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January 21, 2016updated 31 Aug 2016 9:50am

ISPs hit with new ASA rules over broadband price ads

News: Study reveals that consumers are unable to identify the total cost of an offer.

By Alexander Sword

Broadband companies face a crackdown on their advertising practices, as misleading advertising leaves consumers unaware of the true cost of most broadband deals.

The Advertising Standards Authority (ASA) is set to bring in changes to the way broadband pricing is advertised by 30 May 2016 after a study, commissioned jointly with Ofcom, revealed consumers struggled to understand existing broadband advertising.

The draft measures call for all-inclusive up-front and monthly costs, with no separation of line rental. They also demand greater prominence for the contract length and any post-discount pricing, as well as up-front costs.

Only 23 percent of people are able to correctly identify the total cost per month after viewing an ad and being asked to recall as much information about the offered deal as possible, according to the study.

Asked the same question, 34 percent recalled pricing information but were only able to give a partial or incorrect figure for the broadband service or line rental costs.

After a second viewing 22 percent of participants were still unable to correctly identify the total cost per month.

The research also found that 64 percent of these people thought that the headline price for broadband in a package was the total cost, with no additional applicable costs such as line rental.

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Overall, 81 percent of the sample was unable to calculate the total cost of a broadband contract while 74 percent believed information around one-off and on-going costs after an introductory period was either fairly or very unclear.

Currently, prices for different elements of the offer, such as the broadband, introductory offer, line rental, contract length, are presented separately. The ASA views this as the source of the confusion revealed by the survey.

ASA Chief Executive Guy Parker said: "It’s essential we make sure people aren’t misled by pricing claims in broadband ads. That obviously wouldn’t be good for them, but nor would it benefit broadband providers, because advertising works better when it’s trusted.

"We’ll now be moving quickly, working alongside broadband providers, to clarify the presentation of price information."

CBR contacted BT, the UK’s largest fixed broadband provider, which did not issue a comment but referred to the ISPA’s answer on the subject, as follows:

"ISPA welcomes the ASA research into how consumers engage with broadband adverts, but believe that more detailed research is needed to corroborate the survey findings.

"Price is only one factor when a consumer chooses a service and the engagement with an advert is only one part of a purchasing decision – we urge the ASA to consider the whole customer experience when consulting on changes to its advertising guidelines.

"The UK has a highly competitive broadband market and informed and empowered consumers are an important part of this. This is supported by Ofcom’s own figures that show the UK benefits from some of the most competitive broadband pricing.

"Beyond adverts, ISPs provide clear information if consumers engage more closely with them, for example by going to their website, visiting a shop, working with comparison and consumer websites or by calling the providers. This has not been reflected in the survey which is based on a small sample size with some of the reviewed adverts only being shown to 8 participants."

A Sky spokesperson responded to the findings: "We work hard to ensure customers are fully informed when we’re marketing Sky’s products and services and our advertising adheres to all industry guidelines.

"Ofcom’s recent customer service report showed our customer satisfaction levels are the highest in the industry. We will review the new research and work with the ASA to ensure our advertising is in line with any new guidance it introduces."

Paolo Pescatore, Director at CCS Insight, welcomed the changes: "In the consumer segment this change is very much needed. We’ve seen significant marketing and promotional activity over the last 12 months. And it is quite complex for consumers to make sense of it all. More so given the slew of services providers are adding. This will only proliferate as a result of multiplay and convergence."

Pescatore noted that the SME market is "quite different and doesn’t face the same level of marketing activity."

"Invariably there are very small price movements and promotional activity. However, this could change this year as providers seek to offer and push more converged multiplay offerings."

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