Summary of Council decision:
Three issues were investigated, all of which were Upheld.
A paid-for Facebook post, regional press ad, poster and internet display ad for Make The Air Fair:
a. The paid-for Facebook post, seen in early December 2016, was headed “Make The Air Fair” and stated “Our airwaves are up for sale. BT already own too much and now they want even more. Tell Sharon White, Head of Ofcom, she’s our last chance to save the UK’s mobile internet #TellSharon Visit: http://po/st/MakeTheAirFair”. A cartoon image included a speech bubble which stated “I’VE TOLD SHARON, YOU SHOULD TOO #TELLSHARON”.
b. The regional press ad, published on 5 and 8 December 2016, stated “SHARON, WE NEED YOU. YOU HAVE THE POWER TO MAKE THE AIR FAIR. Our airwaves are up for sale and consumers are not being protected. BT/EE dominate the market and, despite what some of the headlines say, Ofcom are allowing them to buy even more in the 2017 spectrum auction. That means higher mobile prices, slower speeds and worse coverage for UK consumers. It’s not too late though. Sharon White, CEO of Ofcom, aka Consumer Champion, can save the day by capping any one company to 30%. GO TO MakeTheAIRFAIR.org and #TELL SHARON”.
c. The poster, seen on 8 December 2016, stated “SHARON, STOP BT/EE DOMINATING OUR AIRWAVES. PEOPLE OF LONDON, GO TO MakeTheAIRFAIR.org AND #TELLSHARON”.
d. The internet display ad, seen on a national newspaper’s website on 2 January 2017, stated “MakeTheAIRFAIR.org Don’t let BT ruin the UK’s mobile internet”.
The ASA received complaints from British Telecommunications plc and two members of the public.
1. All three complainants, who understood that Make The Air Fair was primarily funded by competitors to BT/EE, challenged whether the ads misleadingly implied that Make The Air Fair was an independent body.
British Telecommunications plc challenged whether the following claims were misleading:
2. “Ofcom are allowing [BT/EE] to buy even more in the 2017 spectrum auction. That means higher mobile prices, slower speeds and worse coverage for UK consumers” in ad (b), and “Don’t let BT ruin the UK’s mobile internet” in ad (d); and
3. “BT/EE dominate the market” in ad (b), and “STOP BT/EE DOMINATING OUR AIRWAVES” in ad (c).
1. Hutchinson 3G UK Ltd, trading as Three, responded on behalf of the Make The Air Fair campaign (the campaign). They explained that the campaign was founded by Three and supported by the companies Talk Talk, CityFibre, Gamma and Relish, and the industry body Federation of Communication Services. They were calling for a 30% cap on the total amount of useable mobile airwaves (or spectrum) that any mobile network operator (MNO) could own as a result of the upcoming auction of spectrum planned for 2017, relating to spectrum in the 2.3 GHz and 3.4 GHz bands (the auction). The campaign encouraged the public to participate in a Government consultation launched by Ofcom in November 2016 about how the auction should be run, by contacting Ofcom (who were running both the consultation and the auction) and their local MP.
Three said the ads did not present the campaign as being on behalf of an official, public or statutory body or charity, and the campaign’s purpose and make-up was clearly and prominently presented in the ads and on the campaign’s website. They believed the campaign had been carried out in an honest and transparent manner. The core aim of the campaign was to generate public support for tighter competition measures for the auction, which they believed would enable a fairer distribution of spectrum, and promote competition and better quality of service for consumers.
They said each of the ads contained a prominent call-to-action, or in the case of the two online ads – (a) and (d) – linked directly to the campaign’s website, where the logos of the involved organisations were clearly and prominently displayed and information was provided about the campaign. They said that consumers were required to visit the website in order to participate in the campaign.
