Every Year Like Clockwork The Telecom Industry Lies And Claims Broadband Prices Are Dropping
from the nothing-to-see-here dept
Once a year like clockwork, the telecom industry trade association releases a study claiming that if you squint just right–broadband prices have dropped year after year. It’s their annual attempt to pretend (and to help the politicians that coddle them pretend) that the U.S. broadband market isn’t heavily monopolized and woefully uncompetitive.
Last week, AT&T-backed telecom trade org US Telecom released a new study once again claiming that the U.S. broadband market is secretly super competitive and that consumers have seen amazing price reductions over the last decade in the cost of broadband service. So amazing, that the report claims that the most popular tiers of service saw an 18 percent reduction in cost.
But as telecom sector consultants like Doug Dawson note, to achieve this illusion the report is highly selective with its comparisons. For example it fixates heavily on how the cost over time to buy a megabit of speed has dropped thanks to better networks or faster speeds. But it avoids discussing how, given the way these companies package products and upsell you, prices on the tiers people actually use continue to rise significantly.
For one thing, the report has fun comparing the cost of premium tiers from years’ past to the non-premium products of today:
“Again, with Comcast, the basic 16/2 Mbps broadband in 2009 cost $52.95 and also required a $10 modem. Today, the basic price for 300 Mbps broadband is $93 with a $15 modem. That’s an increase since 2009 of $45, a 72% increase. The authors of the report would have instead pointed to the 50/10 Mbps product as the most comparable product – but in 2009, that was a premium product priced at $149.95 plus a $10 modem. The report would say that the price of broadband has dropped.”
Another key problem with most of these studies: a lot of the high costs of service are tacked on to your advertised rate after you subscribe. For example these studies don’t include numerous bullshit fees (see: the “Internet Cost Recovery Surcharge“), or arbitrary and unnecessary usage caps and overage fees. The reports also don’t discuss the pricing tricks ISPs play with bundling, where the price of broadband is often significantly more expensive if you refuse to bundle TV or phone service or sign long-term contracts.
These kinds of reports are effectively disinformation, peddled to captured regulators and lawmakers so that they can help industry pretend that decades of coddling regional mono/duopolies doesn’t cause market harm. It’s the same reason the telecom industry has historically fought against better broadband maps, given more accurate data would illustrate the painful lack of competition in most U.S. markets.
It’s worth noting that not only does the U.S. FCC never tackle (or even address) monopoly (or duopoly) power. But it also refuses to collect and share local pricing data, given that would only act to illustrate market failure. A very broken and unpopular industry lies and pretends everything’s fine, and regulators, with the occasional, fleeting exception, are generally happy to help sell the illusion.
Filed Under: affordability, broadband, disinformation, fcc, high speed internet, lobbying, prices
Companies: us telecom
Comments on “Every Year Like Clockwork The Telecom Industry Lies And Claims Broadband Prices Are Dropping”
Hear me out....
Maybe AT&T is just confused and think that them paying less to upkeep their network, that means customers are also saving money.
Thats possible, right? RIGHT???
My prices have dropped!
I pay $1 plus $99 in fees!
Re: Great savings!
A few years ago, my cable provider started to charge us a monthly cable modem rental fee.
The letter stated they would normally charge $30 per month for the cable modem fee, but because we’re such great suckers… I mean customers… they’re only going to charge us a mere $10 per month, a savings of $20!
That’s right, my bill would go up by $10 per month, and my cable company touted it as me saving $20 per month.
Yes. I did buy my own cable modem.
Re: Re:
For a while, some of the cable providers added on a service fee for a customer-provided cable modem, which was actually higher than the price of renting the modem.
Stone Age
Once upon a time, it took all day to carefully chisel a rock down to make a stone knife. Nowadays, thanks to modern manufacturing techniques, you could probably work a minimum wage job and earn enough money to buy a steel knife in one hour.
It seems like AT&T doesn’t want to acknowledge that technological progress is a thing. Comparing download speeds of today to that of yesteryear is an attempt to misclassify ordinary network upgrades as a price decrease. Fraud.
