Internet Service Should Cost Exactly as Much as It's Advertised to Cost

There's no good reason why ISPs aren't required to use an all-in pricing model.

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Apr 5 2016, 7:14pm

Image: FCC

Monday, the Federal Communications Commission announced "Broadband Facts," an information label that internet service providers are supposed to use to let customers know how much money they're going to spend on their connections. That such a system is necessary is patently absurd, and it's a depressing reminder that ISPs and mobile providers, for years, have been allowed to mislead customers in a number of different ways.

The new labeling system is modeled on the Food and Drug Administration's Nutritional Facts that we've all grown to rely on to know what's in our food. Nutrition Facts make sense. Food manufacturers often have to do complex lab analyses to figure out just how much iron is in your bowl of cereal, for instance—and there's no good way for a consumer to guess that number without the labeling.

But the thing is, we've already got what is theoretically a good system for telling consumers how much they're going to pay for broadband and what they're going to get for their money. That system works for just about every other industry: It's called listing the price and details of your product when you go to actually buy it.

There's no good reason why the FCC and the Federal Trade Commission has allowed ISPs and mobile data providers to tack on the totally opaque fees that it's now trying to shed light on, and there's no good reason why the FCC allows ISPs to continue to advertise services that both don't live up to what's actually being offered and don't list all the applicable fees in a sort of "all in" pricing scheme. The price you see advertised on an ISP's website is never, ever the price you actually end up paying.

The sample Broadband Facts that the FCC has listed includes things like "administrative fees," "activation fees," "deposits," "early termination fees," and other fees that end up changing an ISP or data plan's ultimate bottom line. Why aren't these fees simply included in the advertised price? If things like "administrative fees" need to be charged, they should be reflected in the price that is advertised to consumers.

"The actual prices paid for broadband-related services can be as much as 40 percent greater than what is advertised after taxes and fees are added to a bill," the FCC wrote in its press release. The commission said it gets 2,000 consumer complaints every year about "surprise fees" on their broadband bills.

A nice comparison here would be the airline industry, which is similarly laden with mandatory taxes and fees. The difference is that the advertised price for a flight is the price that you actually end up paying.

These are ordering options I just pulled up from Comcast's website (other providers are just as confusing):

So if I'm a new customer, how much am I going to pay? How much are "other applicable charges?" How much are "fees?" And am I going to get what's actually being advertised? Chances are, I'm going to pay "more than advertised" and may not get what I paid for.

All these options would seem to be a good thing for consumers, but the truth is they're all pretty misleading. Dane Jasper, CEO of Sonic, a west coast ISP that's gotten lots of customers for its no bullshit policies, told me last year that these tiers are there simply to confuse customers and limit expectations. Comcast is just going to install the same conduit regardless of which one I select, then it's going to artificially limit my bandwidth depending on how much I pay.

"A performance or size constraint on a product like a hamburger makes sense. There's more cow in a Double Whopper," Jasper told me. "There isn't more broadband in a 50MB connection or in a 10MB connection over the same wire."

Sonic, Jasper says, sells one thing: "unlimited, uncapped, and untiered broadband, as fast as it will go."

The FCC's most recent broadband report shows that ISPs are finally doing a better job of delivering the speeds that they actually promise, but still found that many ISPs do pretty poorly on its "80/80" measure, which looks at whether an ISP is capable of delivering what it advertises to at least 80 percent of its customers for 80 percent of the peak usage time period.

More simply, many Americans still aren't getting the speeds they pay for during the times when they are most likely to use the internet.

Broadband Facts is an attempt to clarify what you're getting when you pay for broadband. It's a potentially useful labeling system, but it's still way more complicated than it needs to be. The solution is easy: Require that ISPs deliver what they promise, and make them tell consumers up front what they're actually going to pay.