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.

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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.

SUMMARY: Wireless

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.

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.

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.
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Using another chart of ‘least expensive prices’ for 30–100 Mbps, which includes the EU28, Japan, South Korea, the USA and Canada, we find:

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  • 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.

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).

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.

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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.
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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.

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Summary: Triple Play Overcharging: Why Are America’s Prices 2–5 Times More that Other Countries, Worldwide?

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  • 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.

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”.

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.

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.

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.

Learn more about IRREGULATORS v FCC.

Written by

New Networks Institute,Executive Director, & Founding Member, IRREGULATORS; Telecom analyst for 38 years, and I have been playing the piano for 63 years.

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