Reed Smith Client Alerts

A new research study conducted by Ofcom and the Advertising Standards Authority (‘ASA’) has ruled that the current industry-wide approach to broadband price advertising is “likely to confuse and mislead” consumers.

The study surveyed 300 participants and focused on the presentation of broadband ads and consumers’ understanding of additional pricing elements, such as introductory deals, one-off installations, discounts, activation fees, delivery charges and the length of the contract.

In the past year, broadband price advertising has been a hot topic. The ASA reported that in the past year it received 730 complaints about 555 broadband ads, and in July 2015 the Citizens Advice Bureau published research showing that consumers can pay up to six-and-a-half times more a month for broadband than advertised, and called on the ASA to “set new clear rules” for broadband price advertising.

Some facts and figures from the study

  • Only 23% of participants could correctly identify the total cost per month of an advertised deal from a first viewing of the ad, without being prompted.
  • 34% recalled pricing information, but their recollection was limited and often incorrect, indicating that this needs to be much clearer or prominent in the ad.
  • 22% could not correctly identify the total cost per month after seeing the ad for the second time.
  • 64% of those who were not able to identify or calculate the total cost per month, despite a second review, understood the headline price to be for the broadband element of a package excluding line rental.
  • 81% were not able to calculate correctly the total cost of a broadband contract when prompted.
  • 74% of the participants believed that information about one-off prices and on-going costs after an introductory period was not clear.

The new approach The ASA claims that it remains “open minded as to how pricing should be advertised so as not to mislead consumers.” However, it has made a few suggestions to broadband providers to set out all-inclusive up front and monthly costs and give greater prominence for contract length and post discount pricing.

Date for the diary Broadband providers should now prepare themselves for a discussion with the ASA, as it has announced that it will be seeking to review individual pricing packages with providers in the coming weeks and months. The ASA will publish its final recommendations by 30 May 2016.


Client Alert 2016-023