Will broadband providers ever reach agreement on advertising terms
Thursday 24 April 2008 15:43:13 by Andrew Ferguson
The calls for a code of practice either voluntary or mandatory has been raging for some time but some comments from the Ofcom Chief Executive Ed Richards suggest it is getting ever more likely any code will mandatory.
The biggest problem from the consumer point of view will be that if a voluntary code is created providers who disagree with it will be at leisure to opt-out, but conversely a mandatory code needs to ensure it does not pander to just one or two providers and actually addresses the major concerns.
So what are the concerns?
- Advertising unlimited products which have variable speed limits imposed that in some cases are not published anywhere.
- The degree to which traffic management techniques will affect various types of traffic.
- Providers not informing consumers at sign-up time of what sort of connection speed they will most likely receive.
The Guardian ran an item including the comments from Ed Richards and the revelation that something like only 4% of people subscribed to an 'up to 16Mbps' package received that connection speed. This issue of up to speeds is easy to explain with ADSL and ADSL2+ since the maximum connection speed is largely determined by the length of the telephone line. The graph below compares ADSL and ADSL2+ speeds versus their line length and reflects what should be reasonably possible in the UK.
Click image for full size version
BT Wholesale has published estimates of the connection speed spread it expects from the roll-out of ADSL2+ via 21CN. For those with ADSL now a rough and ready estimate of your ADSL2+ speed can be obtained by finding your ADSL connection speed on the graph and the corresponding ADSL2+ speed.
BT Wholesale is also due to update its broadband checker to give connection speed estimates for individual phone numbers, so for providers selling BT Wholesale WBC products there will be little excuse for not educating customers at the time of ordering/regrade. The LLU operators have access to line length information from BT Openreach which some do use. None of the line checkers or estimates, even if you have ADSL running, can be 100% accurate but there are enough tools available for little or no cost to providers for them to always give clear indications.
Of course knowing a line may achieve a connection speed of 6.5Mbps is no good if one provider promises you should connect at a speed of at least 6.5Mbps and another says speeds of up to 6.5Mbps. The latter is probably more truthful, but the average consumer will believe the former.
The unlimited issue is seen as black and white by some, i.e. that if any limit to the amount someone can download exists that the product cannot be called unlimited. This for many includes using traffic shaping to slow peoples speeds down as they use more. There is a clear need for an absolute definition of what unlimited means in terms of broadband. One consensus would appear to be that providers with a fair use policy of around 500GB in a month is reasonable for an unlimited description. Such a large barrier to the description of unlimited will mean it vanishes for all but a small number of LLU operators.
Providers that have hardware in place to police a fair use policy or used that is on customers from the moment they connect should be required to state the various priorities used for traffic. This will allow customers to compare these priorities when choosing a provider, rather than only finding out once signed up and a few weeks into using the connection.
One very annoying problem is where providers have usage limits but do not provide the consumer with an easy way to track this. A good number of providers do this, so it cannot be impossible and for people with devices like games consoles it can be difficult to track their usage. If consumers were informed of their usage with their monthly bill for example, people would gain a feel for their usage levels and understand how their broadband needs are changing over time.
The biggest danger with any code of practice in the broadband world is that it may be out of date very quickly and far too often while a providers advertising adheres to the code, you will find smoke and mirrors taking place on their own product pages and some sales staff promising the earth. To ensure any code of practice is taken seriously there needs to be policing of what goes on, rather than simply waiting for large numbers of complaints from consumers.
The industry has crept into the world of up to 24Mbps broadband and created its own rules for broadband advertising (e.g. use of unlimited) and bodies like the Advertising Standards Authority are bypassed these days by having a simple banner advert that gets you to visit a website that is then not subject to ASA rules.
We could have written a lot less, since the summary is that whatever code of practice appears it must favour the needs of the consumer rather than pander to the needs of an industry that exists to make a profit from broadband.
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"Of course knowing a line may achieve a connection speed of 6.5Mbps is no good if one provider promises you should connect at a speed of at least 6.5Mbps and another says speeds of up to 6.5Mbps."
surely the point here is that in general there will be *no difference* in the speed achieved on a line between ISPs using the same ADSL standard, so any "mine is faster than his" claim is very likely to be nonsense.
Re the Guardian quoting Point Topic - the original data is subscriber only but in general Point Topic are comparing download rates with advertised line speeds, for example they say only 15% of up to 8M customers get 8M but we know from providers like Entanet that a higher proportion get the full 8128 sync speed.
Perhaps more effort is needed to differentiate line speed (like the graph) from download rate on a contended service.
Yes many good points and we urgently need a big shake-up of this industry especially bringing under control the big companies who are using broadband as a marketing tool rather than a service with a minimum set of professional standards. Apart from the speed the pricing structure, the meaning of "unlimited down/upload", standards on traffic shaping and support, and contract periods need to be set. The OFT needs to be much more proactive and lay down some rules on what consumers can expect. Ofcom as it stands now is largely an ineffective and toothless tiger.
OFCOM is not setup to be a consumer nanny and to dictate how broadband is sold in the way you imply - contract periods for example are a matter of consumer choice with half the ISPs offering 1 month contracts.