Three believed it would be unmanageable and disproportionate to require a campaign relating to a cause or idea with as many supporting organisations as their campaign to include the logos of all the involved organisations in its ads, which were limited in space. They believed it would also be misleading to identify only a selection of the involved organisations. They said the only practical option was to include a link in their ads to their campaign website. Three contended that linking to a campaign website which provided information about the identity and purpose of the cause or idea was the convention for such campaigns.
They further believed that media coverage about the campaign had identified Three and the other organisations involved and that therefore their involvement was widely known to consumers.
2. With regard to the claim “Ofcom are allowing [BT/EE] to buy even more in the 2017 spectrum. That means higher mobile prices, slower speeds and worse coverage for UK consumers” in ad (b), Three said that it was commonly recognised (including by Ofcom) that spectrum allocation was an important determinant of the future structure of the mobile market and of the intensity of the competition within it. Three referred to Ofcom’s assessment that the current (i.e. in the lead-up to the auction) share of immediately useable spectrum held by each of the four MNOs operating in the UK mobile market was as follows: BT/EE held 42%; Vodafone held 29%; Three held 15%; and O2 held 14%. Three stated that the UK had the third most imbalanced useable spectrum in the developed world behind Thailand and Malaysia, and that BT/EE had the largest spectrum holdings of any MNO in Europe.
Three contended that BT/EE had in the past engaged in strategic bidding and were currently using a fraction of the spectrum they held. They said BT/EE bought 45 MHz of spectrum in February 2013 that it had not yet used or had not used widely (BT/EE began to deploy 30 MHz of the 2.6 GHz spectrum it purchased in 2013 only in September 2016). Three believed that had a direct impact on competition because that spectrum could be in use by other MNOs and as such it equated to a strategic advantage due to hoarding. Three believed the current division of the spectrum was therefore already negatively impacting on consumers and that negative impact would become more apparent in the next few years.
Three noted that in its consultation document published in November 2016, Ofcom had proposed a cap to be implemented during the auction of the 2.3 GHz spectrum, which would have the effect of not allowing any one MNO to hold more than 42% of such spectrum. However, Ofcom had not at that time proposed a cap on the 3.4 GHz spectrum which was being auctioned at the same time (but which with current technology was not currently useable). Under those rules BT/EE would be able to buy more spectrum in the auction. Three said that, following its consultation, Ofcom recognised in a statement published in July 2017 that there was a significant risk that the auction could give rise to a very asymmetric distribution of spectrum and as a result weaken competition in the market, to the detriment of consumers. Ofcom had therefore decided to impose two caps on the amount of spectrum a single MNO could hold: firstly, a cap of 255 MHz on the amount of spectrum which was immediately useable after the auction; and secondly, a cap of 340 MHz on overall spectrum holdings after the auction. That would have the effect of limiting any single MNO to holding a maximum of 37% of the mobile spectrum that Ofcom expected to be useable within similar timeframes as the 3.4 GHz spectrum. Ofcom noted in its statement that those two caps would have the effect of preventing BT/EE from bidding on spectrum in the 2.3 GHz band and would restrict BT/EE to winning no more than 85 MHz in the 3.4 GHz band.
Three said that after a decade of continuously decreasing prices, in 2015 and 2016 retail mobile prices had significantly increased, and that Ofcom’s 2015 Market Report showed that UK mobile prices increased by 12% between July 2014 and July 2015. Three believed that trend would be worsened if BT/EE were to increase its spectrum holdings following the auction. They highlighted that Ofcom’s consultation document stated that should BT/EE increase its spectrum holding to 49% in the auction it would result in weaker competition, which could lead MNOs with small spectrum shares to compete less strongly. That was the case especially for specific customer segments such as high value consumers who demanded consistently high data speeds, which could in turn result in increased prices for those customers to moderate the increase in data traffic of such MNOs.
