UK telcos ordered to be clearer about mid-contract price increases

Bill Contract Tear

The recent prices rises imposed on UK subscribers have not gone down well, so the Committee of Advertising Practice has published new guidance on related advertising.

The typical price increase passed on to customers of operators and ISPs in April of this year was 14.4%. Their contracts will have had a clause entitling their provider to increase prices by the rate of inflation plus 3.9% at the start of every tax year. But nobody reads the small print, do they? So the main controversy came from the surprise of this significant price hike, especially for people on flat rates that they may have assumed would apply for the length of their contract.

There wasn’t a whole lot the Committee of Advertising Practice (CAP), which writes the advertising codes enforced by the Advertising Standards Authority (ASA), could do, since the rises were contractually legitimate. But the new guidance it has just published offers a number of recommendations that, if ignored, may result in ASA action against the company in question.

In summary, ads are less likely to mislead consumers when:

  • 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.
  • Price claims are qualified with equally prominent information alerting consumers to the presence or possibility of a mid-contract price increase
  • The details of what the increase will be based on are featured prominently relative to the price
  • Inflation terminology is presented in a way that is clear and simple to understand.
  • They include the full amount the consumer will pay after the increase, once the relevant rate is known
  • They make clear where terminating a variable contract due to a price increase will impact other linked services.

The CAP conducted an extensive consultation of telcos and other industry stakeholders in the process of drafting the guidance, all of which you can read here. There are too many to neatly summarise but it seems like the biggest advertisers are understandably the most reluctant to festoon their ads with small print and talk of CPI, etc. On the other hand, it seems right that they should not be allowed to even imply prices will be static over the course of a contract when that’s not the case.

Altnet Hyperoptic has long been a vocal critic of this sort of thing, making a marketing virtue of not imposing mid-contract price rises. It was one of the respondents to the consultation lobbying for even stricter rules on how they are communicated and seems to be moderately happy with the outcome.

“This is the beginning of the end for mid-contract price rises,” said Hyperoptic’s Policy Director, James Fredrickson. “Broadband advertising rules have allowed these price hikes to be kept in the small print, leaving millions of customers unaware of what they’re really signing up to. With 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.”

The first claim seems like a claim too far but hopefully they will at least have to be much more transparent. Fredrickson’s last statement refers to the fact that the guidance won’t take effect for another six months, during which lots more people could sign up to contracts while being insufficiently aware of how prices could go up soon after. The CAP says that time is needed to make changes to ad campaigns.


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