Actually, my costs did drop
I use to pay $120 per month, but Optimum lowered me to $48 per month after I called them to cancel in order to use T-Mobile’s home 5G internet service. Verizon is now also offering home 5G Internet service in my area too, and Optimum is quickly upgrading everyone to fiber for no extra charge. I officially have 400Mbps service which means I will get internet speeds as fast as 90Mbps.
So, most people in my town now have an option for three different home Internet services (Optimum, T-Mobile, and Verizon), and suddenly our incumbent cable carrier has gotten a lot nicer.
Isn’t competition grand? I wonder why we didn’t try that before?
Re:
Mazel Tov. My apartment has one option available: Comcast.
Re: Re:
Two sentence horror story.
Re:
Verizon can’t even manage to get a working wire to my house. (I had an old-school copper pair once upon a time, but it failed, and Verizon wanted a couple thousand dollars to fix it. Right up until it failed, they continued to bill me a ‘universal service fee’; I don’t know what universal service that supposedly subsidized.) A couple of companies claim that I’m in their 5G service area, but the wireless home terminal that kept my phone service going never detects it. So it’s Charter Spectrum’s aging copper plant, or nothing.
Charter and Verizon both tell the regulators that my neighbourhood is provisioned with fiber. It isn’t. But they get away with it because a couple of business on the opposite end of the township have fiber, so they can report provisioning the whole town.
And this is a fairly wealthy and fairly dense suburban area, not out in the boonies.
Interesting, 3 years of ATT, and each and every year my rate has gone up.
I can remember exactly one-time I was able to lower my rate. I was charged an additional $5 to lower the rate (if you pay us $5/mo we’ll lower the rate to this), my rate increased each year after that, until what I was paying was more than what I had been paying prior to lowering the rate.
They aren’t even trying to be honest any more.
Actually down
Our costs have decreased.
Had copper DSL for $50/mo “Price for Life” from CenturyLink for 10 years.
Was forced to upgrade to 200 Mbps fiber over a year ago. Same price.
Then, recently received a notice that the price would be $60/mo (as the switch from copper to fiber removed the Price for Life guarantee).
Went to the CenturyLink website and found $30/mo plan for the same service. Called CenturyLink and now pay $30/mo.
It is a crazy world.
Earlier this year I got a message from Xfinity (Comcast) that the 50mb tier I’m on is going away and I’ll be on the 75mb tier. This also came with a change from $19/mo to $35/mo.
You misunderstand the report
They were basing the 18% drop on what the planned increase was going to be.
It’s a negative drop, obviously. Try to keep up. Sheesh.
how is it inflation?
When you devalue the money?
Not just ripped off in America
I live in Western Canada. When I first got “High-speed Internet” from my incumbent telco in 2011, the top ADSL options were 50, 25, 15, 10 and 5 Mbps. I choose 15. It cost me $39/month, CAD$. The top-tier 50 cost $75/month.
Since then, my bill has been automatically ratcheted up almost every 6 months by $5. Every time I complained, they said they are reinvesting in the network and that’s the reason for the increases.
In 2014, they introduced Internet 75. Today, they offer 3 GBbps fibre. The current price for 3Gbps is $145. They don’t even advertise less than 250 Mbps.
At no time have I ever been offered to move to a “better value” plan. When I called to ask about the cheap offers they advertised, I was told they are only available to New Customers (loyalty be damned evidently).
I am still on my Internet 15 plan, which now is costing me $105 !!
The kicker is they are repeatedly calling/forcing me to arrange to switch my drop from copper to fibre, “At no cost to me, including replacement of the modem” such that they can turn down the copper network. I would still be billed the Internet 15 rate.
They have offered to “upgrade” my plan to their lowest (unadvertised) fibre plan, Internet 75, but that will cost $115.
Back in 2011, web pages were small, and videos and streaming on-line games were negative, OS and app updates were small and infrequent, by 15 is still fine for me.
To sum up, the top tier speed has gone from 50Mbps to 3Gbps, a 60x improvement, the price has effectively doubled. But if you have the exact same service as before, you’re paying 2.67x more, for the exact same thing! A service so slow, it’s 2.67x slower than their slowest offering!
How is this “price dropping”? By my math, I should be paying less than $20/month if prices actually dropped.