NAD Finds Charter Can Support Certain Comparative Advertising Claims, But Determines Other Claims Falsely Disparage AT&T

New York, NY – Dec. 19, 2013 – The National Advertising Division has recommended that Charter Communications, Inc. modify or discontinue certain superior performance and pricing claims made in broadcast and direct-mail advertising.

However, NAD determined that Charter provided a reasonable basis for certain claims regarding its business phone features and for its Internet speed superiority claims when directly compared to the digital subscriber line (DSL) services offered by AT&T Services, Inc., a competing provider of telecommunications services.

NAD is an investigative unit of the advertising industry system of self-regulation. It is administered by the Council of Better Business Bureaus.

Claims made by Charter were challenged by AT&T, which argued that Charter falsely disparaged its Internet services as outdated and inferior to meet the needs of modern businesses. AT&T maintained that references to the “phone company” are thinly-veiled references to AT&T since AT&T is the main “phone company” in the markets where the advertisements are known to be running.

Specifically, the challenger contended that Charter’s advertising is not limited to comparisons to DSL but could reasonably be interpreted by consumers to compare Charter to all of AT&T’s business services, including its U-verse services which are provided over a digital network.

The challenger explained that AT&T offers multiple tiers of Internet speed up to 24 Mbps and although Charter’s lowest business Internet speed is 30 Mbps, there are no noticeable differences in speed between its 30 Mbps and AT&T’s 24 Mbps for streaming videos, downloading emails and surfing the web.

Charter argued that its advertising explicitly targets AT&T’s DSL services, not its U-verse service.

Charter further argued that the direct-mail piece in question was sent only to business customers in the St. Louis area and permanently discontinued prior to NAD’s review.
Further, the advertiser said, its current direct mail piece more explicitly refers to the challenger’s DSL service, thereby making the basis of comparison very clear.

Following its review of the evidence in the record, NAD determined that the advertiser provided a reasonable basis for its Internet speed superiority and benefits claims as compared to AT&T DSL. However, NAD recommended that Charter clearly and conspicuously identify AT&T DSL when making such claims. Further, to the extent Charter advertises in areas where U-Verse is available and AT&T is the main telecommunications company, NAD recommended that the advertiser avoid general references to “AT&T” or “the phone company” when referring to Internet service.

NAD noted in its decision that Charter is free to promote the fact that it offers more and different business phone features than AT&T for all of its packages but recommended that the advertiser discontinue falsely disparaging claims such as “your business can’t stay ahead of the competition” in the context of any phone service superiority claims.

NAD further recommended that the advertiser discontinue falsely disparaging claims such as “AT&T can’t keep up with your business. It’s time to move on,” and “5 reasons your business is better off without AT&T,” and similar claims.

NAD appreciated the advertiser’s written assurance to: 1) discontinue making the claim “you can’t get TV from the phone company” in areas where Charter and AT&T compete; 2) avoid making unsubstantiated claims about the challenger’s customer service (in relation to the reference to “frustrating service” in its revised direct mailer); and 3) discontinue the use of the modifier “only” in connection with its service reliability. NAD believed these actions were necessary and appropriate.

NAD recommended that the claim “15X Faster than DSL” be further delineated from the “30 Mbps for $55” claim to avoid conveying the unsupported message that AT&T DSL offers speeds of only 2 Mbps and to make clearer, in a manner consumers will readily understand, that AT&T DSL offers speeds of up to 6 Mbps.

NAD further concluded that the “15X faster than DSL claim” was truthful so long as the advertisement airs in markets where speeds of 100 Mbps are offered.

NAD recommended that the unsupported claims “More business owners are switching to Charter Business” and “Save over $50 every month on average” and “9 out of 10 customers recommend Charter Business” be discontinued.

Charter, in its advertiser’s statement, said it respectfully disagreed with certain of NAD’s findings. However, the company said, it “appreciates and respects the self-regulatory process, and will take NAD’s recommendations into account in future advertising.”