Three said that spectrum was an essential input in providing capacity and speeds, which could not be replicated by alternatives such as increasing the density of mobile phone masts. They noted Ofcom’s statement published in July 2017 stated that it had seen credible evidence that MNOs may be less able than it had stated in its November 2016 consultation document to adapt networks to increase capacity without additional spectrum. Three said that MNOs therefore could not match the capacity or quality (i.e. average speeds) of MNOs that had double the spectrum, and as a result they considered the current distribution of spectrum was negatively impacting speeds for consumers. They asserted that if the spectrum held by BT/EE and Vodafone which was currently unused was distributed between Three and O2 equally, Three’s customers would benefit from an increase in average download speeds of 35%.
They also said that spectrum for sufficient coverage was also necessary. They said that an historical concentration of sub-1 GHz spectrum had led to a proliferation of ‘partial not spots’, particularly in rural areas, which were areas where voice coverage was not provided by all MNOs. That meant that consumers must endure ‘partial not spots’ and a lack of choice in rural areas.
With regard to the claim “Don’t let BT ruin the UK’s mobile internet” in ad (d), Three referred again to Ofcom’s November 2016 consultation document. It stated that Ofcom recognised that having a relatively large spectrum holding might enable an MNO to offer a range of services, or quality of service, that could not be matched by competitors with smaller holdings. Also, conversely an MNO with a small spectrum holding relative to others may struggle to compete in some segments of the market or in the provision of services. Three believed that the significant risk to competition identified by Ofcom could ruin the UK’s mobile internet and said that was why Ofcom had in July 2017 decided to impose tighter competition measures on the upcoming auction which would further restrict BT/EE from acquiring more spectrum.
Three understood that BT believed that the claim “Don’t let BT ruin the UK’s mobile internet” misleadingly implied that BT had the will and the capability to distort the market to the detriment of consumers. Three argued that BT/EE had a history of strategic bidding for the spectrum and that BT/EE had an incentive to acquire more spectrum in the auction as a strategic investment in pursuit of rational commercial goals and/or to weaken the competition they faced. They said that Ofcom referred to such incentives in their November 2016 consultation document and later confirmed in its July 2017 statement its significant concern that BT/EE had an incentive to engage in strategic investment in the 2.3 GHz spectrum in order to weaken competition.
3. BT had highlighted a report published by the Competitions and Market Authority (CMA) in January 2016 which discussed the (at that time) anticipated acquisition by BT of EE, which they considered demonstrated that BT/EE did not “dominate” the airwaves or the market. Three countered that this report related to the general state of the UK market rather than to dominance in terms of spectrum holdings and that its findings therefore did not support BT’s challenge of the claims.
Three said Ofcom’s November 2016 consultation document had acknowledged that there was currently asymmetry in spectrum holdings. The document noted that spectrum in the 2.3 GHz band would be immediately useable by MNOs, whereas spectrum in the 3.4 GHz band was not immediately useable. Three highlighted that the report stated that if BT/EE were to win all the of the 2.3 GHz spectrum available in the auction, its share of immediately useable spectrum would increase to 49%, which in Ofcom’s judgement would create a significant risk to competition. Three noted that the cap of 42% proposed by Ofcom in November 2016, was at the level of BT/EE’s current holdings. Three said that demonstrated that Ofcom considered BT/EE’s market share of spectrum should be limited.
Three also said that EU competition law had a 40% threshold for considering market dominance and noted that BT/EE currently held more than 40% of immediately useable mobile spectrum. They also noted Ofcom’s decision in July 2017, following its consultation, to impose a 37% overall cap, which Three contended recognised the significant risk that competition may be weakened if BT/EE were to continue to hold more than that share.
All four ads featured Make The Air Fair’s name and included at least one statement which indicated the campaign objected to BT/EE’s role in the UK’s mobile network. Ads (a), (b) and (c) featured cartoon images of Sharon White (Ofcom’s Chief Executive) and the hashtag “#TELLSHARON”, although ad (c) did not explain who she was. Ad (b) provided the most detailed information in indicating what the campaign related to.
