Last year, the FCC announced upcoming labeling rules for internet service providers (ISPs). These rules require, among other things, that all fees added to the base service fee for internet service, be individually listed on the bill. ISPs didn't like the idea of these rules and said so. This week, the Federal Communications Commission (FCC) responded to complaints by simply telling the companies, too bad, sad story.
Broadband labeling program
In mid-2022, the US Congress instructed the FCC to implement new rules governing the information that ISPs relay to customers. In November, the FCC announced those new rules. Among other new rules for ISPs sits the fee structure labeling requirements.
These new rules would require ISPs, like mobile phone carriers, to list each and every fee they add to your bill in one place. Today, services show you your base service fee and then "other fees" with no details. By adding the line item fee structure, customers will have a better idea of what they are paying for and why their final bill is different from the package they agreed to pay.
ISPs fight back
The FCC has received complaints from five major trade groups representing the major internet service providers in the US. These complaints, followed by a formal petition, claim that the new regulations would create an undue burden on the administrative systems of the companies. According to the filing,
The Associations and their member companies are committed to ensuring that consumers have accurate and transparent information regarding product and service offerings and associated prices and billing, both before and after buying decisions are made. Consistent with these principles, the Associations acknowledge the desired usefulness of informing consumers about the taxes and fees that could be applied to a service. But the variety and quantity of fees that might apply to a broadband service depending on the customer's location, the services provided, and the types of fees that may apply, adds a substantial amount of complexity to an exercise that is intended to simplify the purchasing process for consumers.
Because of this complaint, the organizations have asked that the FCC amend or dispose the rules entirely.
The FCC responds
This week, the FCC has formally responded to these organizations and their request. In the response, the FCC basically told the industry that their complaints were not valid and to suck it up. In the FCC's order, they said,
We affirm our requirement that providers display all monthly fees with respect to broadband service on the label to provide consumers with clear and accurate information about the cost of their broadband service. We thus decline providers' request that they not disclose those fees or that they instead display an "up to" price for certain fees they choose to pass through to consumers.
The FCC also responded directly to the primary complaint - that it was difficult to implement and that it would actually confuse consumers to know what they're paying for.
We also disagree that clear disclosure of these fees "has the potential to cause significant confusion for consumers and add unnecessary complexity for providers" due to the "huge variety and quantity of fees on broadband providers." Providers must itemize the fees on consumer bills, and we see no reason why consumers cannot assess the fees at the point-of-sale any less than they can when they receive a bill. Providers are free, of course, to not pass these fees through to consumers to differentiate their pricing and simplify their Label display if they believe it will make their service more attractive to consumers and ensure that consumers are not surprised by unexpected charges.
Further, we are not persuaded that it will be burdensome for ISPs to itemize on the label those fees they opt to pass along to consumers above the monthly price, particularly since providers acknowledge being able to describe such fees to a consumer over the phone and on a consumer's bill once the consumer subscribes to service. We also find that any such burdens are far outweighed by the benefits to consumers when they are shopping for service... ISPs could alternatively roll such discretionary fees into the base monthly price, thereby eliminating the need to itemize them on the label.
This is good news for consumers, as it means that the rules are going to go into effect and consumers will have the ability to get a full breakdown of the fees they are paying. This includes any pass-through fees that come from the government and are sent straight through to consumers. It also has the possibility of changing the way that ISPs setup their services. With more transparency, wireless carriers changed the way their billing worked. It is very possible that ISPs will change their policies and procedures to make their marketing and billing practices more consumer friendly.