{"id":32920,"date":"2023-06-15T10:20:19","date_gmt":"2023-06-15T09:20:19","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=32920"},"modified":"2023-06-16T12:23:54","modified_gmt":"2023-06-16T11:23:54","slug":"new-uk-ad-rules-to-tackle-mid-contract-broadband-price-hikes","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2023\/06\/new-uk-ad-rules-to-tackle-mid-contract-broadband-price-hikes.html","title":{"rendered":"New UK Ad Rules to Tackle Mid-Contract Broadband Price Hikes UPDATE2"},"content":{"rendered":"

The UK Committees of Advertising Practice (CAP and BCAP) – sister bodies to the Advertising Standards Authority<\/a> (ASA) – have today set out new guidance for how broadband ISPs and mobile operators should communicate mid-contract prices hikes to consumers, which will make such policies clearer and more transparent.<\/p>\n

In an ideal world, consumers who take out a new broadband or mobile contract would enjoy a fixed monthly price for the entire length of their term. But as we all know, many communication providers prefer to shift some of their risk on to consumers by adopting a policy of annual price hikes – regardless of whether or not you’re still inside an existing contract term.<\/p>\n

NOTE:<\/strong> CPI and RPI (Consumer \/ Retail Price Index) are general measures of inflation (i.e. the increase in the prices that we all pay for goods and services), which is often expressed as a % percentage.<\/div>\n

Some providers approach this by doing a fairly static price increase each year, which can sometimes trigger Ofcom<\/a>’s rule on mid-contract hikes and thus enable you to exit your contract penalty free. In this case, you won’t know what the increase will be beforehand or when it might occur, until they announce it (although rises of 5-6% are common).<\/p>\n

However, most of the biggest providers (e.g. BT<\/a>, EE<\/a>, TalkTalk<\/a>, Vodafone<\/a> etc.) write a policy into their terms that enables them to increase their prices each year by nearly 4% plus the rate of annual inflation (CPI or RPI) – as set on a particular month, which results in huge inflation busting hikes. But this does give customers some transparency over how big the hit will be, albeit while sometimes removing the ability to exit your contract penalty free (i.e. Ofcom<\/a> deems you to have been aware of the future increase when you signed-up).<\/p>\n

The catch is that, in both approaches, such policies are often hidden away in the small print and many consumers can find them confusing (e.g. a lot of people aren’t familiar with how ‘inflation<\/em>‘ actually works or the meaning of terms like CPI or RPI). The outcome is thus the same for everybody, consumers who are still within an existing contract will suddenly find themselves paying more than what was originally promoted when they joined.<\/p>\n

The ASA also noted that they’ve previously received complaints in the past from consumers who saw a monthly price for a tiered telecom contract advertised shortly before the annual price increase in April, meaning that the initial price only applied for a month or two.<\/p>\n

The New Guidance<\/strong><\/span><\/h3>\n

The ASA (inc. CAP \/ BCAP) does not have the power to ban mid-contract hikes but, in the absence of Ofcom<\/a> and the Government taking a firmer stance, they can impose new guidance that would effectively require communication providers to be clearer and more transparent with how they present their packages and prices. We should point out that Ofcom are now reviewing the transparency of mid-contract hikes (here<\/a>).<\/p>\n

In keeping with that, CAP and BCAP launched a consultation last year (here<\/a>) on the development of new guidance to tackle this problem, with a view to making changes that would avoid providers “misleading consumers<\/em>“. As a result, mobile and broadband providers will now need to follow much tighter guidance, which will make it harder for them to promote their services without also being clear about how future prices will change.<\/p>\n

“In short, it is crucial that information about any future price increases are clear to consumers in the ad itself, to avoid creating a misleading impression that the initial stated price will remain the same throughout the contract period<\/em>,” said the ASA.<\/p>\n

Key Principles of the New Guidance<\/strong><\/span><\/p>\n

The new guidance makes clear that ads are less likely to mislead consumers when:<\/p>\n

\u27a4 They do not state or imply that a price will apply for the full minimum term of the contract, if that is not the case \u2013 for example, claims such as \u201c\u00a3X for X months\u201d or \u201cfixed for X months\u201d are unlikely to be acceptable if the price is due to rise and any subsequent qualifying information is likely to contradict rather than clarify the claim.<\/p>\n