The ASA considered consumers were generally unlikely to have had prior knowledge of Ofcom’s consultation and Sharon White’s role in it, and would be unlikely to have heard of Make The Air Fair or have knowledge of the organisations involved in the campaign. However, we considered there was sufficient information in all four ads that consumers would understand that Make The Air Fair was a group campaigning on an issue related to the provision of mobile telephony in the UK.
Ad (b) referred to Sharon White as a “Consumer Champion” and stated “consumers are not being protected”, which we considered suggested that the advertiser was campaigning on consumers’ behalf. We considered that the use of the word “WE” in the headline claim “SHARON, WE NEED YOU” further added to that impression. We considered that the call to the “PEOPLE OF LONDON” in ad (c) would be understood as referring to London consumers and therefore implying that it implied the advertiser was campaigning on their behalf. With regard to ad (a) we similarly considered the use of the words “our” in the claims “Our airwaves are up for sale” and “Sharon White …[is] our last chance to save the UK’s mobile internet” and “everyone” in the claim “Fairer mobile INTERNET for everyone” were likely to be understood by readers as a reference to consumers, and consequently that Make The Air Fair was campaigning on consumers’ behalf. While ad (d) did not include any similar statements, it appeared on the Guardian’s website where consumers might expect to find a consumer group campaign ad. We further noted that it (and the other three ads) stated Make The Air Fair’s website address which is a .org domain. We considered consumers would generally associate .org domains with non-commercial organisations, as such we considered the ad gave the impression to consumers that the advertiser was a consumer rather than an industry, campaigning organisation.
We noted Make The Air Fair’s views that it would be unmanageable and disproportionate to state in the ads each organisation involved in the campaign, and that linking to a website was the only practical solution. However, we considered that it would be possible to make clear the status of the organisation in the ads through other means, for example by referring to Make The Air Fair as an “industry campaign group”. We did not accept that most consumers who saw the ads would visit the campaign website.
On the basis of the claims made in the ads, and in the absence of information about Make The Air Fair’s industry status, we considered consumers were likely to infer the campaign was run by an organisation campaigning on behalf of consumers. Because that was not the case, we concluded the ads were misleading.
On that point, ads (a), (b), (c) and (d) breached CAP Code (Edition 12) rules
Marketing communications must not materially mislead or be likely to do so.
Marketing communications must not mislead the consumer by omitting material information. They must not mislead by hiding material information or presenting it in an unclear, unintelligible, ambiguous or untimely manner.
Material information is information that the consumer needs to make informed decisions in relation to a product. Whether the omission or presentation of material information is likely to mislead the consumer depends on the context, the medium and, if the medium of the marketing communication is constrained by time or space, the measures that the marketer takes to make that information available to the consumer by other means. (Misleading advertising).
The claim in ad (b) stated “Ofcom are allowing [BT/EE] to buy even more in the 2017 spectrum auction. That means higher mobile prices, slower speeds and worse coverage for UK consumers”. We considered consumers would understand from the claim that BT/EE would be able to buy more spectrum in the auction, and if they were to do so mobile prices would increase, speeds would be slower, and coverage would be worse, to the detriment of consumers. While ad (d) did not provide specific examples of how the UK’s mobile internet would be ‘ruined’ by BT, we considered consumers were likely to have similar expectations about what that might relate to as those explicitly laid out in ad (b). We therefore expected Three to provide substantiation which showed that higher mobile prices, slower speeds and worse coverage were (at the time the ads were published) likely outcomes of the auction to be held following Ofcom’s November 2016 consultation.
