Business, Innovation and SkillsWritten evidence submitted by British Sky Broadcasting Ltd

1. Sky is the United Kingdom’s leading pay TV operator. With Sky Broadband and Sky Talk, Sky is also the UK’s second largest and fastest growing broadband and telephony provider. As at 30 June 2013, Sky had over 10.4 million subscribers to its satellite TV business, Sky Broadband had reached 4.9 million customers, and Sky Talk had over 4.5 million telephony customers. Last summer Sky also launched NOW TV, a new internet TV service that provides Sky Movies titles streamed through a broadband connection to which we have now added the opportunity to purchase day passes to access Sky Sports.

2. Last year Sky responded to a number of consultations feeding into the development of the Consumer Rights Bill including BIS’ consultation document “Enhancing Consumer Confidence by clarifying Consumer Law” and the Law Commission’s consultation on Unfair Terms in Consumer Contracts. We have recently attended two BIS industry workshops which facilitated some interesting discussions on various aspects of the draft Consumer Rights Bill. Some of the points raised in those discussions also form part of this response. We have limited our submission to three areas of concern which centre around some digital content provisions, a clause in the Services Chapter and some sections in the Unfair Terms Chapter.

I—Digital Content

Digital content to be of satisfactory quality—section 36(10)

(10) A contract to provide digital content may be treated as making provision about the quality of the digital content as a matter of custom

3. Sky is concerned that use of the term “as a matter of custom” is not appropriate in a digital content context because the digital market is so fast-paced that it is unlikely that “custom” will remain current for long. We would suggest deleting this subsection.

Digital content to be fit for a particular purpose—section 37(1), (3) and (6)

(1) Subsection (3) applies to a contract to provide digital content if before the contract is made the consumer makes known to the trader (expressly or by implication) any particular purpose for which the consumer is contracting for the digital content

(3) The contract is to be treated as including a term that the digital content is reasonably fit for that purpose, whether or not that is a purpose for which digital content of that kind is usually provided

(6) A contract to provide digital content may be treated as making provision about the fitness of the digital content for a particular purpose as a matter of custom

4. Sky has serious concerns about these subsections given the immediate nature of receiving digital content on purchase. These subsections would have the effect of giving consumers the opportunity to inform suppliers that they intend to use the digital content for a particular purpose and then to immediately download that content without affording suppliers the opportunity to respond as to whether or not the digital content was indeed fit for the consumers’ stated purpose. For example, if a consumer was looking at an App which was a rough and ready spirit level (it might be a game designed and promoted for teaching children basic carpentry skills) and e-mailed the App supplier to say that he intended to use the App for a complex construction project he is undertaking and then immediately downloaded it, under the current drafting, that App would be deemed fit for that purpose and if it did not perform to the standard the consumer had stated, he would have a course of action against the App supplier.

5. Sky considers that these subsections should be deleted and replaced with drafting that protects consumers by requiring traders to supply digital content which is fit for the purpose stated by the supplier and which is made transparent to consumers. At the very least, if this drafting is retained, the supplier should be given a reasonable opportunity to respond to the consumer and either affirm the consumer’s stated purpose or to explain that the digital content is not suitable for the purpose stated by the consumer before the consumer purchases the content. If the consumer does not wait for a response from the trader before purchasing the digital content, the contract should not be treated as including a term that the digital content is reasonably fit for the consumer’s stated purpose.

6. In addition, Sky has similar concerns as those set out in paragraph 3 regarding the inclusion of the term “as a matter of custom” in clause 36(6). Again we would suggest deleting this subsection.

Time when, and period for which, digital content is provided—section 41(3)

7. Sky is concerned that the reference to a “reasonable period of time” in this subsection could be argued by consumers as overriding the enforceability of express limitations brought to the consumer’s attention pre-purchase. For example, if digital content provided by way of a streaming service is made available for a short period of time and this is made clear to the consumer pre-purchase the consumer should not have recourse to this provision to argue that the period was unreasonable. We would suggest making it clear that availability for the period of time the consumer was told and agreed pre-purchase will not be considered unreasonable, ie the provision should only apply in the event of silence by the trader on the time period for which the facility to transmit the content shall be available.

II—Services

Information about the trader or service to be binding—section 52

(1) Every contract to provide a service is to be treated as including as a term of the contract (whether or not it does so expressly) anything that:

(a) is spoken or written to the consumer by or on behalf of the trader about the trader or the service, and

(b) is taken into account by the consumer when deciding to enter into the contract or when making any decision about the service after entering into the contract

8. Sky is concerned that this drafting may have unintended consequences for consumers. Whilst we agree that consumers must be provided with correct and up to date information on products and services and should be able to rely on the information they are given (with current protection under the Consumer Protection from Unfair Trading Regulations 2008 (the “CPRs”)), there will be times when customer service agents are personably chatting to customers to give them some background or context to a product or service. It would be regrettable if as a result of section 52 customers were greeted with completely scripted and wooden responses because agents were too wary to engage in any other conversation.

