NAD Recommends AT&T Modify Certain ‘U-Verse’ Ads to Better Disclose Limitations of Service, Discontinue TV Spots; Finds Advertiser Provided ‘Reasonable Basis’ for Speed Claim

New York, NY – Nov. 24, 2014 – The National Advertising Division has recommended that AT&T Services, Inc., modify disclosures that accompany certain advertised Internet speed claims made for the company’s U-verse service.

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

The advertising claims at issue were challenged by Comcast Cable Communications, LLC, and included:

• “Up to 45 Mbps”
• “Reliable”
• “Fastest Internet for the Price”

NAD also considered whether the claims at issue implied that the advertised speed tiers are not subject to speed degradation when consumers in a U-verse home are watching two or more high-definition (HD) channels or that AT&T’s 45 Megabits per second (Mbps) speed tier is widely available.

When reviewing “up to” claims about Internet speed, NAD has previously noted that advertisers must demonstrate that the maximum level of performance claimed can be achieved by an “appreciable number” of consumers under circumstances that are typically encountered.

In this case, AT&T provided NAD with data that showed that an appreciable number of consumers do indeed receive its 45 Mbps tier of service under typical-use scenarios. NAD determined that the advertiser had provided a reasonable basis for its claim.

However, NAD noted that there are material limitations to the availability of this service. Specifically, NAD noted, in some markets where the challenged advertisements appeared, the 45 Mbps tier of service is not available to a majority of consumers.

NAD recommended that where the advertised tier of service is available to less than 50 percent of the consumers in the geographical area where the advertising appears, AT&T should modify its advertising to clearly and conspicuously disclose such limitations through the use of explicit qualifying language—e.g., “up to 45 Mbps may not be available in your area.”

NAD also considered whether AT&T’s various speed tiers – 18 Mbps, 24 Mbps and 45 Mbps – are subject to speed degradation in certain circumstances, and if so, whether AT&T’s advertising fails to disclose such speed degradation.

Following its review, NAD recommended that the advertiser – when claiming to offer speeds of “up to” 18 Mbps, 24 Mbps or 45 Mbps – clearly and conspicuously disclose that consumers may not receive the advertised maximum speeds when two or more HD streams are being viewed in the household.

NAD noted in its decision that there was no dispute between the parties that AT&T U-verse allows consumers to dependably establish and maintain an Internet connection. NAD therefore concluded that the advertiser had supported its reliability claim.

However, NAD recommended that AT&T either discontinue two television spots or modify the spots so that they no longer convey the unsupported message that U-verse itself is the reason for the vastly improved quality and speed of Internet service.

Further, NAD recommended that AT&T either discontinue its “Fastest Internet for the price” claim or modify the claim by ensuring that consumers understand that the claim is based on a comparison of pricing for 3.0 Mbps service.

AT&T, in its advertiser’s statement, said the company “appreciates the guidance from NAD, which should apply equally and fairly across the entire industry, regarding the types of disclosures to be made when a new Internet services are made available.”

The company noted that it was “very disappointed, however, with NAD’s decision recommending additional disclosures be made regarding theoretical bandwidth reductions  for U-verse users engaging in very specific and rare combinations of behaviors … . We believe this kind of disclosure overload does not contribute to consumer understanding of the product offering, but rather detracts from it.”

Finally, the company said, it will take “into account all of NAD’s recommendations in its advertising for U-verse.”