Junk Fees and Slow Speeds: Study of 22,000 Internet Bills Shows How Comcast, AT&T, and Others Hide the Cost of Broadband
If there’s one thing Americans seem to agree on, it’s that they don’t like their internet service providers. They have a lot of good reasons to be frustrated, according to a survey of US broadband service from Consumer Reports released Thursday.
Consumer Reports collected and analyzed over 22,000 internet bills in an unprecedented study scrutinizing 500 internet service providers from all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. The study uncovered arbitrary price differences, confusing bills, hidden fees, wildly varying speeds, and an overall lack of transparency that rendered it extremely difficult for anyone to get a clear picture of what it should cost to connect to the internet.
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“We knew we’d uncover a lot of nonsense, but it was surprising to see how difficult it is for consumers to understand bills that should really be straightforward,” said Jonathan Schwantes, senior policy counsel at Consumer Reports. “Policymakers need to step in to make things more affordable and transparent, and address competition issues.”
Speed was a major issue. People who participated in the study had download speeds that regularly failed to match the speeds that ISPs promised. Ironically, that problem was worse for people paying for “premium” plans that advertise higher speeds between 940 and 1,200 Mbps. In reality, speeds fell between 360 and 373 Mbps.
Nationally, prices ranged from less than $40 to over $100, with a median price of $74.99. The study found inconsistent pricing for identical services, though. Internet service providers (ISPs) even charged some people the same or higher prices for download speeds less than 25 Mbps (extremely slow) as others paid for speedy 300 Mbps plans. But issues with the bills were even more troubling when the researchers drilled into the details.
The bills were rife with fees that make prices even more confusing, which can surprise consumers and hide the true cost when you’re signing up. More than a dozen providers charged so-called junk fees with names like “network enhancement fee,” “internet infrastructure fee,” “deregulated administration fee,” and “technology service fee.” Some fees are avoidable, like an extra charge for renting a WiFi router, but most aren’t.
“These make a lot of mealy mouthed excuses for why they charge these fees, but they’re really just charging extra to cover the cost of doing business,” Schwantes said. “Maintaining your high speed fiber network sounds like something my 60 bucks should cover, why do you need to charge me an extra seven dollars?”
The study found that providers including Comcast, Cox, AT&T, and Wave Broadband use data caps in some areas and charge extra fees for going over the caps. While unlimited data plans are an option, they can add as much as $49.99 to the monthly price.
The study wasn’t nationally representative, but it’s one of the most ambitious efforts to understand the real cost of broadband service in the US. (Disclosure: this reporter formerly worked at Consumer Reports in the company’s journalism division, which is separate from its research arm.)
“We’re always working on ways to present customers with service information in a clear and transparent way so they can easily understand the details of their service and have a positive experience,” said Joel Shadle, a spokesperson for Comcast (aka Xfinity). Shadle said Comcast is rolling out a new bill format that breaks out the cost of bundled services, and supports efforts to improve transparency in the industry.
“These findings do not match our current offers. The charges on those bills may reflect older plans that we no longer sell. Customers with older plans can check on our website or call in to see if a lower cost offer is available to them for faster speeds and switch service.” an AT&T spokesperson said.
“Optimum offers a variety of competitively priced services, packages, and promotions across different price points, from our multi-gig fiber services to our internet and mobile savings offers and more,” said Erin Smyth, a spokesperson for Altice, owner of Optimum. Cox and Verizon didn’t answer Gizmodo’s questions.
Thousands of bills had problems that made it hard to understand the true cost of internet service, which stops people from comparison shopping for the best price. More than half of the bills from AT&T and Verizon included promotional, introductory and conditional discounts, typically running from $10 to $50. Obviously discounts are a good thing, but they can be problematic because it’s generally difficult to tell when those discounts will expire and what the actual cost of service will be afterward. Many ISPs including Comcast, the largest provider, often fail to itemize packages that bundle internet, phone, and TV, which makes it impossible to know the price of each service.
A lack of competition exacerbates the issue, the study found. In over 9,000 zip codes, Consumer Reports only detected one ISP, and in the vast majority of zip codes, the study only received bills from one or two providers. Unsurprisingly, the study found lower prices in areas with competition. Prices were about $5 less per month in areas with 3 ISPs, and costs decreased as the number of providers went up. ISPs are at least partially responsible for that issue: industry lobbyists have fought against attempts to set up government run internet service.
Overall, the study pointed to a bigger problem: a total lack of regulation. During ex-president Donald Trump’s administration, the FCC reclassified internet service so it faces far less regulatory scrutiny, an issue that circled around the Net Neutrality debate. Instead of regulating internet providers as an essential part of modern life like phone, gas, and electric companies, the government treats broadband service like a luxury with hardly any oversight.
Schwantes said that the problems highlighted in the report could be solved if the FCC reinstates its authority to regulate ISPs. “We’re talking about billions of dollars in internet infrastructure. It’s a farce that the FCC isn’t regulating broadband as a telecommunications service,” he said.
Update: 11/17/2022 11:15 a.m. ET: This story has been updated with a comment from Altice.
Update: 11/17/2022 8:20 a.m. ET: This story has been updated with a comment from AT&T.
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