Regulation - What is it Good For?

FCC Implements Broadband Labels

The FCC voted recently to implement consumer broadband labels. This was required by section 60504 of the Infrastructure Investment and Jobs Act. The new rules will become effective after the Office of Management and Budget approves the new rules and after the final notice is published in the federal register. ISPs will then generally have six months to implement the labels.

The labels look a lot like the nutrition labels that accompany food. The label will include basic information like a customer’s service plan name, the monthly price for standalone broadband, any special pricing that in place currently and when that special pricing expires, and a description of other monthly and one-time fees. The labels also must disclose the typical broadband speeds and latency.

It’s going to be interesting next summer to see how ISPs react to the label requirement. The pricing information alone must be giving shivers to the marketing folks at the biggest ISPs. This will make them list the price of standalone broadband to every customer and compare that to what the customer is currently paying. It’s been incredibly easy for consumers to subscribe to broadband in the past and never know the list price of what they are buying.

The requirement that I think will be the most controversial is the requirement to disclose the typical broadband speed and latency. I can’t wait until next year to see big ISPs implement this requirement. In the many surveys we have done, most consumers tell us that they have no idea of the speeds they are supposed to get – and that most of their monthly broadband bills don’t mention the speed.

Some ISPs will have a real dilemma with the speed disclosure.

  • It’s extremely challenging for a DSL or fixed wireless ISP to tell any customer the speed, since speeds vary from home to home and by the time of day. Even if one of these ISPs wants to disclose a reasonable estimate of speed, it’s hard to think how they can reasonably do so. I can’t imagine how these ISPs can provide a label to a prospective customer since the ISP won’t know the real speed until they try to connect to the customer.
  • What will ISPs do who have been exaggerating speeds in the FCC broadband reporting? Just to use an example I heard yesterday, there are places where Starlink reported 350 Mbps to the FCC where a customer was barely getting 50 Mbps. If ISPs report the FCC speeds to customers, they are going to hear a mountain of complaints from folks who aren’t seeing the high speeds. But if an ISP tries to be more truthful about speeds on the broadband label, it will have demonstrated that it has fudged the speeds for the FCC mapping.
  • The most interesting speed issue might be upload speeds. It’s hard to think that any cable company or WISP is going to report upload speeds under 20 Mbps because doing so would be an admission of not delivering broadband. But declaring 20 Mbps or faster upload speeds won’t sit well with customers who are getting something far slower.

We’ll have to wait and see, but my guess is that ISPs will report the same speeds to customers that are reported to the FCC. But an ISP that is exaggerating FCC speeds should be ready for an onslaught of customer complaints from customers that know the speeds on the label are not right. I think this is part of the reason why these labels were mandated – to force ISPs to come closer to telling customers the truth. But there are going to be some contentious years coming for ISPs that claim imaginary speeds on the broadband label or to the FCC.

The FCC is not quite done with the labels. The FCC issued a Future Notice of Proposed Rulemaking to solicit input on a few issues. One is how to include bundling on the labels. The surveys my firm does are still showing more than 50% of customers on bundles in urban areas, and bundling allows ISPs to hide the pricing for any component of the bundle.

The FNPRM also asks if there is a better way to disclose speeds, such as average speeds instead of typical speeds. Finally, the FCC is asking if ISPs should disclose network management policies that might harm consumers, such as blocking, throttling, or paid prioritization for some customers.

We won’t see the broadband labels in practice until at least next summer – but I’m expecting an uproar after folks see what ISPs say about prices and speeds.

Regulation - What is it Good For?

FCC Proposes Broadband Labels

The FCC recently issued a Notice of Proposed Rulemaking (NPRM) in CG Docket No. 22-2 that asks questions related to the requirement that ISPs provide broadband labels. This new requirement was created by the Investment Infrastructure Investment and Jobs Act. The Act requires that ISPs must display broadband consumer labels and disclose information to consumers about broadband service plans.

The FCC has taken the directive from Congress and turned it into a proposed set of regulations. ISPs and consumers will have a short 30-day window to file comments on the FCC’s suggested rules. Note that for most NPRMs, the final rules largely follow the proposed rules unless the industry makes a compelling case in comments that sway’s the FCC’s thinking.

Following are a few key aspects of the proposed new regulations:

  • This would apply seemingly to all ISPs – those that deliver broadband through wired or wireless connections. I assume that wireless includes satellite ISPs.
  • The disclosures of broadband information to customers would be summarized in a broadband label similar to ones used for food products. The FCC contemplated labels in 2016 as part of the order that required net neutrality, but when net neutrality was killed, the label requirement was also killed. The FCC is proposing using the same labels that were created in 2016.
  • The labels include a detailed description of the broadband product. ISPs must report broadband speeds. ISPs must report prices, and if a customer has a promotional price they must disclose when that price will expire and the regular price that will be charged. ISPs have to include information on data caps or any other restrictions on broadband usage. ISPs also must disclose network management practices and disclose latency and jitter.

