Shalini Ramachandran and Inti Pacheco report in the Wall Street Journal:
Internet download speeds of 100 megabits per second can cost anywhere from about $25 to $105 a month. Some customers are paying the same amount, say $70 a month, for slower connections (30 Mbps from Cox Communications. in Tucson, Ariz.) as others are paying for superfast ones (300 Mbps from ATT in Spring Hill, Tenn.). Additional internet-related fees—for things like “speed upgrades” and modem leases—range from 4% to 60% of internet cost. “Prices are unknowable except to suppliers, [and] customers are told supply is constricted, leading to price hikes.”
Internet pricing is a puzzle for many American consumers. It is an unregulated marketplace where prices vary drastically across the country, or even just across the street.
Internet download speeds of 100 megabits per second can cost anywhere from about $25 to $105 a month, according to a Wall Street Journal analysis of 187 bills from 2019—bills largely provided by BillFixers, a company that helps consumers negotiate better rates with cable and telecom companies. The tally includes customers buying internet stand-alone and as part of a bundle with other services. BillFixers redacted personally identifying information from the bills it provided the Journal.
Put another way: Some customers are paying the same amount, say $70 a month, for slower connections (30 Mbps from Cox Communications Inc. in Tucson, Ariz.) as others are paying for superfast ones (300 Mbps from AT&T Inc. T 0.87% in Spring Hill, Tenn.). The bills included customers from all the major U.S. providers. We want your help to continue to collect data.
Why is internet pricing all over the map? The companies say the level of competition market-by-market, the varied costs of wiring different regions and promotional offers play a big role. Experts say those factors don’t account for all the disparities.
“In terms of legal markets, there are exceedingly few where pricing is so completely opaque,” said Sascha Meinrath, a telecom policy professor at Penn State University. “Prices are completely unknowable except to suppliers, [and] customers are constantly told supply is constricted, leading to various price hikes.”
The Journal, for example, identified two customers in the same city (West Hollywood, Calif.), with the same provider ( Charter Communications Inc. CHTR 1.27% ) and the same internet speed (100 Mbps) who are paying two different monthly prices: $50 versus $66.
A Charter spokesman said the company has consistent pricing throughout the country, and this difference between customers in the same city is likely a result of one being on a promotional offer.
Bundles and Discounts
Of the bills we reviewed, 82 were from customers who got their internet service as part of a bundle of TV and/or phone services. Comcast Corp. CMCSA 2.32% , the largest U.S. broadband provider, doesn’t break out the cost of internet services purchased in a bundle. In a pair of bundled bills in Omaha, Neb., Cox breaks out the internet cost for a 100 Mbps customer but not for a 300 Mbps user.
Internet providers often lure customers into service bundles or faster connections by offering big discounts that will later expire. Our bills showed that 70% of people with bundles got discounts, compared with 34% of those with stand-alone internet service.When looking at both stand-alone internet and bundled bills, we found two-thirds of customers with the fastest connections got discounts. Just a quarter of those with slower speeds got a discount.
“When customers’ circumstances or pricing plans change, we work with customers to continue to get them a price for the product they need that fits within their budget,” a Cox spokesman said.
An AT&T spokeswoman said “our current standard rates are consistent across our 21-state footprint.”
A recent Journal study found that faster speeds don’t necessarily mean a better streaming experience: Picture quality doesn’t improve much, and video content doesn’t load more quickly. Our bill data indicated that households subscribing to premium plans of 250 Mbps are spending an average of $36 more a month on internet service for less than a second’s improvement on Netflix video load times, compared with households on 50 Mbps plans.
The providers said consumers are demanding faster internet speeds to support the many devices in their households, as well as activities such as ultrahigh definition (4K) streaming, online gaming and telecommuting.
Extra Fees
Customers say the additional fees tacked onto service costs are among the more confusing parts of their cable and internet bills. About half the bills the Journal reviewed had additional internet-related fees—for things like “speed upgrades” and modem leases—ranging from 4% to 60% of the monthly internet cost.
Charter charges a $5 “Wi-Fi” fee for customers leasing combined modem–plus–Wi-Fi routers. The Journal found this charge on about a third of the Charter bills in our sample. A Charter spokesman said this is the only fee included on Charter’s bills, and for customers receiving one gigabit-per-second of internet speed—a superfast service tier—the fee is waived. “Our internet billing is extremely straightforward,” the spokesman said.
Altice USA Inc., ATUS 0.66% which operates the Optimum brand, charged internet fees on 16 of the 17 the bills we analyzed. They ranged from $2.50 to $36. An Altice spokeswoman said the $36 fee was for the provider’s entertainment hub, which helps power the home’s Wi-Fi as well as cable and other services.
Comcast had the highest median internet-related fees in our sample. One Comcast user in Houston was charged a $50 fee for exceeding their data limit. All the internet providers have said they offer a number of affordable internet tiers and options.
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