Consumer Reports undertook a large study where it solicited broadband bills from customers across the country. The beauty of examining bills is the ability to see what ISPs really charge instead of what they say they charge.
The study is not a statistically valid sample since folks voluntarily submitted bills – but Consumer Reports was able to gather over 22,000 bills and found some interesting things.
Some of the things the analysis found are already widely understood. For example, ISPs that bundle multiple services together don’t disclose the actual price paid for each of the services. This means consumers are at the mercy of the ISP to tell them the revised bill that will come after dropping just one of the services. Companies like Comcast have been using the bundling discount as a cudgel to try to persuade folks not to break a bundle by claiming that all discounts were assigned to whatever service is being dropped.
ISPs offer other kinds of discounts. There are discounts for first-time subscribers who buy a service from the web. There are discounts for agreeing to go paperless or agreeing to auto-pay with a bank debt or credit card. There are discounts that are negotiated with customers who threaten to drop service. As might be imagined, these discounts are all over the board, even within the same ISP. Discounts are the Wild West of the broadband world, with some customers getting much deeper discounts than their neighbors.
The study also documents hidden fees that are not usually disclosed in the advertised rate for broadband. Fees like modem rental can sometimes be avoided by a customer willing to buy a modem, but in some cases, that is not an option. The biggest such fee is the median cost of $16 per month charged by Wave Broadband for a modem. Some ISPs have mysterious fees for broadband which are not explained. The biggest headscratcher is the $7.77 Deregulated Administrative Fee charged by Windstream.
The study was particularly critical of data caps. It highlighted Cox, which charges $49.99 to customers who want a guarantee of unlimited data. Consumer Reports saw one bill where Cox charged a customer $100 in a month for going over the data cap.
One of the most interesting findings is that consumers in zip codes where there is only one fast ISP pay an average of $75, while consumers in places with broadband competition average $65. This is reminiscent of a decade ago when the conventional wisdom was that competition lowers rates by around 15%. This still seems to be the case.
The report highlights Altice (Optimum and Suddenlink) as having the highest rates before any discounts. It lists Sonic, a fiber overbuilder from San Francisco, as having the lowest rates.
The report also highlighted some cases where it found prices to be puzzling. For example, the median prices charged by AT&T for various speeds were 12 Mbps for $63, 45 Mbps for $80, 100 Mbps for $60, and gigabit for $80. The report wonders why AT&T would charge more for 12 Mbps than for 100 Mbps. I have my own theory that the big telcos are milking DSL before it dies while trying to drive people off of copper networks.
There was nothing in this report that is a surprise to consumers who are regularly annoyed and angered by the billing practices of the big ISPs. I’m guessing that the reaction of most folks reading this report is, “At least my ISP isn’t the worse one.”