Internet providers finally forced to reveal all hidden fees on ‘nutrition’ label

Starting this week, Americans looking to purchase a new internet line will encounter a familiar looking box. Today, Internet service providers (ISP) and mobile broadband carriers began showing potential customers a Federal Communication Commission (FCC) mandated “broadband consumer label” that clearly explains how much they will have to pay for services and the estimated internet speeds they should expect to receive. Modeled after the ubiquitous nutrition labels in grocery stores, the FCC hopes these new labels could cut down on opaque hidden service fees and provide needed transparency to consumers trying to save money on broadband access. 

Internet providers are required to show the label anytime a consumer tries to purchase home or mobile broadband, be that online or in-person. The label must include a plan’s total monthly cost and note if there is a discounted introductory rate. Provides will also have to clearly list other additional costs like modem or router rentals, government taxes, and early termination fees. ISPs will have to provide estimated download and upload speeds as well as the total amount of data included in monthly plans where applicable.

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Most importantly, the labels force providers to clearly list any separate, previously hidden fees they may charge in addition to the base line price. Critics have long argued these opaque additional charges, sometimes referred to as “junk fees” are needlessly confusing and lead consumers to pay more than they initially expect. Though most of the information included in the broadband labels is already publicly accessible, the FCC believes these prominent and easy to parse labels will give consumers more power to confidently understand what they are paying for and potentially give them the confidence to shop around for better deals. 

ISPs found in violation of the new measures could face penalties from the Federal Communication Commission under Section 503 of the Communications Act. While most broadband providers have until April 10 to implement the labels, ISPs with fewer than 100,000 lines have until October 10th of this year to do so. Several large providers like T-Mobile, Verizon, and Google Fiber have already released their labels.  

Hidden fees make it harder for some Americans to access affordable high-speed broadband 

Despite being increasingly necessary to operate in a digital first economy, access to fast, reliable internet in the US remains far from ubiquitous. A recent report from the FCC claims 24 million US residents currently lack access to high-speed broadband. Though a slew of economic and geographical factors contribute to that unequal access, the Biden administration has argued confusing, difficulty to parse “junk fees” make the problem worse. The administration cited recent research claiming hidden fees tacked on to broadband plans jacked-up overall plan prices by around 20%. 

“Junk fees cost American families tens of billions of dollars each year and inhibit competition, hurting consumers, workers, small businesses, and entrepreneurs,” the White House wrote in a statement. 

Other studies suggest “bundling,” the practice of combining TV, internet and phone services together under one bill, similarly make it difficult for consumers to know how much they’re paying for internet services on their own. The broadband nutrition labels, which must be shown whenever a consumer wants to purchase a new line, could bring some clarity to that notoriously opaque market. Consumer advocacy groups like Free Press and Consumer Reports have championed the labels and pushed for their implementation since 2009.

“Consumers are all too familiar with broadband bills that bury junk fees and service terms in the fine print.” Free Press Policy Director Joshua Stager said in a statement. “People deserve to know what they’re paying for, and this label will help.

ISPs, on the other hand, haven’t welcomed the labels with open arms. Trade groups representing some of the nation’s largest broadband providers have spent years lobbying to gut or remove the label requirement altogether. More recently, these groups fought the FCC over requirements forcing them to make the label clearly visible on consumers’ monthly billing statements. 

Supporters hope broadband labels can mimic food industry success 

FCC Bureau Chief for Consumer and Government Affairs Alejandro Roark reportedly told CNN this week the agency “borrowed” the label idea from figures already seen adorned on food packaging throughout the US. The Federal Drug Administration officially mandated food labels in 1990 following the passage of the Nutrition Labeling and Education Act in order to standardize food nutrition reporting. Studies suggest those labels could drive improved public health outcomes.

The new labels are part of a broader set of efforts by the federal government to push back on onerous, non-transparent fees throughout the economy. Regulators recently released policy capping credit card late fees and have proposed penalizing concert ticket sellers and hotels that don’t clearly list the cost of their products up front to consumers. 

Most internet users in the US should expect to see the legal beginning this week. Consumers can file a complaint with the FCC if they believe they notice a company out of compliance.

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