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Regulation - What is it Good For?

Will Broadband Labels Do Any Good?

The FCC is still considering the use of broadband labels that are supposed to explain broadband to customers. This sounds like a really good idea, but I wonder if it’s really going to be effective?

Some of the items included on the FCC sample label are great. The most important fact is the price. It has become virtually impossible to find broadband prices for many ISPs. Many ISP, including the largest ones, only show special pricing online that applies to new customers. These ISPs show the public the sale prices, but it’s often impossible to know the list prices. It’s often the same if somebody calls an ISP – they’ll be offered different promotional packages, but it’s like pulling teeth to get the truth about the everyday price that kicks in at the end of a promotion.

I’m curious about how the broadband labels will handle bundling. The surveys we’ve done recently show that half or more of homes in many markets are still buying a bundle that might include broadband plus voice, cable TV, security, smart home, or cellular. Big ISPs have never wanted to disclose the cost of individual products inside of a bundle and I can’t wait to see how ISPs handle a bundled broadband product.

There are also hidden fees and other ways to disguise the real price. Disclosing pricing will be a huge breath of fresh air – if ISPs are forced to be totally honest. I can imagine the PR and marketing groups at the bigger ISPs are already agonizing over how to disclose pricing while still keeping it cloudy and mysterious.

More perplexing is the broadband speed issue. The sample label that the FCC circulated for comment would require ISPs to list the typical download speeds, typical upstream speeds, typical latency, and typical packet loss. What does typical mean? Consider a Comcast market where the company sells residential broadband that ranges between grandfathered 50 Mbps and 1.2 Gbps. What is the typical speed in that market? How will any consumer be able to judge what a typical speed means?

I’ve written about broadband speeds a lot, and for many technologies, the speeds vary significantly for a given customer during the day. What’s the typical broadband speed for a home that sees download speeds vary by 50% during a typical day? I don’t always want to come across as skeptical, but I’m betting that the big cable companies will list the marketing speeds of their most popular broadband product and call it typical. Such a number is worthless because it’s what customers are already being told today. I don’t have a proposed solution for the various speed dilemmas, but I fear that whatever is told to customers will be largely uninformative.

What will the typical consumer do when told the typical latency and packet loss? It’s hard to think many homes will understand what those terms mean or what the typical values mean.

ISPs are also supposed to disclose network management processes. Does this mean a cable company must be truthful and tell some neighborhoods that their coaxial cable is too old and needs to be replaced – because that is s specific network practice? Will a cable company tell a customer that their neighborhood node is oversubscribed, which accounts for slowdowns at peak times? I’m guessing the network management processes will be described at the total market level instead of at the neighborhood level – again, making them largely uninformative.

I’m also curious how the FCC will know if customers are being told the truth. Folks who read this blog might tell the FCC if a broadband label is deceptive or wrong – but what is the FCC going to do with such complaints? Broadband issues are often hyper-local, and what happens on my block might be different than somebody living just a few blocks away.

I want to be clear that I am not against the broadband labels. Forcing ISPs to be public with prices is long overdue, as long as they disclose the truth. But I’m skeptical about many other things on the labels, and I fear big ISPs will use the labels as another marketing and propaganda tool instead of disclosing what people really need to know.

Categories
Regulation - What is it Good For?

Regulatory Shorts for April 2016

Here are a few things of interest happening in the regulatory world:

Copper Retirement. The FCC’s new copper retirement rules went into effect on March 24. The rules require that any telco tearing down copper must give residential customers 90 days notice and business customers 180 days notice.

While this rule very well might be aimed at Verizon who has been retiring copper with short customer notices, it applies to everybody. This is something that anybody replacing a copper network with a fiber network needs to be aware of. Verizon has been forcing customers to abandon the copper, and that act requires this same notice.

Appeals of USAC Rulings. The FCC recently decided that anybody who wants to appeal a ruling from USAC must formally first appeal the process at USAC and can then only bring the issue to the FCC after losing that appeal.

This is an interesting ruling and probably speaks to the volume of complaints the FCC has been getting about USAC. As telephone landlines have been falling the revenues that feed the Universal Service Fund have been decreasing. USAC has made up shortfalls by constantly raising the USF surcharge, which is now up to an 18.2% surcharge on interstate revenues, and back in 2010 was only 12%.

But USAC has also been getting more aggressive in defining the items to which the surcharges apply and have made retroactive rulings against a number of carriers on various issues. With this new process a carrier will have to go through the USAC formal process before starting any complaint at the FCC, which will greatly increase the time during they might be liable for disputed retroactive surcharges.

Broadband Labels. The FCC has unveiled their suggested labels where carriers can report facts about broadband such as cost, price, speeds, latency, etc. The labels look surprisingly like food labels. It’s often been impossible for customers to find a lot of the information that the FCC wants reported to customers.

No company is required to use the suggested FCC format, although a number of large companies like Verizon, Google and CenturyLink had input into creating the format. For now only large carriers with more than 100,000 broadband customers are required to report this information to customers. But small companies that have a superior broadband product compared to your competition ought to strongly consider doing this anyway. I also strongly recommend you look closely at the labels issued in your areas by large competitors to make sure they are being truthful.

Cancelling Service On-line. There is currently a bill in the California legislature that requires any company that sells services on-line to also allow customers to disconnect services on-line. There are companies like Comcast who are notorious for making it difficult to disconnect without going through a long spiel from a service rep.

The process of making it hard to disconnect started with AOL who was infamous in the day for making it extremely hard to drop their dial-up service. But many other ISPs have started win-back programs that make customers tell the company why they want to disconnect while also listening to a host of special offers trying to get the customer to stay.

While currently this is only proposed in California, we’ve often seen that ideas from California, New York and Illinois often make their way to many other states within a few years.

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