Telecom companies: prices advertised must be inclusive of all applicable taxes: CCP

The Competition Commission of Pakistan (CCP) has declared that the failure of telecommunication companies to advertise the exact price that a consumer would have to pay, may result in deceptive marketing practice whereas prices advertised by companies must be inclusive of applicable 'taxes and fees.' The CCP here on Thursday issued draft 'Marketing Practices Guidelines for the Telecom Sector' pursuant to the provisions of Section 29 of the Competition Act, 2010.
These guidelines replace the previously issued draft "Deceptive Marketing Guidelines for the Telecom Sector". The Guidelines have been issued to provide guidance with respect to Section 10 of the Act 'Deceptive Marketing Practices' to undertakings providing telecommunications services. The purpose of these guidelines is to provide guidance to undertakings providing telecommunications products and services, including broadband, wifi, internet, among others, in Pakistan.
The CCP has asked all interested parties to forward their comments and suggestions regarding the draft guidelines to the contacts provided at the end of the guidelines document by October 8, 2014. The guidelines have been uploaded on the website of CCP.
According to the guidelines, a Telco that makes certain claims through its marketing, representations or warranties regarding the product or service in question or even the performance of the Telco itself, should have some reasonable basis for disseminating such claims, representations or warranties to consumers.
A Telco should ensure that all key terms and conditions relating to the purchase or use of a product or service are disclosed to the consumers prior to the purchase by the consumer of such product or service. These terms and conditions should be clearly stated, easily accessible and published on their websites or in hard copy, in both Urdu and English. These terms, inter alia, should include the duration for which the product or service is valid, situations in which the Telco or consumer may terminate the contract, etc
In respect of advertisements pertaining to price reductions or discounts, Telco should take care that the actual price reduction or a percentage is advertised and that there is in fact an actual reduction from the former price at which the product or service was being sold.
If a Telco is advertising the price of a product or service as lower than that offered by another Telco for the same product or service, it must ensure that this comparison is based on facts and is not fictitious. The price comparison should also be in respect of prices that are inclusive of taxes. The practice of advertising prices of products or services offered by telcos in the denomination of paisas will be regarded as deceptive as the one rupee coin is the lowest recognised unit. Paisas are no longer recognized as legal tender in Pakistan. Instead of a price being expressed as 90 paisa per minute, for example, it should be expressed as Rs.0.90 per minute, the CCP stated.
The comparisons should only be made between products or services that meet the same needs or that are intended for the same purpose. Similarly, bundled products and services should be compared with similar "bundles" offered by a competitor to prevent any comparison from being misleading or deceptive. Comparisons have to be truthful and meaningful. The comparative advertising should not in any way discredit the trademarks, trade names or other distinguishing marks of an undertaking.
The CCP stated that when using words such as "free", "gift", "given without charge", or "bonus", Telco should be careful to disclose all relevant terms and conditions of the offer. The product or service being advertised in such a manner should be actually free and the consumer should not have to pay for that product or service in some other manner. If a Telco uses the word "unlimited" in advertising any telecommunication service, it has to clearly define what aspect of the service the term applies to, and also disclose any other conditions that may qualify the offer.
When a Telco is advertising a product or service, it should make sure that the product or service is available at the time of the advertisement, all terms and conditions relating to the limited availability of the product or service are disclosed and it must intend to supply the product or service to the consumers, the CCP maintained.
Telcos when advertising promotions should generally disclose the approximate number or nature of the prize, restrictions on entry or the number of entries, the areas in which the consumers can take part in the contest, any information that may affect odds of winning, etc.
As per guidelines, these guidelines apply to telemarketing as to any other conduct in telecommunications markets. Emphasis should be placed on clear and truthful representation of products and services. The CCP said that telcos providing telecommunication products and services are under a duty to disclose essential and material information to consumers rather than the consumers only being informed if they inquire about it. For example, telcos should inform the consumers of any offers that may be activated on purchase of a service and also give details of the options available to the consumer.
Explaining the accurate description of speed in broadband advertising, the CCP said that the claims should not be made that internet/downloading speed remains constant when it is in fact not the case. Telcos must explain to the customers that the actual speed they will receive will depend on line quality, distance from exchange, load of traffic, among other factors. If possible, the number of people using the internet at any given period in time must be estimated and the contention ratio must be calculated. Internet users must be made aware of this contention ratio through the service provider's website. A Typical Speed Range (TSR) representing the range of speed actually achieved by three fourth of the customers should be used when advertising broadband on the basis of speed. If a maximum speed is used in an advertisement, the TSR must be equally highlighted.
The guidelines also focus on marketing practices that may violate Section 10 of the Competition Act. However, the list of deceptive marketing practices enumerated here is not exhaustive, and may be expanded and/or amended by the Commission from time to time.
The distribution of false or misleading information in respect of telecommunication products or services may take any form, be it through the print media, television advertisements, brochures, billboards, banners, advertisements on internet, telemarketing and Short Message Service (SMS) offers, among other means of advertising.
The "False information" can be said to include oral or written statements or representations that are contrary to truth or fact and not in accordance with the reality or actuality; usually imply either conscious wrong or culpable negligence; have a stricter and stronger connotation than can be justified and are not readily open to interpretation.
On the other hand, "misleading information" includes oral or written statements or representations that are capable of giving a wrong impression; likely to lead to error of conduct, thought or judgement; tend to misinform or misguide owing to vagueness or any omission; omission of information is also misleading. Omission of material information also constitutes deceptive marketing practice. Omissions include the situations when a telco chooses to omit relevant material information in advertisements, this will be considered as false representation. Half truths may also be considered to be in violation of Section 10, if the effect of the half truth is that the consumer is misled. For example, not disclosing that a certain offer, which entitles the consumer to get discounted rates is only available for a limited period of time or not mentioning the date of expiry, may be regarded as violation of section 10 of the Competition Act, the CCP added.