as ‘free’ for a limited period. Such claims are also often used as introductory offers.  Once that additional element has formed part of the package for a certain period (normally six months), that extra component should be described as ‘inclusive’, not ‘free’. In 2013, the ASA investigated a website offering a ‘free’ phone with particular tariffs. The ASA noted that cheaper SIM-only tariffs were available, while the direct equivalent SIM-only tariff was not available on the same SIM-type as the ‘free’ phone. This demonstrated that the £25 per month included the cost of the phone and upheld the complaint (The Carphone Warehouse Ltd, 20 Nov 2013).Marketers should be wary of how they advertise any price reductions. In July 2012, the ASA ruled that Virgin Media could not describe their TiVo box activation as free on packages where they had stopped charging for it. The ruling highlights that the box formed an existing part of the TiVo bundle, and it should therefore have been described as a price reduction, rather than ‘free’ (Virgin Media Ltd, 18 July 2012).

 

  • One off costs

In 2013, the phrase ‘…BT is the only place to get this award winning Youview box for FREE’ was found to be misleading, as an activation fee of £49 applied to the TV service. The fee was an up-front cost. The ASA found that if the £49 fee had been payable to someone other than BT (i.e. a third-party installer), the claim they were offering the box for free would likely have been acceptable. Given the amount payable depended on whether the ‘free’ box was accepted, and because the additional fee was paid to BT, the use of ‘free’ was deemed misleading.

 

  • Free trials

‘Free’ trial should not be used to describe ‘satisfaction or your money back offers’, or similar. In 2013, a complainant challenged if an internet provider’s ’30 Day Free Trial’ was misleading, as they understood charges would apply from the start of the trial period, and would only be refunded if cancelled within 30 days. The ASA found this type of ‘money-back guarantee’ offer to be inconsistent with the impression given by ‘free’, and deemed the ad misleading.

 

For more information on the use of free claims, see the Advertising Guidance on Free claims, and ‘Use of free’.

 

Mid contract price increases

In December 2023, new Advertising Guidance on the presentation of mid-contract price increases in advertising for telecoms contracts came into force. It details how information about future price rises should be presented in ads for mobile and/or broadband contracts, to avoid consumers being misled. It was designed with ads targeted at consumers in mind, but can be considered for business-to-business advertising too. It applies to both tiered and variable contracts.

 

It contains a series of principles which, if followed, reduce the likelihood of a marketer being found to be in breach of the CAP Code. It aims to prevent consumers being misled, as has been the case in the past.

 

Prior to its publication, the ASA determined that ads for TalkTalk’s broadband service, which claimed the price of broadband was fixed for 24 months, were misleading. Customers were told the price of their packages were increasing during the fixed contract period, despite one of the ads explicitly claiming there would be ‘no mid-contract rises on your Fixed Price Plan’. The ASA disagreed with TalkTalk’s assessment that consumers would not expect to pay a fixed price for the levels of usage in lockdown (TalkTalk Telecom Ltd t/a TalkTalk, 29 September 2021).

 

Similarly, O2 ran ads which made clear that the monthly cost of an advertised iPad and Microsoft Surface Pro X would increase after the first three months. However, the additional pricing information, including information about the mid contract price increase, were insufficiently prominent in the ad. It was determined that the monthly costs after three months and any upfront costs should have been included in the main body of the ad (Telefonica UK Ltd t/a O2).

 

Further information on the principles, and worked examples on how to present price increase information can be found in the Advertising Guidance. Additional information can be found in this news article.

 

Source: CAP

 

About CAP

The Committee of Advertising Practice (CAP) is the sister organisation of the Advertising Standards Authority (ASA) and is responsible for writing the Advertising Codes.

 

Note: This advice is given by the CAP Executive about non-broadcast advertising. It does not constitute legal advice. It does not bind CAP, CAP advisory panels or the ASA. CAP’s AdviceOnline entries provide guidance on interpreting the UK Code of Non-broadcast Advertising and Direct & Promotional Marketing.

 

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