The Office of Communications ("OFCOM") has issued new guidance to communications providers to improve consumer understanding of the technology used to provide broadband services, published 13 December 2023 (the "Guidance"). OFCOM wants to ensure that consumers of phone, TV and broadband services, including small businesses and charities, are receiving clearer information and are treated fairly, which includes ensuring consumers are empowered to make the choices which are right for them. This short blog discusses the context in which the new guidance was made, what the new guidance states and other changes which OFCOM is proposing to make.
Confusing terminology in marketing materials
OFCOM is the regulator for the communications services, including phone, TV, and broadband services. It launched a consultation in March 2023, which closed in May, inviting responses on its proposal for new guidance to improve the information provided to customers. Alongside the Guidance, OFCOM released a statement setting out the background and an overview of OFCOM's research and work to date relating to broadband information (the "Statement").
The OFCOM research found that a quarter of fixed broadband consumers - individual persons, charities and small and medium-sized enterprises - were not confident understanding the language and terminology used by providers. The Statement noted that other research had found similar results. For example, CityFibre found 54% of consumers do not understand that 'fibre broadband' includes a mix of different technologies.
The Statement noted that providers do not use clear and unambiguous terms to describe their services. For example, some providers use the term 'fibre', which OFCOM considers ambiguous since it could refer to several technologies. Only 46% of consumers who reported being on fibre to premises were living in areas where that was available, indicating confusion regarding the underlying technology used to deliver broadband services.
OFCOM does not believe the information being provided on the underlying technology is sufficient, that the distinction between fibre and full fibre is not currently made by all providers and information on the different technologies is not easily available on websites when searching for deals nor at the point of sale. Potential harms were therefore identified, resulting from consumer confusion. Information on the underlying technology is important since it can have implications for performance and in meeting the consumers need.
What is the new Guidance?
OFCOM’s General Conditions of Entitlement are regulatory conditions which all communications providers must comply with if they wish to provide communication services in the UK. Part C of the general conditions set out what information consumers – defined as "Relevant Customers" in the Guidance - should receive at different stages of purchasing such services, to be able to make informed decisions.
This Guidance has been issued under general conditions C1 and C2 and is intended to complement the pre-existing guidance on contract requirements, published in June 2022, under General Conditions C1 and C2.
Broadband providers should ensure that they use clear and unambiguous terms to describe its broadband services. Specifically, providers should:
- Give a short description of the underlying technology of each broadband product offered on its website at the point of sale, in the contract information and in the contract summary;
- Not use the word 'fibre' on its own to describe the underlying technology as this is ambiguous (though providers can use the term 'fibre' in product names);
- Give a more detailed explanation of the underlying technology, in a form that is accessible and easily understood, so customers can understand what it means for them.
The Guidance is to apply from 16 September 2024, giving broadband providers nine months to implement the changes. Providers should ensure that clear terminology is used in both service descriptions, pre-contract information and marketing and promotional materials.
New OFCOM rules on price rises
Broadband providers should be aware that OFCOM is proposing a ban on inflation-linked price rises and price rises that are set out in percentage terms in contracts.
Providers would instead need to set out the price rise up-front in pounds and pence where the contracts provide for any such price rises during the contract period, ensuring consumers are certain about the cost of their contract before signing up to it. Providers would need to also set out when any changes in monthly price will occur. Again, this will need to be drawn to the customers attention before being bound by the contract.
The consultation states that as of April 2023, four in ten broadband customers and over half of mobile customers were on contracts whose terms allowed for an annual price rise linked to future inflation plus an additional percentage, typically 3.9%. OFCOM estimates these number may grow further to around six in ten of both broadband and mobile customers as Three and Virgin Media apply inflation linked price rise terms to more contracts during 2023 and 2024.
OFCOM is consulting on this until 13 February 2024 and plans to publish its final decision in spring 2024, with the intention that the new rules would come into effect four months after that publication. Broadband providers could therefore find that the new rules with regards to inflation-linked contract price rises come into effect at the same time as the Guidance.
As well as staying up to date, broadband providers should ensure that they begin to implement the Guidance before the deadline of 16 September 2024. OFCOM will investigate providers where they have failed to comply with any guidance, including where that guidance contains specific provisions relating to contract information and contract summaries. You can read more about OFCOM enforcement action under the June 2022 guidance mentioned above in our blog here.
If you have questions on the application of this new OFCOM guidance or the proposed ban on inflation-linked contract price rises, please get in touch with Martin Sloan or Jennifer Murphy.
