First-Ever ISP Study Reveals Arbitrary Costs, Fluctuating Speeds, Lack of Options
Consumer Reports, an independent nonprofit research organization best known for its product reviews, launched its Fight for Fair Internet study in July 2021. At its core, the study sought to publicize what Americans pay for internet service 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 disturbing practices are commonplace. Worse, the magazine found this to be true across many of the 526 domestic ISPs examined during the study—including all 26 of the largest providers, which cover more than 90 percent of the country’s services.
One anonymized AT&T bill from the published study illustrates how consumers are issued discounts seemingly at random and without information on how to keep the discount. The bill shows that the customer was given two $10 discounts on their original bill of $80: One for bundling and another for “loyalty.” Most of us appreciate a good discount, but without any explanation as to what “loyalty” involves—was the customer made aware of the discount? Is the discount permanent?—it’s difficult to compare pricing with other ISPs, which stymies competition.
Some ISPs even use these arbitrary discounts to make it appear as though their customers are getting a better deal when they actually aren’t. More than half of the AT&T and Verizon bills Consumer Reports analyzed included some sort of discount, while Google Fiber bills never did…even though some Google Fiber customers paid lower prices for the same level of service.
On the other side of the inconsistent pricing spectrum are fees. Several of the ISPs the magazine studied tacked on “network enhancement,” “internet infrastructure,” “deregulated administration,” and “technology service” fees ranging from $2.49 to $9.95 each. Not only are these fees usually unavoidable (unlike modem and router rentals, which are sometimes up to the customer’s discretion), but they’re deceptive, too.
“The unavoidable fees are especially problematic because consumers may believe they are government-imposed when, in fact, many are company-imposed and distinguished from the core service price at the provider’s discretion,” Consumer Reports said. “They can surprise consumers when they appear on monthly bills, and can enable providers to raise prices without seeming to violate marketing or contractual price commitments.”
ISPs often boast higher speeds than their competitors’—a factor that increasingly weighs on consumers’ minds as more people work and attend school online. But many of these companies regularly fail to provide the megabits per second (Mbps) promised in ads and service agreements. This is particularly the case for consumers who pay extra for “premium” plans, who reportedly receive less than half the download speed they’re paying for. Consumers who subscribed to plans promising 940 to 1,200Mbps often end up receiving median speeds of between 360 and 373Mbps.
Together, these frustrations have major implications for consumers’ wallets and for the ISP market. ISPs are clearly happy to take advantage of less web-savvy consumers, who are unlikely to realize they’re receiving far slower speeds than they’re paying for. Their billing practices also make it difficult to establish fairer internet practices. Consumer Reports’ study touches on ISPs’ unfortunate habit of lobbying against equal internet access and driving out competitors that would force them to lower their prices. A majority of those who participated in the study support municipal or community broadband, but 17 states have laws prohibiting that very thing, likely as a result of ISPs’ political interference.
The study ends on a hopeful note. Congress and the Federal Communications Commission (FCC) are working to implement a universal “nutrition label” for internet services, which would mandate clear disclosures of pricing information, discounts, fees, and performance. But Consumer Reports argues this might not be enough. The results of its study reveal the need for data cap justification, more robust competition, and expanded FCC oversight, the organization says.
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