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| Giving consumers confidence in price comparisons of telecommunications services - 14 December 2001 | |
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| Contents | |
| Summary | |
| Chapter one | Introduction |
| Chapter two | Proposed criteria for Code of Practice |
| Chapter three | How the scheme will work |
| Chapter four | Consultation |
| Glossary of terms | |
| Annex A | Ofgem's Price Comparison Service Specification |
S.1 Oftel is seeking views on its proposals for an accreditation scheme for websites designed to help consumers compare what they are currently paying for telecoms services with what they could be paying with another supplier.
S.2 This consultation exercise is part of Oftel’s work on ensuring that consumers are well informed about telecoms services.
S.3 Oftel wants to raise consumers’ awareness of the choices available to them, and also to make useful information on price and quality more accessible to all consumers. Good quality tariff information websites will help achieve both these aims. Oftel therefore proposes to draw up a Code of Practice – sites which comply with the code will be accredited by Oftel and able to display this fact.
S.4 Some sites may provide prices of fixed telecoms services only, others may be aimed at mobile phone users. Oftel intends that the accreditation scheme should be flexible enough to accommodate different types of telecoms services, even, for example, more complex offerings such as Internet access.
S.5 In this paper, Oftel makes a number of proposals for the criteria of the Code of Practice (summarised below) – some are deemed more necessary than others but all are open to comment:
S.6 Oftel would like feedback from consumers and from industry – particularly parties interested in gaining accreditation – on what those criteria for accreditation should be and also on the practical aspects of the scheme.
S.7 The period for comments runs until 22 February 2002. Oftel has already had informal discussions with two companies interested in accreditation and provided copies of an earlier draft of this paper to the Advisory Committees for Telecommunications, including DIEL. Oftel intends to publish the terms of the Code of Practice in March 2002.
1.1 This chapter explains why Oftel is planning to draw up a voluntary Code of Practice for websites providing details of prices of telecoms services (‘sites’). It summarises relevant research in this area and also flags up some issues that the accreditation scheme will need to take on board.
Well-informed consumers
1.2 Oftel’s goal is to get the best deal for consumers of all types of telecoms services in terms of quality, choice and value for money.
1.3 One way to achieve this is by ensuring that consumers are well informed about their rights as telephone users and the choices of telecoms services available to them. A well-informed consumer is more likely to take advantage of opportunities offered by the market. This in turn encourages effective competition between suppliers of telecoms services.
1.4 Oftel therefore aims to increase:
1.5 Research has shown that consumers want more sources of information to help them make informed telecoms decisions. Also, the profile of existing good sources of information needs to be raised. Oftel believes that an accreditation scheme for tariff information websites is one way to achieve both these things.
1.6 Accreditation will make it clear to consumers that a particular website will be useful to them in comparing the cost of competing services.
Phonebills
1.7 Research indicates that consumers find it difficult to compare telecoms prices easily and accurately and that there is a demand for services that help in the decision-making process.
1.8 In response to this demand, a price comparison scheme called Phonebills [www.phonebills.org.uk] was launched in December 1999. It is managed by a telecoms consultancy but both Oftel and the telecoms industry were closely involved in its creation.
1.9 Phonebills is not an Oftel site: it is run by Analysys Ltd. However, Oftel’s endorsement indicates that it is an initiative that we support – we have encouraged industry to participate and have offered advice on format and content issues.
1.10 Phonebills has had positive feedback from consumers who seem to find it to be well designed, easy to use and relatively informative. Consumers also value the fact that Phonebills has been endorsed by Oftel.
1.11 But things have changed since Phonebills was set up. There are now other sites that offer comparisons of telephone tariffs, for both fixed and mobile services. There is also interest in providing comparisons of broadband services. Oftel wants to encourage these developments. We recognise that Oftel’s endorsement is potentially important to the consumer, and valuable to the site.
1.12 It therefore seems fair, sensible and timely to consider an accreditation scheme, ie endorsement by Oftel, for sites that meet certain criteria.
1.13 Accreditation will not mean the same thing as Oftel’s current endorsement of Phonebills. Phonebills was a new type of service designed to meet a demand that was not being satisfied through other means, and it needed encouragement and support from the regulator. Oftel does not intend to have the same relationship with websites that gain accreditation. However, an accredited website will be able to display an Oftel ‘kitemark’ as evidence of Oftel’s endorsement. Consumers can then see at a glance that Oftel believes that site will be useful to them in researching prices and deciding whether to switch supplier.