9. Sky devotes significant time and resource to train customer service agents to make the customer’s interaction with us as congenial as possible. Naturally, we have information scripted which must be shared with the customer so that they fully understand their rights and obligations in relation to the key areas of the contract and so that we are compliant with consumer protection and other sector specific Ofcom regulation. The conversations are followed up by our welcome letter and contractual information (with the opportunity to cancel the order if the customer changes their mind within the cooling off period). We are concerned that albeit that we are confident that our agents would not mislead prospective customers, if implemented in this form, we would need to advise the business to retrain agents to ensure that they hold fast to a script and not to engage with customers any further than that, in order to ensure that no unscripted comments were to form part of the contract.

10. We are also concerned that confusion could arise as to which terms apply. We cannot go through the entire contract with the customer on the phone but we do highlight the main terms of the agreement; for example the price, minimum term, package etc. We then send customers their full contractual documentation so they can consider it at their leisure. The terms and conditions that are sent to the customer constitute the final contract. If customers object to those terms they still have the opportunity to cancel the contract before services are activated (following installation of necessary equipment) or within any applicable cooling off period. If the customer is able to add additional terms as a result of section 52, this causes confusion as to which terms constitute the final contract, bearing in mind that the customer has had the opportunity to read the full contract and cancel if those terms are not suitable.

11. Sky considers that consumers are already protected from misrepresentation by the law of misrepresentation, the CPRs and in addition, the cooling off periods provided for under the current Door Stop Selling Regulations1 and the Consumer Protection (Distance Selling) Regulations 2000 (to be replaced by the Consumer Contracts (Information, Cancellation and Additional Payments) Regulations) that allow customers to change their minds if they are unhappy with the products or services or the terms of the contract. We consider that this additional layer of consumer protection is unnecessary.

III—Unfair Terms

Exclusion from assessment of fairness—section 67 (2) & (4)

(2) Subsection (1) excludes a term from an assessment under section 65(1) only if it is transparent and prominent

(4) A term is prominent for the purposes of this section if it is brought to the consumer’s attention in such a way that an average consumer would be aware of the term

12. Sky has some concerns about the requirement for price terms to be “prominent” in order to be within the exemption under section 65(1) so that the term is not assessable for fairness, particularly in respect of scenarios where a customer is purchasing a “package” or “bundle” of services, or is purchasing a primary service but may at a later date add other services which are priced separately but which also form part of the same contracts, or where prices change regularly. In respect of the first two examples, our concern is that under the Bill, charges could be subject to an assessment of fairness if they are not brought to the average consumer’s attention at the time of entering into a contract.

13. This is perhaps best illustrated by examples. We offer various packages for fixed-line telephony services. Each package has a monthly subscription cost which allows the customer to make various types of calls without additional charge, eg evening and weekend calls to UK landlines. However customers are also able to use their phone line to make calls which do not fall within the inclusive usage allowance. Although the most popular call charges may be brought prominently to the customer’s attention, it would be impractical in any sales process to bring all the possible call charges to the customer’s attention as the document setting these out runs to several pages and includes details of many call charges which customers may never make, eg charges for calls to certain international countries. However according to the Bill, those call charges not brought to the average consumer’s attention at the point of sale, would not fall within the price exemption.

14. Another example from outside of the communications industry if a customer books a hotel room, the room rate will be made clear but the hotel may offer additional optional services, such as its laundry service or mini-bar. The Bill appears to require that the hotel would have to give the customer details of all its prices for additional or optional services in order for those prices to fall within the exemption. If this is BIS’ intention, it would, in the case of telephone sales, both considerably lengthen the call for the consumer, and also have the result of making the customer switch off from other information given on the call which will be of considerable more importance than information about charges they may or may not incur at a point in the future.

15. Suppliers such as Sky also refer customers to pricing information on their website where that information changes regularly, such as charges for directory enquiry calls which change frequently often due to circumstances outside the control of the telecoms provider, and it is therefore logistically very difficult to provide customers with up-to-date information in hard copy documents. For example, we currently refer customers to our website for our call charge pricing rather than including it in our hard copy contracts. Would this information be considered to be “prominent” so that the average consumer would be aware of it and so within the exemption in s65(1), or would it fall to be assessable for fairness? We do not believe that this can be BIS’ intention but we would welcome further clarity on these points. We understand from the BIS workshops that BIS will be discussing this issue with Ofcom to assess the impact on the communications sector. We support transparency for our customers but we would caution against measures which are impractical to implement.

Other requirements for contract terms—section 71(2) and (3)

(2) If a term of a consumer contract is especially onerous or unusual, the trader must ensure that the term is drawn particularly to the consumer’s attention

(3) Whether a term of a contract is especially onerous or unusual is to be determined, in particular, by reference to the subject matter of the contract

16. Sky has similar concerns under s71 (2) to those set out under section s67 (4). As explained, Sky along with other communications providers, has a long tariff guide detailing the call charges to all international destinations. Calls to St Helena will indeed be unusual for the vast majority of the population. The use of the term “unusual” in the Bill would require that this call charge be “drawn particularly to the consumer’s attention”. This is an even higher test than the “prominence” test under s65 (4) and could equally apply to communications providers international tariffs. At one of the workshops, BIS confirmed that s71 applied at the time the contract was concluded which would mean that for telephone sales, the agents would be required to read out any “unusual” call charges. Again, we are confident that this is not BIS’ intention but the unintended consequences may be that in the communications sector, in order to avoid the price terms of call charges being assessable for fairness, providers are required to bring all “unusual” charges to the consumer’s attention thereby drowning out the terms that consumers really do need bringing to their attention.

22 August 2013