Three had referred to Ofcom’s November 2016 consultation document in support of the claim. A key focus of the Ofcom consultation document was the importance of ensuring that the UK mobile market remained competitive following the auction. It recognised that very asymmetric spectrum holdings might weaken competition in the market to the detriment of consumers. The document presented six options to address competition concerns in the auction and recommended the option which Ofcom considered would best address their concerns about a potential weakening of competition while remaining proportionate. Five of the options suggested measures specifically designed to limit BT/EE’s ability to increase its spectrum share. Ofcom’s preferred option in the November 2016 consultation (which was, apart from imposing no competition measures, the option that would impose the smallest limitation to BT/EE’s ability to increase its spectrum share) was to introduce a cap which would have the effect of preventing BT/EE from bidding on spectrum in the 2.3 GHz band. That meant that BT/EE’s share of immediately useable spectrum would remain at 42%, although if BT/EE were to win the entire available spectrum in the 3.4 GHz band (which was not currently useable) its overall share of spectrum when that band was useable would be 44%.
The Ofcom November 2016 consultation document stated that despite the current asymmetry in spectrum share, with BT/EE holding 42%, the market appeared to be operating well, with strong competition, low prices and continued investment in new services. The consultation document noted that in recent years Three and O2 had generally increased their market share of network subscribers while BT/EE and Vodafone, both having a higher share of spectrum, had lost subscribers. The consultation document also noted there was continuing innovation in the market, including innovations by Three when it was the most recent, and smallest MNO, to enter the market. We considered those were examples that competition amongst MNOs remained strong despite the asymmetry in spectrum holdings. We noted that Ofcom remained of that view in its July 2017 statement. Ofcom also noted in July 2017 that Three had acquired UK Broadband in May 2017, which meant it now had significantly increased its share of overall mobile spectrum that would be useable in future.
The information in the consultation document relating to mobile pricing did not support Three’s assertion that in 2015 and 2016 retail mobile prices had significantly increased. The average ‘best prices’ available from MNOs had increased for a few packages that included premium handsets between 2013 and 2015, but those prices had reduced again or had only marginally increased in 2016. Most ‘best price’ packages had remained about the same price or were slightly lower compared to 2014 prices. Ofcom had also reviewed ‘lowest available’ prices for SIM-only plans, and found that of eight plan types, one had increased steadily in price since 2014, another had increased marginally in price and all others had remained stable or decreased in price. Average monthly spend on mobile services in the UK showed steady decline from 2008 until 2014, with an increase of 40p in 2015 from 2014 prices. We considered the consultation document data indicated that mobile prices had not significantly increased in 2015 and 2016.
The consultation document summarised the performance of the four MNOs in relation to coverage and speed. The data relating to coverage for voice and data services, in 2015, showed that while BT/EE had the best coverage for voice and data services across various sub-categories, Three’s coverage was equal or better than Vodafone’s in all but one sub-category. Three’s coverage for data services was also closely comparable to BT/EE’s in all sub-categories. We noted that the ability of MNOs to provide good voice and data coverage therefore did not correlate directly with their spectrum share.
The consultation document also referenced the speeds delivered by the four MNOs in the first half of 2016, as reported by Rootmetrics. BT/EE ranked first, followed by Vodafone, then O2 and Three. While we noted that these rankings correlated more closely to the spectrum share of the MNOs, we understood that spectrum share was not the only factor that had an impact on speed. Ofcom highlighted Rootmetrics’ view that while Three ranked fourth for speed, it had been relatively slow to deploy its 4G network across the UK, and that if it expanded its 4G network, its speeds could improve. Rootmetrics also noted that Vodafone could narrow the gap with BT/EE if it continued to expand its 4G presence.
While we noted Three’s view that spectrum was essential in providing capacity and speeds and that it could not be replicated by alternatives, the Ofcom consultation document considered that MNOs with lower spectrum share could deliver comparable levels of capacity by relying on other short- and long-term approaches such as densifying the network topology and increasing the number of sites, moving to more efficient technologies, and possibly using licence exempt spectrum. However, we noted from Ofcom’s July 2017 statement that it had seen evidence in the consultation which suggested that MNOs would be less able to adapt networks to increase capacity without additional spectrum than it had previously understood.
