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

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.

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