Triple Play for $45; Deals for Only $15 a Month? Why is America Paying 2–5 Times More for Our Broadband, Internet, and Cable Services?
PART I: Really Unlimited 4G Wireless for $30 Dollars?
PART II: America’s Triple Play vs the OCED-EU Countries.
Backdrop: IRREGULATORS v FCC
On July 22nd, 2019, the IRREGULATORS v FCC moved forward with the filing of our initial brief. The FCC has until September 5th, 2019 to respond. This legal challenge exposes one of the largest accounting scandals in American history. AT&T, Verizon and CenturyLink have been able to manipulate the FCC accounting rules, which directly impacts the price of every communications service you, your friends, family, and business pays for.
Part 1 addressed the dichotomy in pricing in America’s wireless services as compared to wireless services provided in the 41 OCED-EU countries. From Slovenia and Korea to Finland, the price for a totally unlimited 4G wireless service, with 500–1000GB, can be under $30 US dollars. The US unlimited wireless packages, with taxes, fees and surcharges, are mostly over $90 dollars (special deals aside) and can be capped at 22–50GB.
- We estimate that the US unlimited wireless customers are being overcharged $50-$75.00 a month, not counting the additional 500–1000 GB of a truly unlimited service that you did not receive. This comes to an average of $873 a year extra.
- There is severe customer gouging in the low-end wireless market. A 1GB “data booster” from Verizon costs $15.00, not counting taxes. We estimate that while the average basic wireless plan can be $30-$60 a month, when there are plans around the world that have 100 GB for $8.27, and services at $7.50 that offer the same amount of GB, we estimate that the overcharging is $20–50 a month.
- This comes to an average of $654 a year extra.
- Overcharging by Capping GB Usage. It is clear something is very wrong when other countries have unlimited usage of 500–1000GB as standard, and the US has been capped at 25–75 GB, and then the service is slowed to being almost unusable.
SUMMARY: Part 2: Triple Play Pricing Using the European Commission Data:
- New Networks Institute estimates that the overcharging on America’s basic Triple Play is between $70-$155 a month, not counting add-ons.
- OCED-EU: Triple Play ‘basic’ averaged $44.77 a month in 2017, but the ‘cheapest’ was only $15 a month.
- US Triple Play prices are 258%-479% above the OCED-EU average; 766–1410% above the ‘cheapest’ basic Triple Play service offered by some OCED-EU countries’ carriers.
- US Bait and Switch: AT&T, Verizon, Comcast and Spectrum et al. have an advertised averaged price of $88.95. However, the actual price (using a Spectrum NYC basic plan, which has common added fees that appear to be in the same price range, nationwide) comes to about $115.00 a month.
- Missing: The US Triple Play is plagued by 20–35% of taxes, made up fees, and surcharges including the infamous “Broadcast TV and Sports Programming” — now at $14.69 on the August Spectrum, NYC bill. It is not a mandated fee but is direct revenues to the companies — and there is no oversight.
- Post-Promotional Price: 130% above advertised price, bringing total to over $200.00 a month (based on Charter-Spectrum and Comcast Triple Play bills, though it varies by state, city and carrier.)
We estimate that America is paying an estimated $50-$60 billion in overcharging annually on communications services, and this is the low number. But, as we tracked — this is directly caused by the manipulation of the FCC cost accounting rules in a multitude of ways.
Controls over the infrastructure are controls over the prices of all communications in America.
Almost everyone reading this knows in their gut that there’s something wrong with all of this, especially when they see an advertisement for a Triple Play package priced at $89.99 but no one can ever get the service at that advertised price, or that this is the promotional price that will go up 100+% after the first/second year. And we all know that there are ‘cord-cutters’ attempting to save money by dropping one or more services, and using alternative streaming video services. But, in the end, the price for the core high-speed broadband service will continue to rise due to made up fees and gimmicks, even though prices should be in steep decline.
In the end, this overcharging is consequence of a few holding companies, AT&T, Verizon and Centurylink, (who are actually the former “Bell Companies” that were created out of harmful mergers with their siblings (an act against nature). Unfortunately, they have taken control of America’s telecommunications state-based public utility infrastructure and have been able to manipulate the FCC accounting rules to make the state-based public utility local phone customers fund the fiber optic wires used for wireless, broadband or internet, then claim it is private property. And all of this is helped by the cable companies, Comcast and Charter-Spectrum, (which is another part of this sorted tale).
