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News broke late last week that the ASA’s (Advertising Standards Authority) and Ofcom’s recent joint study into customers’ understanding of advertised broadband pricing has found it is ‘likely to mislead’ customers and in response they plan to impose a number of changes on all ISPs from 30th May 2016.

The suggested changes are as follows:

– Advertise all-inclusive up-front and monthly costs; no more separating out line rental

– Greater prominence for the contract length and any post-discount pricing

– Greater prominence for up-front costs

Whilst we agree there is an issue with some ISPs potentially misleading customers by not clearly detailing the ‘hidden’ costs, contract lengths and post-discount pricing, we feel the proposals from the ASA and Ofcom will cause a number of problems for the channel who they have once again not considered when developing this plan, instead focusing solely on combatting the questionable advertising practices of the major UK ISPs.

This echos the problems caused when the ASA and CAP (Committee of Advertising Practice) introduced new rules around the advertising of broadband speeds, which also unfairly penalised smaller providers by requiring ISPs to advertise speed based on the actual speed achievable by 10% of their customer base. This had obvious disadvantages for many smaller ISPs with much smaller datasets to calculate their samples from when compared to the major, national providers.

Yet again, to counteract a problem which is in the main being caused by the larger mainstream providers, the smaller ISPs could now be unfairly penalised due to the ASA and Ofcom’s lack of understanding of the UK’s wholesale channel-based broadband market.

We completely agree that contract length and post-discount pricing should be more prominent on adverts to make it easier for customers to compare packages. We also agree that where possible all up-front costs should be detailed, although this could also cause problems because the costs can vary dramatically depending on how the customer moves to the new provider (e.g. whether they benefit from an often free of charge migration or require a potentially costly new installation and new hardware etc).

However, we have particular issue with the proposal to “Advertise all-inclusive up-front and monthly costs; no more separating out line rental”. We agree that where line rental is provided as part of the package offered by the broadband provider, it should be included in the headline pricing. However that often isn’t the case and also often isn’t required or even desired by the customer. Whilst we don’t yet know the full details of the plans, this suggests that all broadband pricing must include line rental. Potentially this forces ISPs to provide ‘bundled’ services, which many either can’t or don’t want to do. Most importantly, restricting choice for consumers in this way who may not want line rental from the same supplier is bad news for consumers – they should have the flexibility to choose shouldn’t they?.

By at the very least ‘encouraging’ the adoption of ‘bundled’ services, the ASA and Ofcom could be unwittingly increasing costs and restricting choice for consumers who may be sold higher cost line rental services as part of the new ‘bundled’ headline price.

This proposal will also be subject to further complications and confusion when we consider FTTP/H based services which often don’t require any line rental at all. How will these services then compare and be explained to consumers?

Our main concern and disappointment is that once again the ASA/Ofcom strive to apply ‘one size fits all’ type proposals to solve a market problem that has arguably been caused by the larger mainstream providers. While they typically focus almost solely on price,  the smaller providers more often than not focus on other key factors such as quality, reliability and added value.

This is certainly an approach we encourage our own channel partners to adopt. Rather than trying to compete against major ISPs solely on price, we urge them to find their own differentiators and use these as their USP (Unique Selling Point). Whether that be quality of technical support, service reliability, additional consultancy services etc.

Is this a major industry problem?

Out of 23.7 million fixed broadband line users (at 2014 according to Ofcom’s Communications Data Report Data of August 2015) the study these proposals are based on sampled a whopping 300 consumers!

Whilst we don’t dispute there is an issue with customers’ understanding of current broadband pricing adverts and we agree something should be done to tackle this, we feel a larger and more representative sample would have been useful, especially as these proposals will potentially have a major impact on the industry.

Similarly, the timescales for the implementation are short to say the least. The ASA claims to be “open minded as to how pricing should be advertised so as not to mislead consumers” and claims they are only at the early stages of the ‘process of engagement’ but as they expect to introduce the final plans by 30th May 2016 they’re not leaving much time for further consultation!

ISPA appears to echo our concerns, stating: “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.”

Have your say!

How do you expect the new proposals will impact on your business and your customers? Do you currently provide line rental as part of your solution and how do you advertise the pricing? Do you think the proposals are necessary and will they help to solve the issue or do consumers need more education and guidance? Share your opinions by leaving us a comment below.

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