In July 2017, following the completion of the consultation (and the appearance of the ads under consideration), Ofcom reconsidered the position set out in its November 2016 consultation document. As noted above, it had seen evidence which suggested that MNOs would be less able to adapt networks to increase capacity without additional spectrum than they had previously understood. Ofcom was also less confident that the 3.6 to 3.8 GHz band (which did not form part of the auction but which had been a factor in their consideration of the impact it would have on the market) would be fully useable on a similar timeframe to the 3.4 GHz band. Those factors gave rise to a slightly greater concern about asymmetric spectrum shares. Consequently, while Ofcom maintained its position of imposing a cap on the amount of spectrum in the 2.3 GHz band that any one MNO could hold, it also introduced a cap on the overall amount of spectrum any one MNO could purchase in the auction as a whole – an option which was proposed in the November 2016 consultation document but not as Ofcom’s preferred option at that time. That new cap had the effect of limiting MNOs to a maximum of 37% of the mobile spectrum which Ofcom expected to be useable within broadly the same timeframes. The limit of 37% reflected the level at which Ofcom considered that competition concerns might arise. We noted it was substantially more than the 30% proposed by Make The Air Fair, but was still less than the level at which Ofcom had considered competition concerns might arise in its November 2016 consultation document.
We considered Ofcom’s consultation document and statement highlighted that a possible outcome of the auction could be that competition in the mobile market could be weakened, to the detriment of consumers, if Ofcom’s greatest concerns about the state of the market after the auction were realised. However, we had not seen sufficient evidence from Three, or in the Ofcom consultation document or subsequent statement, to substantiate a claim that the auction run as proposed in the November 2016 consultation document would result in higher mobile prices, slower speeds and worse coverage for UK consumers, or in BT ‘ruining’ the UK’s mobile internet. We concluded the claims in ads (b) and (d) exaggerated the risks of BT/EE behaving, or being in a position to behave, as described, and were therefore misleading.
On that point, ads (b) and (d) breached CAP Code (Edition 12) rules 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. (Misleading advertising), and 3.7 3.7 Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation. (Substantiation).
Ad (c) stated “STOP BT/EE DOMINATING OUR AIRWAVES”. Ad (b) provided material additional to the claim “BT/EE dominate the market” that indicated that it was made in the context of BT/EE’s spectrum share, which could be increased as a result of the auction. We noted Three’s comment in relation to EU competition law, but we considered the ads from the standpoint of the ordinary, reasonably informed reader of the ads, rather than from the perspective of competition law.
We considered consumers were likely to expect from the references to BT/EE ‘dominating’ the market/airwaves in both ads, particularly in the context of the campaign name ‘Make The Air Fair’, that BT/EE currently was so large that it materially limited consumer choices in the range of products and services available from different networks, and that prices were higher, and/or there was poor service delivery across the sector.
We noted that BT/EE held the largest spectrum share relative to its competitors. However, we further understood, as discussed in Point 2, that despite the current asymmetry in spectrum share the market appeared to be operating well, with strong competition, low prices and continued investment in new services. We also noted Ofcom’s consistent view that even after the auction, Vodafone, Three and O2 would remain credible competitors. In other words, they would be able to exert an effective constraint on their rivals across a wide range of mobile services and customers by providing, for example, high quality services, competitive prices, choice and innovation, and so contribute to the overall competitiveness of the market. We concluded that the claims that BT/EE currently ‘dominated’ the market/airwaves had not been substantiated and were therefore misleading.
On that point, ads (b) and (c) breached CAP Code (Edition 12) rules 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. (Misleading advertising) and 3.7 3.7 Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation. (Substantiation).
The ads must not appear again in the form complained of. We told Make The Air Fair to ensure its ads did not imply that it was an independent body campaigning on behalf of consumers. We also told them not to make claims which stated or implied that BT/EE ‘dominated’ the mobile market, that it could ‘ruin’ the UK’s mobile internet, or that if BT/EE bought more spectrum in the auction it would result in higher mobile prices, slower speeds and worse coverage for UK consumers, unless they held adequate substantiation.