ASA ruling against Virgin Media may change broadband advertising
Ofcom ruled on mid contract price rises a long time ago and the majority of broadband users will be used to the letters informing them of changes and giving the pre-requisite 30 days notice so people can escape current contracts. The ASA has waded into the arena following two complaints against a Virgin Media advert and a price rise that the people experienced while still in their minimum term.
Two complainants, who, during the minimum term of the contract, had been told their monthly charges would be increased, challenged whether the price claims were misleading.
Virgin Media Ltd said that, at the time a customer signed up to a 12- or 18-month contract, they made the promotional price and subsequent standard price clear. They said they might increase prices such as line rental occasionally which would affect the majority of customers, including those who had signed up for a 12- or 18-month contract. They said they did not know if, when, or by how much a customer's core price might rise at the start of the contract. Therefore, they were unable to advertise the future price.
Because subsequent price rises meant the advertised price claims for the packages did not represent the prices that consumers would pay throughout the minimum term of the contract, across both the promotional and standard periods, and because it was not made clear that the contract was a variable one in which prices could increase, we concluded that the ad was misleading.Extracts from ASA Adjudication
While this adjudication is against Virgin Media, we believe it affects almost all the broadband market and is likely to mean a line not unlike "prices may rise during the minimum term but we will give you at least 30 days notice of any changes" may have to be added to the majority of adverts, alongside all the other footnotes.
As a general rule introductory offer prices of free for X months or £4 for X months are usually a fixed price reverting to a standard variable price thereafter. All the providers follow roughly the same patterns and while Virgin Media is immune from regulated price changes to core Openreach products it often appears to track BT for voice line rental, and the amount of investment in their network to resolve congestion or simply upgrade the network as usage continues to climb month on month means keeping prices static for a long period is difficult. There are of course other factors like fuel prices, wages, changes to National Insurance and many other things that can make prediction of price over a long term almost impossible.
If the market decides to widely adopt the idea of fixed price contracts then we are willing to bet that we will see prices go up, as providers will pre-load estimated rises over the 12 or 18 month period and the consumer may be no better off.
For those in areas where Virgin Media is the only superfast or ultrafast option available, the Ofcom mandated get out of your contract for free clause may be little use, as people will be reluctant to drop back to slower ADSL/ADSL2+ services.