Consumer Groups Criticize Broadband Providers for Advertising Practices, Including Use of Maximum Speeds

Broadband Data, Broadband's Impact October 15th, 2009

, Reporter-Researcher, BroadbandBreakfast.com

By Mercy Gakii, Reporter-Researcher, BroadbandCensus.com; and Rahul Gaitonde, Reporter, BroadbandCensus.com

WASHINGTON, October 15, 2009 – Six public interest organizations, including Consumers Union, on Wednesday filed comments with the Federal Communications Commission urging the agency to protect consumers from misleading and confusing advertising and billing practices by phone, cable and wireless providers.

The consumer groups argue that current protections are insufficient and urge the FCC to require meaningful, not misleading, disclosure.

These groups would like to force billing and advertising practices which are more transparent and easier to understand. These companies often offer introductory rates and special offers to some customers which then change without consumers knowing in advance when their rates will be affected.

The other organizations were Consumer Federation of America, Free Press, Media Access Project, the New America Foundation and Public Knowledge.

“When consumers have the facts, they can make informed choices,” said Chris Riley, policy counsel of Free Press. “Consumers are being bombarded with inconsistent and incomplete information when shopping for service providers or plans, and then they are baffled by misleading and confusing bills once they sign up. Customers invest a lot of money in these services and spend a great deal of time using them. That’s why the FCC must ensure truth in billing and must establish clear disclosure rules so that consumers do not fall victim to the dubious and misleading practices of their phone or Internet access providers.”

“The [FCC] can and should adopt stronger consumer protections for a broad range of services typically ‘bundled’ together by providers, including voice, video, and broadband Internet access offerings on both wireline and wireless platforms,” said Matt Wood, associate director of Media Access Project. “Competition between providers depends on the free flow of truthful information to potential and existing customers. The Commission has ample jurisdiction and justification to adopt rules requiring the disclosure of the actual costs and limitations of service plans.”

“Today, a consumer needs an accounting degree to navigate the terms of service and understand what they’re actually paying for,” said Joel Kelsey, Policy Analyst with Consumers Union. “Otherwise, it seems like your phone and cable bill can change month to month.”

The groups criticized practices commonly used by the phone and cable industry including internet access services being labeled with theoretical “maximum speeds,” rather than actual speeds, and with the actual speeds lagging behind advertised rates by up to 50 percent.

Service providers often deliberately obscure the real cost of services with misleading advertising that hides fees, surcharges, promotional periods, early termination fees and bundling requirements, the groups said.

The groups called the “Speed Boost” service the most confusing of these adverting phrases — because the ads say that the service gives customers a boost in service during “high traffic” times. Consumers are unable to determine, they said, if they are actually getting this boost in speed.

About BroadbandCensus.com

BroadbandCensus.com was launched in January 2008, and uses “crowdsourcing” to collect the Broadband SPARC: Speeds, Prices, Availability, Reliability and Competition. The news on BroadbandCensus.com is produced by Broadband Census News LLC, a subsidiary of Broadband Census LLC that was created in July 2009.

A recent split of operations helps to clarify the mission of BroadbandCensus.com. Broadband Census Data LLC offers commercial broadband verification services to cities, states, carriers and broadband users. Created in July 2009, Broadband Census Data LLC produced a joint application in the NTIA’s Broadband Technology Opportunities Program with Virginia Tech’s eCorridors Program. In August 2009, BroadbandCensus.com released a beta map of Columbia, South Carolina, in partnership with Benedict-Allen Community Development Corporation.

Broadband Census News LLC offers daily and weekly reporting, as well as the Broadband Breakfast Club. The Broadband Breakfast Club has been inviting top experts and policy-makers to share breakfast and perspectives on broadband technology and internet policy since October 2008. Both Broadband Census News LLC and Broadband Census Data LLC are subsidiaries of Broadband Census LLC, and are organized in the Commonwealth of Virginia. About BroadbandCensus.com.

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5 Responses to “Consumer Groups Criticize Broadband Providers for Advertising Practices, Including Use of Maximum Speeds”

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