\u27a4 Price claims are qualified with equally prominent information alerting consumers to the presence or possibility of a mid-contract price increase.<\/p>\n

\u27a4 The details of what the increase will be based on are featured prominently relative to the price.<\/p>\n

\u27a4 Inflation terminology is presented in a way that is clear and simple to understand.<\/p>\n

\u27a4 They include the full amount the consumer will pay after the increase, once the relevant rate is known.<\/p>\n

\u27a4 They make clear where terminating a variable contract due to a price increase will impact other linked services.<\/p><\/blockquote>\n

Such measures can sometimes have a significantly positive impact upon the market, such as when the advertising authority required fixed line broadband providers to present a single upfront cost for setup charges and to stop separating out the cost of phone line rental from broadband connectivity. Not to mention their efforts to limit abuse of “unlimited” terminology. Hopefully, the same may be true this time too.<\/p>\n

The catch is that some providers may not really start to take note of these changes until the ASA begins enforcing the rules with bans. As ever, ads are assessed by the ASA on a case-by-case basis, taking into account factors including the likely audience, medium and context in which the ad appears. But the outcomes of their investigations often arrive months after the advert itself has finished its run, although the provider does suffer some negative publicity.<\/p>\n

All told, it may take a fair bit of time before we start seeing some rulings based on the revised guidance, assuming of course that some ISPs will inevitably fail to adapt (very likely as the ASA is considered to be somewhat of a soft touch). In our experience, it usually takes the market a year or so to fully adapt to new ASA guidance, once it’s introduced.<\/p>\n

But overall, today’s changes still represent a positive step forward, even though it might not be the ban on mid-contract hikes that many people would like to see. We should add that not all communication providers play the mid-contract hikes game. A good number of ISPs, particularly smaller players, often adopt much more static pricing that rarely changes.<\/p>\n

The guidance will take effect on 15th December 2023<\/strong>, following a six-month grace period to allow advertisers to makes necessary changes to their campaigns.<\/p>\n

UPDATE 10:40am<\/strong><\/p>\n

The full guidance has now been published online<\/strong><\/a>, which also includes details of the responses from BT<\/a>, Sky Broadband<\/a>, INCA, Hyperoptic<\/a> and others. Speaking of Hyperoptic<\/a>, they’re the first ISP to react this morning.<\/p>\n

Hyperoptic<\/a>\u2019s Policy Director, James Fredrickson, said:<\/strong><\/p>\n

“We are delighted that CAP is bringing significantly improved transparency to broadband pricing. This is an outcome we have been actively campaigning for. For too long, broadband advertising rules have allowed mid contract price hikes to be kept in the small print, leaving millions of customers unaware of what they\u2019re really signing up to. Now those days will be over.<\/p>\n

Whilst today\u2019s CAP announcement grants a 6 month grace period, given the high rate of inflation and squeeze on household incomes, Government should be pushing all operators to comply with these new rules with immediate effect.”<\/p><\/blockquote>\n

UPDATE 16th June 2023<\/strong><\/p>\n

We’ve had a comment from the boss of Zen Internet<\/a> too.<\/p>\n

Richard Tang, CEO of Zen Internet<\/a>, said:<\/strong><\/p>\n

“A step in the right direction, which will hopefully result in consumers being clearer on what they will pay, and clearer that the headline price advertised by all the big broadband providers is not the full story.<\/p>\n

In 28 years of trading, Zen has never engaged in mid-contract price hikes, and we have no intention of doing so in the future.”<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

The UK Committees of Advertising Practice (CAP and BCAP) – sister bodies to the Advertising Standards Authority (ASA) – have today set out new guidance for how broadband ISPs and mobile operators should communicate mid-contract prices hikes to consumers, which will make such policies clearer and more transparent.<\/p>\n","protected":false},"author":1,"featured_media":32922,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[1,1645],"tags":[99,36,38],"class_list":["post-32920","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uk_isp_news","category-key_uk_isp_industry_developments","tag-asa","tag-ofcom-regulation","tag-politics"],"share_on_mastodon":{"url":"","error":""},"yoast_head":"\nNew UK Ad Rules to Tackle Mid-Contract Broadband Price Hikes UPDATE2 - ISPreview UK<\/title>\n<meta name=\"description\" content=\"The UK Committees of Advertising Practice (CAP and BCAP) - 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