Consumer Reports, an independent, not-for-profit research organization best known for its product reviews, launched its Fight for Fair Internet research in July 2021. At its core, the survey sought to reveal what Americans pay for internet services and (more importantly) what their money actually gets them. We’ll avoid any fanfare here: things aren’t great. After analyzing more than 22,000 internet bills from all 50 states, the District of Columbia, Puerto Rico and the US Virgin Islands, Consumer Reports found that arbitrary pricing and other disruptive practices are commonplace. Even worse, the magazine found this was true for many of the 526 domestic ISPs surveyed during the study, including all 26 of the largest providers, covering more than 90 percent of the country’s services.
An anonymized AT&T invoice from the published study illustrates how consumers get discounts seemingly at random and with no information on how to keep the discount. The bill states that the customer received two $10 rebates from the original $80 bill: one for bundling and one for “loyalty.” Most of us appreciate a good discount, but without any explanation of what “loyalty” means – was the customer made aware of the discount? Is the discount permanent? It is difficult to compare prices with those of other ISPs, which hinders competition.
Some ISPs even use these random discounts to make it to appear as if their customers are getting a better deal when in reality they are not. More than half of AT&T and Verizon bills Consumer Reports analysis included some kind of discount, while Google Fiber bills never did… although some Google Fiber customers paid lower prices for the same level of service.
At the other end of the inconsistent pricing spectrum are fees. Several of the ISPs the magazine studied mentioned “network enhancement,” “Internet infrastructure,” “deregulated administration,” and “technology service” fees ranging from $2.49 to $9.95 each. Not only are these costs usually unavoidable (unlike renting modems and routers, which are sometimes at the discretion of the customer), but they are also deceptive.
“The unavoidable fees are especially problematic because consumers may think they are government-imposed, when in fact there are many that are company-imposed and differentiated from the base service price at the discretion of the provider,” Consumer Reports said. “They can surprise consumers when they appear on monthly bills, and can allow providers to raise prices without violating marketing or contractual pricing obligations.”
ISPs often boast faster speeds than their competitors – a factor that is increasingly weighing on consumers’ minds as more people work online and go to school. But many of these companies regularly fail to deliver the megabits per second (Mbps) promised in advertising and service agreements. This is especially true for consumers who pay extra for “premium” plans, which reportedly get less than half the download speed they pay for. Consumers who have subscribed to plans promising 940 to 1,200 Mbps often get median speeds between 360 and 373 Mbps.
Together, these frustrations have major consequences for consumers’ wallets and for the ISP market. ISPs clearly like to cater to less web-savvy consumers, who probably don’t realize they’re getting speeds much slower than they’re paying for. Their billing practices also make it difficult to establish fairer internet practices. Consumer ReportsStudy touches on the unfortunate habit of ISPs lobbying against equal internet access and drive out competitors that would force them to lower their prices. A majority of those surveyed support municipal or community broadband, but 17 states have laws that prohibit just that, likely due to political interference from ISPs.
The study ends with hope. Congress and the Federal Communications Commission (FCC) are working to implement a universal “nutrition label” for Internet services, which would mandate clear disclosure of pricing information, discounts, allowances and benefits. But Consumer Reports states that this may not be enough. The results of the study show the need for justification of data caps, more robust competition and expanded FCC oversight, the organization says.