Future Tense

We Need a Broadband Internet Pricing Equivalent of Nutrition Labels

Wifi Modem with long receipt attached.
Natalie Matthews-Ramo/Slate

This article is part of the Future Agenda, a series from Future Tense in which experts suggest specific, forward-looking actions the new Biden administration should implement.

Consumers in the U.S. face an infuriating lack of transparency when it comes to purchasing broadband services. Bills are convoluted, featuring complex pricing schemes. Roughly 7 in 10 U.S. adults surveyed by Consumer Reports who have used a cable, internet, or phone service provider in the past two years said they experienced unexpected or hidden fees. Unsurprisingly, 96 percent of those who had experienced hidden fees found them annoying. (To the other 4 percent: Are you OK?)

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We’ve been here before. In 1990, a similar crisis of consumer confidence prompted one Cabinet secretary to decry that “as consumers shop… they encounter confusion and frustration.” He said the market had become “a Tower of Babel, and consumers need to be linguists, scientists and mind readers to understand the many labels they see.” While this diagnosis could apply almost word-for-word to today’s broadband market, then-Secretary of Health and Human Services Louis W. Sullivan was talking about the grocery store. The solution then offers a ready-made formula for how the incoming Biden administration can help consumers now: add a label.

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Recent research conducted by our organization, New America’s Open Technology Institute, reveals that U.S. consumers pay more for broadband than people in Asia and Europe. (New America is a partner with Slate and Arizona State University in Future Tense.) Those confusing promotional rates and hidden fees—for equipment rental, installation and activation, data overage penalties, and contract termination—add up more for U.S. consumers than those abroad. For example, the average monthly rental fee for a modem in the U.S. was found to be $9.86, compared to just $1.17 in Asia and a mere 58 cents in Europe. Further, the study found that most internet service plans in the U.S. advertise limited-time promotional rates, and that after those rates expire, bills increase by $22.25 per month, on average. These fees could mean the difference between having internet access and not for millions who struggle to afford broadband service.

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The opaque nature of internet costs—fueled in large part by these pernicious add-on fees—leaves not only consumers but our consumer protection agencies in the dark. The Federal Communications Commission does not collect broadband pricing data or analyze the price of broadband access. This is despite numerous studies detailing how cost is one of the biggest barriers to broadband adoption, a stark divide that disproportionately harms Black, Latinx, tribal, and rural communities. The COVID-19 pandemic casts this gap in a grim new light.

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For the incoming administration, the solution is as close at hand as the nearest jar of pasta sauce or container of ice cream. Nutrition Facts demonstrates how a standardized label can help consumers cut through a mess of confusing information.

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Before regulatory changes in the late 1980s and early 1990s culminating in the 1994 adoption of the now-iconic Nutrition Facts panel, consumers were faced with a variety of hard-to-understand food labels peddling often-misleading information. While labels were required to list calories, serving sizes, and other nutritional information, including such a label was voluntary except when a company made nutritional claims about a food (such as “low in fat” or “high in vitamins”), or a food contained added nutrients. Without standards for what nutritional claims actually meant, and with no uniform nutrition label with which to compare products, consumers were left to decipher labels that were, according to the nonprofit Institute of Medicine, “at best, confusing and, at worst, deceptive economically and potentially harmful.” Today, it’s difficult to imagine not having the ability to read straightforward facts about the nutrition content of our food and comparison shop between competing products.

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The same could be true for broadband. As far back as 2010, our organization has been advocating for the adoption of a broadband nutrition label, including here in Slate. In fact, labeling is such a common-sense measure that it has been adopted in the broadband context before. In 2016, the FCC and the Consumer Financial Protection Bureau together rolled out their version of the “broadband nutrition label.”

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A proposed facts label to be put on broadband modems.
The proposed Broadband Facts label as announced by the FCC in 2016. FCC
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“Broadband Facts” resembles Nutrition Facts, emulating a disclosure method the American public is already familiar with. It breaks down a plan’s cost and performance, including all additional fees and taxes, so that people don’t have to dig through complicated terms of service and contracts to find simple information.

Increasing internet pricing transparency would both benefit consumers and strengthen competition. Research highlighted by our organization in the past indicates that people prefer labels to guide their purchasing decisions. And, helping consumers better understand the fees behind that choice would incentivize companies to offer simpler pricing structures to attract more customers. It would be tougher for companies to sell consumers on nonsense fees and unnecessary high costs when they are forced to spell out their charges rather than concealing them in complicated contracts or bills.

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In fact, internet service providers helped create—and publicly endorsed—the label back in 2016. At the time, companies, consumers, and the FCC all agreed that price transparency and a standardized disclosure would be good for the broadband market.

However, in 2017, President Trump’s newly installed FCC chairman, Ajit Pai, abandoned the broadband nutrition label. In July, the House of Representatives passed legislation directing the FCC to revive the label and promote its widespread adoption. The Senate has yet to take up the bill, but the FCC does not need to wait for Congress to pass a law. The agency could revive the label at any time. With Ajit Pai’s pending resignation, a new FCC chair should make employing a common-sense, easily understood broadband label a top priority.

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Internet access is an essential utility, and consumers deserve essential information as they shop for it. Nutrition Facts shows the power and possibility of offering that information in a clear, understandable way. While Nutrition Facts has been tweaked and criticized throughout its history, this too can serve as a blueprint for how a broadband label would evolve. We are constantly working to improve transparency measures, and in the broadband context consumers are currently working with little to no clarity. Adding a label would be a significant step in the right direction, and one that would develop alongside the development of the broadband marketplace. The Biden team should work with the FCC and Congress to press providers to adopt the broadband nutrition label. Doing so would be a major win for harried consumers and a key step in understanding and addressing the digital divide.

Future Tense is a partnership of Slate, New America, and Arizona State University that examines emerging technologies, public policy, and society.

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