As proof of just how adaptable ISPs are, Demon for one now uses line length and connection speed as a form of smoke and mirrors to cover up poor network performance.
This will fool the average consumer into thinking there are technical limitations on their connection and there is not much they can do about it because things won't be any faster if they try to change provider.
Clever, hey?
One of the biggest regulatory improvements which could be made would be to ban 12-month contracts.
And also the newly 18 month ones that are creeping in.
"to ban 12-month contracts."
bollocks. The quid-pro-quo of the 12 month contract is free activation and free hardware. What you are suggesting would mean upfront activation fees for everyone - read the Orange story and see if you still think it's a good idea.
No minimum contract terms. No activation fees.
The point of regulation is to regulate so that the market functions appropriately.
Then you don't have to worry about regulating advertising because if people are not happy they can move very easily. So that side of things will regulate itself.
I'm not saying there are not problems with this approach, but they can be thought through.
What am I supposed to be seeing in the Orange story?
Not sure how it applies.
They made a decision to introduce a connection charge knowing it would and intending it to have approximately this effect. And?...
This argument will go on forever, ofcom or someone needs to step in and say hey these are the rules you follow them or you get fined. As simple as that, corporates only language is profits. Get rid of the idea a competitive retail market regulates itself, far from it.
No herdwick, OFCOM are "set" to kowtow to BT. Somehow, this seems...less than useful for actual competition.
Kper - Actually all that's needed is appropriate education in consumer rights. If you are not receving the service advertised or if they change the T&C's unilaterally they cannot hold you to a contractual term.
"not receiving the service advertised" is the difficult bit; and that's sort of the point...
If it is easy and cost-free to switch, the market should become more perfectly competitive, then you don't really have to worry as much about advertising terms.
This would, of course, have other consequences; but I think it would be most effective to focus on regulating contract terms and conditions rather than anything else.
Huh? You're missing the point. These laws allready exist. No further "regulation" is required - people just need to be informed of their rights.
Never mind. I don't mean that to sound dismissive, but comments are limited to 600 characters so I don't fancy my chances of providing an explanation for you which is both sufficiently clear and sufficiently concise. It is important to know one's limitations, after all.
In other words, you can't defend your position. Right.
Hi All
Good story Andrew.
Some action is desperately needed to protect consumers from contention and traffic management that is a big unknown but often very bad.
Dawn_Falcon, you should probably not discount the possibility of a disingenuous opening clause in that second sentence; in which the stress was on the words "for you". Life is short, like the permitted length of comments.
Have you taken any ISPs to court recently for breach of contract; or they you?
To pick up Fireblade40's point, my contention (ha, ha) is that if there are no minimum contract terms, no activation or exit fees, then consumers can protect themselves. Maybe. There would be other consequences and prerequisites.
I've forced three ISP's over the years to cancel their contracts (two for service quality being unacceptable, one for a T&C change) with me.
Your insult is a flat as your position, forcing ISP's into a bad business position is not a good idea when there is allready adequate protection for consumers on this.
(traffic management which is not revealed up front IS a contract-cancelling matter!)
May be a good time to start your consumer education programme, then.
(You've considered the costing of that going forward, and who will pay? Don't believe there is a legal basis for it to come from the regulator's budget.)
So, how did you establish that the 'speed' you were getting was not as advertised?
How long, and how much effort, did it take to reach an agreement with the ISPs?
Interesting that you have had to do it 3 times.
Did you have any problems with debt collection agencies?
And, how do you conclude ISPs would be forced into a "bad business position"?
Uncessary regulation leads to bad business positions, in this case it'd prevent bundling offers for routers and the like (kiss of death to some of the LLU ADSL2 services who currently give each customer the same router for ease of support), prevent adequate cashflow projection, etc.
Taking the first of my experiences, Karoo's ADSL was so slow that AOl 56k dialup was better. Took me two weeks and a single registered letter to cancel.
(I've had problems with debt collection agencys, but due to identity theft from my previous bank!)
Whatever happened to getting things into perspective? Watch a football match = 90 minutes entertainment - cost = £20 ?
Cinema tickets - 2 hours cost =£ 15 ?
Train journey of 100 miles - £70 ?
Or 30 days Internet usage - £ 20
A bargain I'd say - about 3 times lower than three years ago. And still we aren't satisfied
Business needs to maximise its return on investment. Its how/why they employ people. Change your ISP if you don't like the proposition, but - make no mistake - bandwidth charging or traffic shaping is on its way in and there's nothing we can do to stop it 'cause we've had it way too cheap to enable ISPs to continue to subsidise ITV/BBC iplayer etc on what we pay at the moment.
...only because both BT and VM have (completely different) suicidal business models. There's absolutely nothing inherent in it, study different countries and you can see that there are right and wrong ways to do it.
Guess what? We're on the "wrong" side!
Nicely summed up the various issues, and the conclusion would be reasonable, but for Ofcom...
>must favour the needs of the consumer
Ought to read "should but wont" rather than "must". Ofcom's so-called consultations allow plenty of opportunity for input from all sides, but inevitable it's the service providers, not the public, who make 90 percent of the running. Ofcom side with providers ovber consumers time after time (going to court to protect mobile mast locations, mobile roaming caps etc) and are unlikely to change the habits of a lifetime now.
