Broadband labelling and advertising rules bring greater transparency for consumers when comparing tariffs and choosing a service. We compare common elements of labelling schemes around the world and consider their relationship to competition in the market.
A number of regulators around the world have crafted rules on how operators can advertise broadband services. Changes in the market, including those brought by fibre rollouts, have required updates to these rules such as those made recently by Ofcom in the UK.
Requirements related to advertising speeds are the most common element of these rules. In addition to a maximum and minimum speed, operators in Germany are required to provide a “normally available” speed and any speed adjustments based on data usage.
When there is still a mix of full fibre and FTTC rollouts, the language used when referring to the underlying technology is arguably more important for consumers. Italy’s regulator created a traffic light system to easily differentiate between the type of connection available.
Labelling rules can also offer additional support for vulnerable consumers through required notices related to affordability as well as accessible versions of labels. Operators in both the US and the UK offer these added features which improve digital equity.
Despite well-established rules for advertising, remedies available to consumers who experience underperforming broadband services are still limited. The Australian Competition and Consumer Commission provides the largest range of possible remedies, with the most common being a penalty free opt-out of a contract.
The impact of these rules is limited in markets without robust competition. While the US represents a virtuous cycle of transparency and choice, the Canadian consumer experience suffers from both a lack of information required by advertising rules and limited competition, both of which improve outcomes.
Ofcom’s new rules in the UK reflect global trends in broadband advertising
As the full fibre rollout continues to ramp up across the UK, Ofcom is working to ensure consumers understand the choices they have when selecting a broadband tariff. Most recently, the regulator announced that a brief description of the technology that makes up a customer’s fixed internet connection should be included as part of the contract summary offered by operators at the point of sale. Customers can increasingly choose between different configurations of fibre to the home/premise (FTTH/P), which is also referred to as full fibre, fibre to the curb or cabinet (FTTC), fixed wireless access (FWA), cable and copper technologies to support their connectivity needs. In response, UK operators are providing more information to ensure that consumers understand the tariffs on offer and can more easily navigate the fixed broadband market.
Ofcom is one of a number of regulators around the world with specific rules for broadband labelling or advertising. In markets of various sizes and levels of competition, operators are required to provide consumers with information on different items of possible comparison at various points before and after any contract is signed. While some of these rules are long-standing, regulators continue to review and refine both the type of information that operators must include as well as the level of detail and the style in which the information is presented. Taking examples from five different jurisdictions, we highlight some of the different standards that regulators are employing to help consumers be more informed when selecting a broadband tariff and ultimately support a more competitive market (see Figure 1).
Advertising of speeds is the most common but also the most varied requirement
Rules regarding how operators can advertise or label the speeds of the broadband tariffs they have on offer are the most common issue taken up by regulators. Since speeds can vary due to a variety of factors outside of operators’ control, such as the number and type of devices that end users connect, these rules normally require a range of possible speeds or a few benchmark speeds like maximum and minimum speeds for both download and upload. However, since some variability can also be due to operator actions or is at least likely known in advance by operators, some regulators also require that advertising includes speeds which occur under certain conditions, such as during busy periods or after a customer has used a certain amount of data.
As part of the implementation of the European Electronic Communications Code in Germany, BNetzA requires that operators include four different speeds in a standardised format before a contract can be finalised. In addition to the more standard maximum and minimum speeds, the regulator also requires that the operator include a “normally available” speed and any speed adjustments that may occur based on a customer’s data usage. While a number of jurisdictions also require that some version of a normally available or “typical” speed be provided to customers, changes in the definition of a typical or normal period can result in very different metrics. In Australia, for instance, that typical speed must be measured during a busy period for connectivity. In the US, typical speeds can be measured in a number of different ways, including through internal operator data or speed testing conducted by customers. The role of the regulator in defining typical or normal in these instances therefore has a significant impact on what customers are led to believe will be the normal performance of their connectivity services.
Fibre rollouts increase the importance of describing underlying technology
Speed and stability of connectivity is also dictated by the underlying technology used to provide a customer with service. As full fibre rollouts continue, regulators have clarified how operators can describe the connection to a customer’s household. In Italy, AGCOM set out the most comprehensive system for advertising fibre connections in 2019. Using a traffic light system, operators must colour-code any advertising materials based on the underlying technology used. Full fibre is coded green while mixed technologies such as FTTC or FWA are yellow, and copper connections are red. In the UK, Ofcom recently revised guidance on how operators can advertise fibre connections, focusing on consumer understanding by requiring a one or two word description of the technology in plain language. In France, Arcep also requires a narrative description of the underlying technology that makes up a connection and specifically insists that operators specify the technology that makes up the final stretch of a FTTC connection. Given the impact that underlying technology can have on speeds, some regulators, including the ACCC in Australia, also require operators to clarify any limitations or maximums that customers should be aware of based on the type of connection to their households.
Provisions related to advertising fibre or other underlying technologies are not universal though. As take-up of full fibre increases, the requirement to accurately label FTTC or copper connections may become less important to consumers over time. However, when there is a mix of fibre and copper being deployed for residential services, a clear distinction between a full fibre and a FTTC connection is especially crucial. While customers may be increasingly confident in the long-term in their access to full fibre thanks to ongoing network investments, the precise labelling of underlying technologies ensures that consumers have a complete understanding of what powers their connectivity while rollouts are in earlier stages. Based on the specific rules that regulators have drafted to ensure these labels are easily understood, consumers can expect to have readily available and accurate information throughout all phases of fibre adoption.