In the case of wireless, AT&T, Verizon and Centurylink, with the help of the FCC, are able to keep prices inflated by controlling the accounting rules. Instead of lowering prices and building the state infrastructure, these companies were able to build out their own wireless networks by having it subsidized by local utility phone customers. And the guts of the networks, known as “backhaul” or “Business Data Services”, are able to be kept at inflated rates and obscene profits because they have the local phone customers pay the majority of their expenses.
In the case of the Triple Play, AT&T et al. were all supposed to upgrade their state utilities to fiber optics to compete with the cable companies; they never showed up in most of America. Even in areas where they did deliver service, they just split the wired-high-speed broadband markets. Worse, all of these “ISPs” have adopted the same industry-wide, identical deceptive advertising, bait-and-switch promotional pricing, and the addition of made up fees, offering no serious competition to lower prices or serious options.
SPECIAL FREE SUMMER READING: “The Book of Broken Promises: $400 Billion Broadband Scandal & Free the Net” documents how, in state after state, customers paid billions to have their networks upgraded to fiber optics, which was never done.
Based on 41 OCED-EU Countries
NOTE: Missing Data: We are using published research from the European Commission and a collection of Triple Play bills from NY and NJ, but also information supplied by the carriers, especially their published advertising. Unfortunately, neither the FCC or the state commissions are a good source of accurate information about Triple Play total bills, or even the made up fees, etc., found on an actual bills.
In the 41 combined members of the “Organisation for Economic Cooperation and Development” (“OCED” has 36 member countries) and the European Union (with 28 countries) the price for a basic Triple Play with 30–100 Mbps can be as little as $15 bucks.
The Report, the “European Commission Study Fixed Broadband Prices in Europe, 2017”, published 2018, supplies some alarming details: (NOTE: 1EURO=$1.11 Dollars, August 1, 2019)
- In parts of Europe, customers can get a Triple Play with 30–100Mbps speed for as little as about $14.86 (US dollars), (absolute lowest price) while 1GBPS speeds, can be as low as $29.32.
- NOTE: These include VAT taxes, usually at 15%.
Using another chart of ‘least expensive prices’ for 30–100 Mbps, which includes the EU28, Japan, South Korea, the USA and Canada, we find:
- In South Korea, a 1Gbps Triple Play can be $34.84 dollars, and the EU 28 ‘least expensive’ is $45.22 while Japan is $54.26.
- And America? The Report states: “Fixed internet offers are more expensive in the USA and Canada compared to the EU, particularly in the case of ultra-fast broadband (>100 Mbps)”.
- In contrast, according to the report, the US Triple Play costs about $81.02 US dollars. Anyone in America knows that this is the ‘promotional’ price, and these statistics do not include the taxes, made up fees and surcharges, which adds 20–35%. This is then joined by increases that could double the price after the promotion is over.
- (NOTE: The author’s Spectrum NY Triple Play, with no add-ons, is $209.11 in August, 2019 yet was advertised at $89.99. The taxes, which were not fully disclosed, added 27% to the actual price of the first bill (without other added activation charges). This means that the actual total bill went up continually, over 130%, from the advertised price after the 1 year promotion expired.
- Based on actual bills, including taxes, fees and surcharges, the US Triple Play is 200–450% more than Europe or Japan or South Korea.
Competition Lowers Rates: America Doesn’t Have Competition.
The OCED-EU pricing should make the reader realize that the common wisdom, ‘competition lowers prices’, is true around the world. Therefore, it should also be painfully obvious that America does not have enough competition to lower rates.
Most of the OCED-EU countries’ Triple Play prices decreased in 2017, in almost all categories, from a 7% drop to a 24% drop with services offering 100+ Mbps.
- “A decrease in retail prices was recorded for all bundles including television services (-9.5%, 12–30 Mbps basket; -7.3%, 30–100 Mbps basket; -13.4%, 100 Mbps basket).
- “The largest decrease in retail prices was recorded for Triple Play offers in the 100+ Mbps basket (-24.3%), with 12–30 Mbps (-13.2%) and 30–100 Mbps (-14.5%) reaching double digits as well.”