1.14 Phonebills will of course be able to seek accreditation in the same way as any other website.
What consumers want
1.15 In early 2000, shortly after the launch of the Phonebills initiative, a survey was conducted on behalf of Oftel and the Consumers’ Association amongst 5700 UK adults to establish the proportion of homes that had switched their fixed telecoms supplier. The results were published in August 2000 in the Report on Consumer Switching Behaviour in the telecoms market.
1.16 25 per cent of UK homes claimed to have switched their fixed telecoms supplier. A sample of ‘switchers’ (770) and ‘non-switchers’ (1215) were contacted and their awareness and usage of telecoms choice and decisions examined in more detail:
1.17 Demand for price comparison was even higher amongst consumers who had already switched (and who therefore presumably had a better idea of the type of information they would have found useful).
1.18 The report stressed the importance of price comparisons:
"The continued development and accessibility of initiatives such as operator price comparisons, and quality of service comparisons remains important if Oftel is to achieve its objective of well informed consumers. Just less than half of consumers (48%) felt that their suppliers’ pricing and tariff structure was straightforward and easy to understand. This was generally much higher amongst cable customers than BT customers."
1.19 The report also suggested that there was greater inertia, ie reluctance to change supplier, in fixed telecoms than in other markets.
1.20 This survey illustrated the demand for pricing information and comparisons.
1.21 However, more recent research indicates that many consumers are not aware of existing sources of information. Oftel’s quarterly residential consumer survey conducted in early 2001 indicated that fewer than one in ten consumers had seen or heard of Phonebills and the Comparable Performance Indicator (CPI) website, produced by the telecoms industry.
1.22 This figure is disappointing, particularly as there is clearly a demand: the survey showed price comparisons were the most frequently mentioned information that consumers would like to see a telecoms advice website contain.
1.23 Oftel therefore wants to raise consumer awareness of, as well as consumer confidence in, comparison websites: the creation of an accreditation scheme will go some way in achieving this.
Alternatives to websites
1.24 The Internet is ideal for providing price comparisons. It is fast and can process simple data provided by the consumer to produce a tailored response, eg "Based on the information you have provided, you could save £x by changing to Telecoms Ltd."
1.25 However, Oftel knows that many consumers do not have access to the Internet. Oftel is therefore keen also to find ways to accredit alternative means of providing this type of service, for example price comparisons provided over the phone or in writing. These alternatives will need to be researched and designed carefully if they are to be useful to consumers. For example, printed material would need on the one hand to be easy to understand, ie without overwhelming the consumer with information, but on the other, comprehensive enough to allow the consumer to make a proper evaluation of some of the alternatives available to him/her.
1.26 Although the Internet provides a useful starting point for an accreditation scheme for tariff information services, we would welcome comments on how the scheme could be extended to other media, particularly from those interested in providing such services.
Non-business telecoms prices
1.27 It is important to make information on prices as accessible as possible. For this reason, Oftel proposes that providers should not charge for providing prices and price comparisons of residential telecoms services.
1.28 However, accreditation will not be limited to sites providing residential tariff information only. Oftel’s research has shown that small to medium enterprises also need more information to help them compare prices of competing telecom services.
1.29 Oftel recognises that business telecoms services may present some difficulty for tariff information websites. Prices often vary from customer to customer – business rates and packages tend to be flexible and it may be difficult to be wholly sure that prices are accurate at any given time. Providers need to be aware that this is a complex area: Oftel’s Code of Practice may need to treat information on prices for businesses differently to information on prices of residential services.
Co-operation of the telecoms industry
1.30 Clearly, it is crucial that prices and price comparisons are accurate and up-to-date. The site provider will be responsible for ensuring this. Obviously, however, many providers will be relying directly on operators to provide accurate and current data. Oftel believes that the telecoms industry’s co-operation in supplying this information is vital for consumers to be confident that they are getting the best possible deal. We will therefore be encouraging suppliers of telecoms services to take a responsible and helpful attitude towards requests for information from tariff providers, regardless of accreditation.
2.1 This chapter sets out Oftel’s proposed criteria for accreditation. We would welcome comments on any of these.
2.2 Ofgem, the national regulator of gas and electricity, has already drawn up a voluntary code for companies providing price comparison services, on the Internet, by telephone or by post. Its experience so far has been positive, and Oftel believes that its code is a useful starting point for our own Code of Practice. However, the energy and telecoms industries are different, and this is reflected in Oftel’s proposals. (See Annex A for Ofgem’s code).
Accurate and up-to-date
2.3 Prices and price comparisons should be accurate and up-to-date (showing the date that they were last updated). This is necessary in order to gain accreditation and also thereafter. Oftel suggests that information should be updated at least quarterly.