The NPRM asks how the FCC will be able to judge the accuracy of labels. To me, this is the key question in the docket, and there is no easy answer. Many ISPs are not going to want to tell the truth about their products since the labels allow for easy side-by-side comparison between competitors. Probably an even more important question is how the FCC can enforce accuracy and how the agency might discipline ISPs that won’t disclose accurate labels. Food manufacturers that lie on the label can be forced from the market, but it’s not that easy to discipline ISPs, except perhaps with monetary damages. Remember that for now, this FCC has little direct authority over ISPs. The FCC will be in charge of these labels, but the agency doesn’t regulate much else related to broadband.

If done accurately, the labels should allow a consumer to quickly identify the difference between two ISPs. This has to scare any ISP competing against a fiber network. The fiber network will show symmetrical speeds, lower latency, and likely pricing with no gotchas. I have to think that cable companies, DSL providers, and some WISPs do not want these labels.

There are a lot of practical concerns about the labels. How does an ISP report on a technology that doesn’t deliver the same broadband speeds and quality everywhere in a market? DSL speeds vary from customer to customer, and even a next-door neighbor can have a drastically different DSL experience. Will a big telco that is still reporting rural DSL speeds of 25/3 Mbps come clean with customers on the actual expected speed?

Most people probably don’t realize it, but the speeds delivered by many cable companies can also differ significantly from neighborhood to neighborhood. In most cities, we find some neighborhoods where a cable company has a clean network that nails the desired speeds and latency. But just blocks away might be a neighborhood with network problems that the cable company has not addressed where speeds are far lower than expected. Are cable companies going to reveal this to customers in the neighborhoods with poor performance? I’ll be shocked if they do.

Fixed wireless broadband also can deliver a wide range of customer experiences. A customer close to the tower with a perfect line-of-sight will get the best speeds, while a host of issues like distance and impediments in the environment can slow down speeds for other customers. Will a WISP that is serving customers past the recommended range of the radios really come clean with a potential customer about how lousy the broadband will be?

If the FCC implements this rule without some way to police it, the big ISPs will continue to tell customers the story they want them to hear instead of the truth. But it sounds impossible for FCC to monitor the whole country to see if ISPs are reporting the truth. The FCC might consider some sort of customer feedback process like they are planning with the FCC maps. But I can’t see the FCC getting bogged down in dealing with hundreds of thousands or even millions of complaints about the labels.

We also can’t forget that the ISP is not always the reason for a poor broadband experience. There are millions of customers that insist on using the cheap WiFi router they bought a decade ago that is killing the broadband speeds inside the house. The FCC is never going to get involved deeply enough to know if an ISP or the customer is at fault.

The labels sound like a good idea, and if ISPs are even only partially truthful, the labels will highlight the difference between competitors. But I can’t imagine any set of requirements that will suddenly force a bad actor ISP to tell the unvarnished truth.

Regulation - What is it Good For?

Broadband Labels

There is one quiet provision of the Infrastructure Investment and Jobs Act that slipped under the radar. Congress is requiring that the FCC revamp broadband labels that describe the broadband product to customers, similar to the labels for food.

The Act gives the FCC one year to create regulations to require the display of a broadband label similar to the ones created by the FCC in Docket DA 16-357 in 2016. A copy of the FCC’s suggested broadband label from 2016 is at the bottom of this blog. The original FCC docket included a similar label for cellular carriers.

ISPs are going to hate this. It requires full disclosure of prices, including any special or gimmick pricing that will expire. ISPs will have to disclose data caps and also any hidden charges.

As you can see by the label below, it includes other information that big ISPs are not going to want to put into writing, such as the typical download and upload speeds for a broadband product as well as the expected latency and jitter.

To show you how badly big ISPs don’t want to disclose this information, I invite you to search the web for the broadband products and prices for the biggest ISPs. What you are mostly going to find is advertising for special promotions and very little on actual prices and speeds. Even when it’s disclosed it’s in small print buried somewhere deep in an ISP website. And nobody talks about latency and jitter.

What is even harder for ISPs is that they often don’t know the speeds. How does a telco describe DSL speeds when the speed varies by distance from the hub and by the condition of the copper wire on each street. I’ve seen side-by-side houses with different DSL speeds. Cable companies can have a similar dilemma since there seem to be neighborhoods in every city where the network underperforms – most likely due to degradation or damage to the network over time.

The sample label asks for the typical speed. Are ISPs going to take the deceptive path and list marketing speeds, even if they can’t be achieved? If an ISP tells the truth on the labels, shouldn’t it be required to submit the same answers to the FCC on the Form 477 data-gathering process?

I’m sure that big ISPs are already scrambling trying to find some way out of this new requirement, but that’s going to be hard to do since the directive comes from Congress. It’s going to get interesting a year from now, and I can’t wait to see the labels published by the biggest ISPs.

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