A Consumers Union analysis of more than 22,000 home internet-service bills, including bills from Wisconsin, has found that many of the documents obscured the true cost of service and included “junk fees” to increase the amount owed.
On average, Wisconsinites paid $75 a month not including bundled services such as cable television, according to Consumers Union, the non-profit publisher of Consumer Reports magazine. That amount mirrored the national average.
Company-imposed fees, that may appear to be required by the government but are not, sometimes added more than $10 to a bill. The fees enable internet service providers to raise prices without seeming to violate marketing or contractual price commitments.
Consumers Union found that more than a dozen internet service providers included “junk fees” on their bills under names such as “network enhancement fee, internet infrastructure fee, deregulated administration fee, and technology service fee.”
The description might say the fees aren’t required by the government.
“But the way these fees are presented on bills frequently creates the false impression that they are imposed by government regulation or taxation, when instead they are often routine input costs and are distinguished from the core service price only at the provider’s discretion,” Consumers Union said. “Such fees do a disservice to consumers by muddying the true price of broadband.”
A wide range of fees can add up to a significant portion of the overall cost of service.
“Individual fees tied directly to internet service in our sample typically ranged from $2.49 to $9.95 per month. It is often difficult to determine whether these fees are associated with broadband or other elements of a service bundle. Some of these fees, such as the cost of renting a modem or wireless router from the provider, are avoidable, but most are not,” Consumers Union said.
Modem charges are no longer allowed
Until recently, some internet service providers charged for modems they supplied even if a customer used their own device instead.
Those fees are no longer legal, said Jonathan Schwantes, senior policy council and manager of special projects at Consumers Union.
Some service providers charge a fee for increased speed performance, such as an additional $20 a month for a “speed boost.”
“We treated these costs as part of the base internet price to accurately reflect what the consumer is paying for the service received,” Consumers Union said.
Consumers Union received bills from all 50 states and the District of Columbia, voluntarily submitted by internet-service subscribers. Personal identifying information was deleted in the “Broadband Together” project done in partnership with the Milwaukee Journal Sentinel and a handful of other newspapers.
More than 500 bills were received from Wisconsin. Nationwide, nearly 86% were from urban areas.
Competition improves speeds, reduces prices
Studies have shown that prices are lower, and speeds are higher, in areas where two or more internet service providers compete for subscribers.
Yet Consumers Union found many instances of download speeds routinely failing to match the advertised speeds people might expect.
“This was especially true for users paying for premium plans purporting to offer download speeds of ‘up to’ between 940 and 1,200 megabits per second, who in fact reported median speeds of between 360 and 373 Mbps,” the analysis said.
Deregulation of the telecommunications industry, through changes in laws and court decisions, has lessened the abilities of state and federal agencies to hold service providers accountable to customers.
Last year, Congress ordered the Federal Communications Commission to develop and implement a standardized consumer broadband “nutrition” label with the goal of bringing greater price transparency and uniformity to internet-service pricing.
Consumers Union said the label could help resolve some of the billing issues identified in its analysis because it would require clear disclosures of pricing information, discounts, fees, and internet performance.
However, the FCC may not require the label to appear on every monthly broadband bill. And if it’s only displayed on websites and marketing materials, many current customers may never see it.
“The same could be true if the label is buried in fine print or merely linked to by a hyperlink,” Consumers Union said.