FactCheck: How free is Sky broadband?
Updated on 10 August 2006
FactCheck studies the small print
Sky logo
The Claim
"Sky Broadband bringing free broadband to Sky TV customers"
Newspaper Adverts, 9 August 2006
Background
War has broken out between the UK's telecom providers as they jostle for position in the 'free' broadband market. TalkTalk threw down the gauntlet with its 'free broadband forever' package, and at the end of July Sky moved into the space, bundling free high-speed internet into its satellite TV offering.
CEO of BSkyB James Murdoch launched the service by saying "too many people have been paying too much for broadband for too long." After TalkTalk was rapped by the Advertising Standards Authority (ASA) for misleading consumers with a free package that included connection charges, line rental, a mobile phone contract and disconnection fee, advertisers have been more careful in their use of the word 'free'. But the latest ads from Sky do claim to offer 'free' broadband to its Sky TV customers.
Analysis
So how 'free' is Sky's broadband service?
Sky is offering free broadband subscription to customers already subscribing to any of BSkyB's TV offerings. With the basic 'free' service, called Base, customers get free monthly subscription, and a free wireless broadband box and one year's security package.
But they do have to fork out an activation fee of £40 and need a BT phone line, rental for which costs £11 a month. Customers can choose to have their broadband service installed by an engineer for £50.
With Sky's TV packages starting from £15 a month, rival broadband provider NTL claims that the lowest amount of money a subscriber would pay for a 'free' broadband package from Sky is £402 a year, including engineer installation, which is free with NTL/Telewest.
NTL does not offer a 'free' broadband service but claims that its bundled broadband and digital TV package is, at £20 a month, a cheaper option than Sky's. In a recent series of ad campaigns NTL claimed that, with Sky's deal, a subscriber would pay up to £162 more in their first year than with NTL/Telewest, taking into account the installation costs of the first year. Line rental is not required as NTL's digital TV and broadband services run via cable and there is no connection fee for take-up of the broadband service.
But NTL's own bundled TV and broadband offering also has strings attached. Installation is free of charge, and the offer has no connection fees and unlimited monthly use. But after the first year the price of the package increases to £23.49 a month, and the £20-for-two offer ends at the end of August 2006, after which time it reverts to £23.49.
But even after the first year, when NTL's prices rise and the costs of installation have been removed from Sky's package, NTL's offering is still cheaper than Sky's 'free' package. The annual fee for Sky's basic broadband and digital TV service - from the second year of subscription onwards and taking into account phone line rental and TV subscription - would be at least £312 compared to £281.88 a year for NTL's basic package.
So is Sky able to call its service free?
The broadcaster avoids the sweeping 'free forever' slogan of TalkTalk, its ads clearly aimed at those who are already Sky customers and spelling out the additional charges.
The reason TalkTalk fell foul of advertising regulation with its ads was that its broadband and phone calls package was entirely new; Sky's free deal, however, adds something extra to an existing package.
The ASA adjudication notes state that TalkTalk had relied on the CAP (Committee of Advertising Practice) Help note on 'free' claims for internet packages in order to claim that the broadband element was free.
(Contd.)
This states that "marketers may claim their services are 'free' where consumers pay nothing for each element of the service but are required to pay for another separate item." It gives the example of a free internet service that requires customers to make a certain amount of non-internet related phone calls or sign up to a cable TV service.
But this Help note relates only to existing packages and TalkTalk's T3I calls package - to which subscribers must sign up in order to receive free broadband - was a brand new calls package in which "broadband was an intrinsic element", according to a spokesman for the ASA.
Sky's deal on the other hand adds broadband to a pre-existing service, and thus can be called 'free' despite one-off charges for activation.
It is also aimed squarely at existing Sky TV customers, and Karen Darby, chief executive of consumer website Simply Switch, says that 'free' packages are of more benefit to existing customers: "There's no such thing as a free lunch. Bundled packages tend to be great for existing customers but not for new customers."
But even customers already signed up to one of Sky's TV packages will need to spend money, on a £40 connection fee and a BT line.
Sky is launching its own line rental product in the final quarter of 2006 costing £9, which will bring costs down, and a spokesman for BSkyB said that "the vast majority of its customers will be already connected to the BT network."
The key aim of providers launching the latest 'free' broadband deals is to lock their existing customers into dual, triple or even quadruple play as convergence gathers pace. Broadcasters and telecoms companies are, as a result of mergers and expansion of their offerings, now able to offer deals that combine digital TV, phone and internet services; offering their existing customers a bundled package - with one element billed as 'free' - allows them to quickly build a subscription base for new services.
The original freebie from TalkTalk, offering 'Free Broadband Forever', has now dropped its slogan and watered down some of its claims.
FactCheck Rating: 3
Verdict
Sky's 'free' broadband package is not 'free' even for its own TV customers, who need to pay activation fee and a BT phone rental charge. But there is no monthly subscription charge and because the broadband service is added to an existing package it falls within the guidelines of what advertisers are permitted to call 'free'.
The Sources
Sky Broadband promotion
NTL
Advertising Standards Authority ruling on TalkTalk ads, 19 July 2006
Your view
You've read the article, now have your say. We want to know your experiences and your views. We also want to know if there are any claims you want given the FactCheck treatment. Email factcheck@channel4.com
FactCheck will correct significant errors in a timely manner, Readers should direct their enquiries to the Editor at the email address above.
How ratings work
ery time a FactCheck article is published we'll give it a rating from zero to five.
The lower end of the scale indicates that the claim in question largerly checks out, while the upper end of the scale suggests misrepresentation, exaggeration, a massaging of statistics and/or language.
In the unlikely event that we award a 5 out of 5, our factcheckers have concluded that the claim under examination has absolutely no basis in fact.