2.4 Oftel proposes regular spot checks of the content of each site to ensure that tariffs and, where the site is interactive, tariff calculations are accurate.
Independent
2.5 It is important that consumers have confidence in the information provided, particularly if a site is actually suggesting an alternative supplier. Oftel therefore believes that accredited sites must be independent of telecoms suppliers.
2.6 The site must not advertise the services of any supplier. However, the site may provide links to a supplier’s own website and/or include a small piece explaining what kinds of services the supplier offers. This is in the interests of the consumer, ie ensuring the consumer has sufficient, relevant and impartial information to help him/her in any decision to change supplier. The provider should monitor the content of any pieces submitted by suppliers to ensure that they are not advertising by the back door.
2.7 Oftel does not intend to give accreditation to sites that charge for providing prices and price comparisons of residential telecoms services. However, Oftel realises that a provider will need to pay for the site somehow. It may well receive payment from suppliers, particularly if its site goes beyond providing prices and/or price comparisons.
2.8 For example, having provided the consumer with details of what he/she could be paying with another supplier, the provider might then ask whether the consumer wants to switch suppliers on-line. In this situation, it is probable that the provider is earning commission from suppliers who have agreed to enter into this type of arrangement. Oftel believes it is important for consumers to know the provider is receiving commission and we would like comments on the level of disclosure that the provider should make on its site.
2.9 It should also be made absolutely clear to the consumer what he/she is doing; too often consumers are not given full information and are therefore not aware that they are actually switching suppliers.
Data protection
2.10 Some tariff information sites will require consumers to provide personal details such as their e-mail address, postcode and how much they spend on telephone calls per quarter. If the site includes a facility to switch suppliers on-line, it may even ask for bank or credit card details. These personal details may constitute personal data within the meaning of the Data Protection Act 1998 and will therefore be subject to the requirements of that Act in relation to how that data is acquired, held and used.
2.11 Privacy rights are enforced in the UK by the Office of the Information Commissioner. For further information on data protection and privacy rights you may wish to refer to the Information Commissioner’s website at www.dataprotection.gov.uk. The Information Commissioner’s office may be contacted on 01625 545700.
2.12 In order to ensure that consumers have full confidence in accredited sites, Oftel proposes, amongst other things, that accredited sites must make it clear to users (by means of a prominently displayed privacy notice) that they comply with the relevant data protection legislation.
Interactive/comparative
2.13 Should Oftel give accreditation to interactive sites only, ie where the user actually inputs personal details, such as postcode and types of calls typically made, in order for the site to calculate alternative suppliers/packages? What about sites that simply list tariffs?
2.14 Oftel’s view is that the key consideration here is ‘user-friendliness’. Research has shown that consumers prefer comparative information. If the site is well designed and user-friendly, the consumer is guided through a straightforward process and is able to see clearly how much he/she could be saving. By contrast, Oftel believes that lists of data are of limited use to the ordinary consumer.
2.15 However, it is possible that providers may be able to design non-interactive sites which are constructed in such a way that they are still user-friendly, ie the consumer is still able to calculate whether he/she could be getting a better deal elsewhere. Certainly, Oftel will need to consider the format of the information if the accreditation scheme is extended beyond websites to include leaflets.
Accessible to people with disabilities
2.16 The site must comply with the Disability Discrimination Act – this is irrespective of accreditation. But Oftel is keen to see the provider going beyond what the legislation requires and using its common sense in designing the site, with particular reference to consumers with impaired eyesight. There is some useful advice on good practice in this area published on Oftel’s website at www.oftel.gov.uk/publications/consumer/gpm0901.htm.
2.17 This makes the following suggestions:
2.18 All of this could be seen simply as ensuring that the site is ‘user-friendly’. However, Oftel believes that the Code of Practice should specifically mention having regard to the needs of disabled consumers.
Other issues besides price
2.19 Consumers should be made aware that there are factors besides price that they may want to consider, for example how many complaints per customer does the supplier receive? How quickly does it resolve problems? And in the case of mobile phones, how does the supplier compare with others for coverage?
2.20 Oftel therefore intends to include a requirement that the site must display a clear note advising consumers that they may want to take service quality issues
into account before making any decision. There should also be a link to:
Which/how many telephone suppliers should be included?
All suppliers?
2.21 Oftel does not propose that accredited sites must provide prices for all telecoms suppliers.
2.22 The Ofgem code of practice says that providers must give rates for all suppliers. However, the gas industry and telecoms licensing regimes are very different: it is just not feasible for Oftel to require such a thing.