Vulnerable consumers benefit from accessibility and affordability requirements
In line with the idea that regulators are focused on supporting consumer understanding, some jurisdictions have included rules specifically on the meeting accessibility and affordability needs of consumers. In the UK, Ofcom requires that operators be particularly active in providing consumers with information regarding the affordability of their broadband services. Through proactive notifications, operators must provide customers with warnings about the end of their contract as well as other tariffs which may provide a better value for their needs. According to Ofcom, End of Contract and Annual Best Tariff notifications disproportionately help vulnerable consumers, including older customers and financially vulnerable customers, in navigating their options when otherwise faced with more expensive out-of-contract services. The US also requires operators to advertise the Affordable Connectivity Program, a government funded subsidy for broadband services, on the label for every broadband tariff they have on offer.
Regulators have also been active in ensuring that consumers with accessibility needs, including limited literacy and numeracy skills as well as disabilities, also benefit from broadband advertising rules. In the US, the FCC has been particularly proactive in requiring operators to publish broadband labels in additional languages to English and offer labels in alternate formats such as audio recordings or braille. Ofcom also requires operators to make reasonable accommodations to supply the same information to customers who don’t speak English as well as elderly customers. Given the elevated importance of reliable connectivity for consumers who may be housebound or rely frequently on digital translation services, efforts by regulators to ensure broadband labelling is accessible is a meaningful step in supporting digital equity.
Consumer recourse for services that aren't as described remains limited
While consumers can more easily access a range of information about their expected service, their options remain limited when it comes to dealing with broadband coverage that doesn’t live up to promised levels of service, particularly speed levels. Since many broadband labels or advertising rules are designed as summaries of contracts, the information provided is backed up by legally binding terms for operators and customers alike. However, when speeds don’t match advertised levels, the most common remedy required by regulators is to allow customers to opt out of the contract without penalty. The ACCC in Australia offers the largest range of remedies, including compensation for any harms caused by insufficient service and the option to switch tariffs. In Italy, AGCOM also allows operators the opportunity to restore speeds to an advertised level to satisfy consumer complaints. To help consumers judge their connectivity against their contract, a number of regulators also provide speed testing tools. Regulators such as Ofcom and BNetzA publish regular reports on experienced broadband speeds as an industry-wide accountability measure which is also another information source for consumers.
The value of broadband labels to consumers is still dependent on markets being competitive
While broadband labelling and advertising rules can be effective in helping consumers find the best tariff for their needs, a lack of competition in broadband markets can still undermine the benefits of more transparent broadband advertising. Without a choice of multiple providers, consumers can’t benefit fully from the ability to easily compare tariffs through labels. Advertising rules can still provide consumers with valuable information about the service they are paying for, but remedies for underperformance such as opting out of contracts to switch providers are less feasible. Some level of the transparency provided for in broadband advertising rules could support increased consumer demand for a more competitive market. However, a lack of competing tariffs may also limit the context available to consumers on the comparative value of their services. The relationship between limited competition and a lack of broadband advertising rules can therefore become a self-fulfilling prophecy, as limited consumer choice can justify a lack of rulemaking around transparency even if improved transparency could increase demand for more choice.
In Canada, consumers lack both the benefit of broadband advertising rules and often a choice between tariffs. As of 2021, the majority of Canadians (73.4%) were covered by three different broadband providers offering some level of connectivity to their household. That number increased by 13.9% (from 59.5%) from 2020 but isn’t broken down by the speed of connectivity or the underlying technology of the offer, meaning those three providers may not offer comparable tariffs. While an increase in the number of households with multiple choices for broadband services may appear to be a positive change at the outset, the majority of that change was also linked to a 13.1% decrease (21.1% in 2020 to 8.1% in 2021) in the households with the choice of at least four providers, suggesting consumer choice is shrinking on the whole. Additionally, given the decision by the Canadian Radio-television and Telecommunications Commission (CRTC) to exclude broadband advertising from its 2019 Internet Code, Canadians are left to navigate their already few options without the benefit of regulated advertising. Policymakers have since looked to address both issues. Bill C-288, which is pending before the Parliament, would amend the Telecommunications Act to require operators to offer consumers information on busy period speeds. Additionally, in 2022, the Government tasked the CRTC with implementing a new policy direction that prioritises competition and consumer interests in telecoms regulation.
Comparatively, the US has seen this relationship between improved information for consumers and increasing competition work in the opposite direction. As more operators are able to provide more customers speeds that exceed the national minimum standard for connectivity (25/3Mbps), consumers have also benefited from the introduction of broadband “nutrition” labels required by the FCC on every tariff on offer. Since the majority of Americans gained access to three or more providers providing similar connectivity levels in 2021 (see Figure 2), these labels highlight points of comparison between tariffs on offer.
While the US remains a market with limited competition as compared to the UK or the EU, the combination of expanding competition and the implementation of labelling rules contributes to a virtuous cycle of transparency and choice that benefits the consumer. Across jurisdictions with more competitive markets as well, broadband labelling and advertising rules continue to support consumers in navigating choice through improved transparency resulting in improved outcomes overall.