I really don’t know where to start with this. Kempy BT has plenty of money to pay their people and then some, look at their last quarter’s publicised profit £639m. With that amount of profit they should be investing heavily in upgrading their local exchanges or adding new ones this would eradicate adsl's talk of line length and stabilize connection speed to the advertised. BT is still in the stone age on the ground and needs to invest better for the future.
Additionally herdwick don’t believe everything you read in the Guardian I think that statement is a little biased and optimistic when ofcom has it at 2%. And finally to Kper, BT is the backbone for Demon and they are correct it’s not smoke and mirrors my friend. With all of that in mind clearly the non-backbone ISP’s are trying hard to make a good profit with a severely disabled infrastructure that is known as BT, therefore using whichever marketing they can possibly get away with.
What I meant about the smoke and mirrors was that if you complain to Demon about the DATA THROUGHPUT you are getting, they always just trot out a load of stuff about the technical limitations of rate adaptive ADSL itself: line length etc.
This neatly fools the average consumer into thinking there is an unavoidable technical reason why their line can't go any faster when, in fact, they might just be getting very poor performance from Demon (or BT) for congestion/contention/shaping reasons.
What I meant about the smoke and mirrors was that if you complain to Demon about the DATA THROUGHPUT you are getting, they always just trot out a load of stuff about the technical limitations of rate adaptive ADSL itself: line length etc.
This neatly fools the average consumer into thinking there is an unavoidable technical reason why their line can't go any faster when, in fact, they might just be getting very poor performance from Demon (or BT) for congestion/contention/shaping reasons.
sannas30 That's because its currently a 45 Billion pound industry, that by BT's own predictions will shrink to 5 Billion over the next 10 years. That's why we are seeing them trying to diversify into computer maintenance and television and non-telephony services. I wonder how many people they will be employing then? The cost of 21CN is estimated at 14 Billion That's a whopping great chunk out of their balance sheet, and probably scared their institutional investors 'whitless'. And that IMHO is why the cost of broadband is too cheap to justify a ROI
No you got it slightly wrong. BT has engineered OH sorry accountancy driven itself to a great future in terms of returns. It is investing with a lot of help into the 21st Century which will carry all the communbications traffic on medium to large pipes etc. Its got little interest in the local loop ie the small pipes and in principle those down to the individual pairs of twisted wires they cost money.
21st Century installed and beefed up with a lot of financial assistance from where-ever government and European cash will reduce their running costs and bring them big profits. They are destined to make big profits and return little effort to for instance Openreach and its individual feeds to the individual customers.
Then look out even this year when they want to get rid of lots of Openreach workers. Its then the Level 3 and above managers will start smarting and thinking how they fought to keep up their big bonuses by not allowing the cas to be spent on maintaining the local twisted pairs upo the the standard that Bt inherited that great national asset. Watch out for the attempt to give Openreach away, They may have to pay someone to take it could even be before the end of this year. Start thinking lads will you have a land line, big questions coming sooner than you think.
Oh, what part of 45 billion into 5 billion is slightly wrong then? And how do you expect BT to be able to sustain the people it employs on a ninth of their income? Also do you think that BT would enter a marketplace they knew nothing about 18 months ago (BT 24/7 support is now being advertised all over the place - aka Gordon Ramsey threatening his PC support consultant with violence because he hadn't prepared his menus in good time, suggesting that BT will do a better job hah hah) unless they thought that they needed to diversify?
To keep to the point, I am suggesting that Our expectations are that we can simply keep adding more people onto the same infrastructure - or that we should expect BT - or other to magically produce this bandwidth at zero extra cost. And that I'm afraid is simply unsustainable, given the figures I have just pointed out. So we either have to pay more for it up front or we ask the government to use our money to subsidise it. Either way we pay for it.
Traffic shaping (or over contention) as we should accurately call it is the only way that ISPs can provide consumerswith the price point that they wish to see. Then we complain when it doesn't live up to our expectations. Only a handful of ISPs are prepared to sacrifice volume sales for customers who are prepared to pay a little more for what they actually get and not suffer traffic shaping.
sorry to monopolise the postings her - I should have said that there are only a handful of ISPs LEFT not traffic shaping, and as downward price pressure continues there will be fewer still. I guess the test would be how many posters to thinkbroadband would consider using an ISP if they made a point of declaring they traffic shaped?
I think that there are more than you think..... eg plusnet is getting *more* customers, and actually there are a *lot* of people that want *just* web and email..
They DO know about the shaping, and are happy that it keeps away the maniacal downloaders, so that they can surf without problems!!
download a whole album or DVD??? why would they do that, when they can get the physical stuff, to put on your shelf, to listen to/see at FULL quality, while reading the sleeve notes, for only a few quid at HMV etc????
Plusnet Traffic shapes - read the T's and C's
Top marks Andrew, your statement "whatever code of practice appears it must favour the needs of the consumer rather than pander to the needs of an industry that exists to make a profit from broadband." Just what the public need to see put into practice.