2.23 Every gas supplier needs a supply licence and must go through an application procedure before Ofgem grants it a licence. Ofgem therefore knows who each supplier is. Moreover, each licensee is required under its licence to provide pricing information to anyone who requests it. At December 1999, there were only 26 licensed domestic gas suppliers in Great Britain.
2.24 By contrast, there are hundreds of telecoms suppliers, and the Department of Trade and Industry (‘DTI’) and Oftel do not know the identity of each one.
2.25 Any party ‘running a telecommunications system’ within the terms of the Telecommunications Act 1984 must have a telecoms licence. Without going into detail, if you are running a telecoms systems it usually means you have some element of control over the way in which a message is carried. Not all suppliers have the necessary degree of control.
2.26 And even if a company is operating under a licence, because of the way in which the telecoms licensing regime works, the DTI and Oftel do not necessarily know anything about it.
2.27 There are also telecoms companies who don’t need a licence at all but who provide residential users with a good cheap service, eg some companies who offer cheap international calls where the caller dials a Personal Identification Number first. It would therefore be unhelpful for Oftel’s Code of Practice to require providers to provide tariffs of licensed operators only.
Fixed telecoms services: at least ten suppliers, including BT
2.28 Oftel’s view is that, in order for a site providing prices of fixed telecoms services to be accredited, it must include BT’s tariffs. BT is still the supplier for the majority of UK residential consumers and it is helpful to consumers to be able to compare prices with BT’s. Also, details of BT’s prices and packages are readily available. Oftel does not believe that requiring providers to include BT gives BT an unfair advantage over other suppliers who are not named.
2.29 Oftel also proposes that for a site providing prices of fixed telecom services to gain accreditation it must provide tariffs for at least ten suppliers (including BT). The provider should list all the suppliers so that it is clear to consumers from the start how many suppliers are included in total (although not all of these may provide services in the consumer’s geographical area) and who they are.
Mobile and other services
2.30 Oftel proposes that a site providing price information on mobile telecoms services should include at least the four main mobile network operators, ie BTCellnet, One2One, Orange and Vodafone. We would welcome suggestions on whether any particular service providers should also be included.
2.31 Providers may want to provide price information for other types of telecoms service, for example broadband services and Internet access. Oftel has no fixed idea about how many different suppliers should be included: we propose to consider any application for accreditation of this type of information on its individual merits.
Bundled packages
2.32 Some suppliers offer a number of different services ‘bundled’ together at one price eg telephone calls bundled with access to the Internet and digital television services. While such packages may be attractive to the consumer, it makes comparison with services offered by other suppliers difficult – unless those services are similarly bundled. If the consumer is unable to compare like-for-like, then a supplier of bundled services may be unwilling to participate in the site.
2.33 However, it is in the consumer’s interests that as many different services as possible – bundled or otherwise - are included on a site.
2.34 Requirement 8 of Ofgem’s code simply states:
"Bundled" offers (such as those that include telephone or other utilities, or free membership of an organisation) should list details of the offer separately."
2.35 Oftel proposes to take a similarly flexible approach: the key is that information must be clear, accurate and fair.
Compliance with relevant legislation
2.36 Sites, whether or not they are accredited, must comply with all appropriate legislation. This includes, but is not limited to, consumer protection legislation, and the Disability Discrimination Act and Data Protection Act (mentioned above).
2.37 However, accreditation by Oftel must not be taken to mean that Oftel has checked that sites do comply with all the relevant legislation. It is the responsibility of the site provider to ensure it is aware of all its legal obligations and it should therefore take its own legal advice on the content of the site.
How the scheme will work
3.1 Oftel will consider all applications from providers seeking accreditation for their websites.
3.2 A provider may intend to set up more than one site – it is therefore important to understand that it is the site that is accredited, not the provider. For example, Oftel may decide to accredit a provider’s site offering comparisons of mobile telephone services but not its fixed telephone services site.
3.3 Applications will probably need to be in writing. This will help Oftel to make decisions fairly and consistently. However, applicants will be encouraged to talk and/or meet with Oftel to demonstrate their sites and explain how they satisfy the principles set out in Oftel’s Code of Practice.
3.4 Oftel is also considering using a third party to assist with the application process and subsequent monitoring of accredited sites. This will depend to a large extent on how much work the accreditation scheme involves.
3.5 Clearly, the most difficult thing to check is accuracy. Once accreditation has been granted, the onus lies with the provider to ensure that it has accurate and up-to-date details of prices and packages. Oftel proposes to make regular spot checks and will bring any problems to the provider’s attention.