Triple Play Bait-and-Switch Advertised Pricing of America’s ISPs
Here are Verizon, Spectrum-Charter, Comcast xfinity and AT&T’s major Triple Play offers. Not one carrier supplies the actual price charged on the first bill, or that there are made-up charges that the customer must pay that will add 20–35% to this total, such as the Broadcast TV and Sports charge. And not one explains that this is an introductory, promotional price that will double once this promotional price is removed.
20–35% of the Advertised Price Is Missing from the Actual Bill.
This mark-up of a Triple Play cable bill shows all of the ins-and-outs of the use of separate fees to nickel, dime, quarter, and in the case, half dollar us. See More:
- Missing: The US Triple Play is plagued by 20–35% of taxes, made up fees, and surcharges including the infamous “Broadcast TV and Sports Programming” — now at $14.69 on the August Spectrum, NYC bill. It is not mandated but is direct revenues to the companies and there is no oversight.
Note: A year+ ago, this fee was only $11.55 on the bill — a 27% increase. And note that it had already gone up 413% since 2012.
Summary: Triple Play Overcharging: Why Are America’s Prices 2–5 Times More that Other Countries, Worldwide?
- NOTE: The “European Report” covers (left to right) — “US” is the price which is quoted in the report; then we have the “cheapest”, “EU28”, “Korea” and “Japan” –all taken from the report.
- The average basic price is derived from averaging the EU28, Korea and Japan, and does not include the “cheapest”.
- The first column has the US “Advertised Price”, then the Triple Play first bill with taxes — “Advertised with Taxes”, followed by the total bill once the promotion is removed, “Promotion Removed”. We used $200.00 for the basic Triple Play without discounts, with the taxes and fees included.
To Sum Up
- Overcharging on the Triple Play: We estimate that the range is $71-$155 a month, not counting add-ons. This is based on “Advertised with Taxes”, the starting price with taxes, slowing going up after the benefits of the promotion are “removed”.
- OCED-EU’s Triple Play basic average is $44.77 a month; the cheapest is at $15 a month.
- Bait and Switch: AT&T, Verizon, Comcast and Spectrum et al. Triple Play is advertised with an average price of $88.95, yet the actual price in NY City was about $115 a month.
- Post-Promotional Price: 135% above advertised price, bringing total to over $200.00 a month.
- In the end, US Triple Play prices are 258%-479% above average; 766–1410% above the ‘cheapest’ basic Triple Play service offered by ISPs in the OCED-EU member countries.
IRREGULATORS v FCC and Your Communications Services
IRREGULATORS v FCC exposes the inflated rates and the cross-subsidies of AT&T, Verizon and Centurylink’s wireline broadband, internet and VOIP phone service — i.e., the Triple Play. But it also exposes the underbelly of a regulatory system that has gone rogue and has been captured by these few companies to cause massive financial inequalities — in this case serving their own financial gain over the public interest.
- Stare at these numbers and you realize that the companies’ inflated prices caused the Digital Divide and are responsible for the “Homework Gap”, pricing families out of being able to purchase these services, or worse, they may not even be available.
- Read through these statistics and we find that Net Neutrality, Privacy, and our very democracy has been slowly eroded by a few companies working together to give their own companies advantages over the public.
- Prices could not continually increase over decades if there was actual competition.
A failure to properly upgrade and maintain the networks.
- AT&T and Verizon failed to properly upgrade and maintain their state-based utility infrastructure and most of America country does not have a second high-speed competitor.
- AT&T only has 3.1 million “fiber optic to the premises” residential and business customers, even though AT&T covers 76 million ‘locations’ and now controls 21 state’s wired utilities. I.e.; 3% of their territory is using a fiber optic to the premises wired service.
- It is clear that AT&T, Verizon and the cable companies have all decided to use the same deceptive bait-and-switch promotional mechanism to fool customers and to add multiple added made up fees — as an industry-wide practice.
- Verizon has cross-subsidized their entire FiOS, fiber to the home deployment and was able to not only charge all basic wireline phone customers extra for the fiber optic upgrades, claiming that they are just upgrading the state utility infrastructure — but this was done claiming these networks are “Title II”, common carrier networks.
This is the second in a new series of articles tied to IRREGULATORS v FCC. And, to be clear, the overcharging of wireless services and the Triple Play are based on the manipulation of the FCC cost accounting rules.