Introduction

We reported in July 2011 that Ofcom, the independent regulator and competition authority for the United Kingdom communications industries, announced that the disparity between actual and advertised broadband speeds had increased, identifying the fact that actual speeds were, on average, 8.2Mbit/s slower than what had been advertised. Please click here for a copy of this Client Advisory.

The Committee of Advertising Practice (CAP) and the Broadcast Committee of Advertising Practice (BCAP), the committees responsible for writing and maintaining the advertising codes, have now released two Help Notes on the 'Use of speed claims in broadband advertising' and the 'Use of 'unlimited' claims in telecommunications advertising'. The Help Notes are not binding, but instead are intended to help the Advertising Standards Agency (ASA) interpret the advertising codes of practice for both broadcast and non-broadcast media. The ASA is the United Kingdom's independent regulator of advertising across all media, which from 1 March 2001 has included marketing on websites.

The media scrutiny around broadband advertising continues to be a hot topic in the United Kingdom. This stems from the concern that misleading advertising has fallen foul of the Consumer Protection from Unfair Trading Regulations 2008 and the Business Protection from Misleading Marketing Regulations 2008.

Use of Speed Claims in Broadband Advertising

  1. Speed Claims

The first Help Note states that where providers make a numerical speed claim that is likely to be understood by consumers as the maximum speed attainable by their service, the provider should be able to demonstrate that the speed is achievable for at least 10% of the relevant customer base. This guidance is stated to apply regardless of whether the speed claim is made in an advertising communication or as part of the name of the service.

  1. Qualifying Speed Claims

In a move that will not entirely satisfy Ofcom, which was concerned that the term was misleading, the Help Note has confirmed that where some customers' maximum speeds fall below the advertised maximum, that figure must be prefixed with the words 'up to'. However, where factors such as traffic management are likely to significantly lower the claimed maximum speed for some customers, information on such factors should be clearly set out in the marketing material. Any qualifying wording must be expressed clearly and prominently, and must avoid technical language that may not easily be understood by consumers.

Moreover, where a factor is so serious, such as to cause a significant proportion of an ISP's customers to receive a maximum speed that is so much lower than the advertised maximum that it prevents those customers from conducting online activity in accordance with their reasonable expectations, further qualifying information must be included. This information should notify consumers of the likelihood of the service not being able to meet their expectations.

  1. Other Claims

The use of terms such as 'superfast' to describe a broadband service will also be covered by the Help Note. In these circumstances, the advertiser must include qualifying wording if the conditions above are satisfied.

It is also interesting to note that the guidance applies to upload speeds as well as download speeds. The growing trend for internet users to store content online and the consequent development of cloud computing services such as 'iCloud', has meant that uploading has assumed a position of increased importance. Accordingly, consumers are likely to apportion greater attention to upload speeds advertised by ISPs, meaning that these may soon come to be advertised as widely as download speeds. The Help Note's inclusion of such rates is therefore welcome.

Use of 'unlimited' Claims in Telecommunications Advertising

The second Help Note states that marketing communications must not mislead the average customer about the benefits or results that might be expected from an 'unlimited' telecommunications product or service. However, it still provides scope for providers to implement traffic management polices where certain thresholds are met.

The advertising of 'unlimited' telecommunications products or services will tend to be permitted where the (i) user does not incur an additional charge or suspension of service as a consequence of exceeding any fair usage threshold and (ii) any limitations that impact the speed or usage of the service are only moderate and are explained in the relevant advertising material. It is important to note that a key exception set out in the Help Note is that providers will still be able to subject 'unlimited' products and services to subscriber-based and application-based traffic management policies, network-wide traffic management policies, and traffic management mechanisms that are under the auspices of a fair use policy.

Conclusion

CAP and BCAP's guidance is scheduled to come into effect on 1 April 2012. It is intended that the greater clarity afforded by the Help Notes in relation to the advertising of broadband products and services will protect consumers from purchasing broadband products that fail to deliver a service that is compliant with their reasonable expectations. Ultimately, therefore, the effective enforcement of this guidance by the ASA may help to promote the delivery of more consistent broadband services generally. However, the Help Notes will not eradicate all complaints regarding broadband advertising. In particular, the threshold for speed claims is relatively low (i.e. 10%), the guidance does not seek to prevent the use of 'up to' wording and 'unlimited' products and services are still subject to a provider's traffic management policies.

It is hoped that the increased regulatory focus on broadband advertising will eradicate some of the misleading advertising that the United Kingdom market has recently seen. It will be interesting to see how ISPs the ASA behave in this fiercely competitive market.