3.6 Oftel will review the situation from time to time and will of course consider removing accreditation from any site in serious and/or repeated breach of the code. However, as far as possible, Oftel wants to keep the process informal. It is, after all, a voluntary scheme: providers do not need to apply for accreditation in order to be able to provide price comparisons. But we hope that this consultation will generate interest in the scheme and encourage providers to apply.
How to make comments on the questions raised in this consultation document
4.1 Oftel welcomes comments from interested parties on any of the issues outlined in this paper and in particular on the proposed criteria for the Code of Practice. The following questions may help focus responses:
The closing date for submitting comments is 22 February 2002. The accreditation scheme is a very positive consumer initiative and, while allowing a reasonable period for feedback, Oftel believes it is in the interests of the consumer for the Code of Practice to be finalised as soon as possible.
4.2 Where possible, comments and any comments-on-comments should be made in writing and sent by e-mail to ritu.manhas@oftel.gov.uk However, copies may also be posted or faxed to the address below. If any interested parties are unable to respond in one of these ways, they should discuss alternatives with the Oftel policy adviser named below:
Ritu Manhas
Oftel
50 Ludgate Hill
London
EC4M 7JJ
Tel: 020 7634 8746
Fax: 020 7634 8893
e-mail: ritu.manhas@oftel.gov.uk
Further copies of this document
4.3 Paper copies of this document, and alternative formats such as large print, Braille, disc and audio cassette can be made available on request. Please contact Oftel's Research and Information Unit by phoning 020 7634 8761 or by sending an e-mail to infocent@oftel.gov.uk.
Publication of comments made by stakeholders
4.4 On this occasion, Oftel is not programming a formal period during which interested parties may comment on the responses made by others. Nevertheless, in the interests of transparency, all non-confidential comments and comments-on-comments, will be published. Respondents should separate out any confidential material into a confidential annex which is clearly identified as containing confidential material. Oftel will take steps to protect the confidentiality of all such material from the moment that it is received at Oftel’s offices. However, in the interests of transparency, respondents should avoid applying confidential markings wherever possible.
4.5 Non confidential responses can be viewed on Oftel’s website in the Publications section under Responses to Oftel consultations. They can also be viewed at Oftel’s Research and Information Unit. Appointments must be made in advance by phoning 020 7634 8761 or sending an e-mail to infocent@oftel.gov.uk.
E-mail notifications
4.6 Oftel has a free e-mail based mailing list to help people stay informed about the work that Oftel is doing. Each time an Oftel document is published and placed on Oftel’s website at www.oftel.gov.uk, subscribers to the list receive an e-mail alert. To register, please go to the What’s New section of the website and access the electronic form.
Code of Practice – a set of principles upon which Oftel’s decision to accredit a site (as defined below) will be based
Comparable Performance Indicators (CPI) – a joint Oftel/industry initiative intended to help consumers compare how telecoms companies have performed in certain areas concerning quality of service, eg in dealing with complaints
Provider – the party responsible for running a website providing details of prices of telecoms services
Site – a website providing details of prices of telecoms services
Supplier – a party supplying a consumer with a telecoms service
Ofgem’s Price Comparison Service Specification
1. The service must be independent of any gas or electricity supplier. It can take commission from suppliers but this must not influence the provision of information. The service must state clearly if it receives commission from a supplier on its comparison list. Advertisements from suppliers or their agents should not be accepted.
2. The service must include price comparisons for all currently available tariffs for all suppliers (for gas, electricity and dual fuel). Comparisons should be on a like for like basis, but if they do not cover "historic" tariffs that are no longer generally available then this should be stated clearly.
3. Payment methods must include:
- standard credit by cash/cheque
- monthly and quarterly direct debit
- Prepayment meter
4. Prices from no less than the three cheapest suppliers must be listed. Prices must include VAT (and state that they do so).
5. Customers should also be invited to consider quality of service issues and energy efficiency programmes and be told where to find this information.
6. Prices and price comparisons must be accurate and state when they were last updated.
7. Non-cash offers (eg Air Miles, supermarket points) must be listed separately where they are available. (This applies to continuing offers. Introductory offers do not have to be listed; they should not be included in a price comparison.)
8. "Bundled" offers (such as those that include telephone or other utilities, or free membership of an organisation) should list details of the offer separately.
9. The service should comply with all other appropriate legislation (including but not limited to legislation on misleading prices and comparative advertising and the Data Protection Act).
