Broadband Pricing: What Consumer Reports Learned From 22,000 Internet Bills

Broadband service is too expensive for many Americans to afford. Consumer Reports ollected and analyzed more than 22,000 consumer broadband bills. Many of the consumers who shared their bills also took internet speed tests and completed a survey on their satisfaction with and the reliability of their internet service. While this is not a nationally representative study and is not predictive of the broadband market, it is one of the most ambitious efforts of its kind to understand how much consumers are paying at a moment in time. We believe our findings have important public policy implications.

• Median cost of service: Among the 18,359 consumer bills on which an internet price could be identified, the median cost of high-speed internet service was $74.99 per month. Approximately half of the households were paying between $60 and $90 per month. 
• Confusing bills: Bills that are hard to understand make it difficult for consumers to budget and compare prices with alternative service options. The following factors contribute to this billing confusion: 
  • Bundles. Numerous internet service providers (ISPs), including Comcast (Xfinity), the nation’s largest provider, do not always itemize the internet price within their “bundled” TV, phone, and internet packages. This was true of 2,827 of the 22,088 bills we analyzed, and 1,810 were issued by Comcast. This practice makes it impossible for both consumers and CR’s researchers to determine the cost of the service and compare it with other providers. 
  • Discounts. Many ISPs offer discounts on broadband service, including introductory promotional discounts and conditional discounts such as auto-pay discounts. The discounts identified typically ranged from $10 to $50. Discounts generally benefit consumers, but also make it challenging for consumers and researchers to determine the true cost of service and to compare it with other providers’ prices. For example, it is not always clear from bills when discounts will expire and what the price will be afterward. Notably, more than half of the AT&T and Verizon bills we analyzed contained discounts, while none of the Google Fiber bills in our sample included discounts. 
  • Fees. ISPs charge a wide range of fees that, together, can add up to a significant portion of the overall cost of service and contribute to the confusion around internet pricing. Individual fees tied directly to internet service in our sample typically ranged from $2.49 to $9.95 per month. It is often difficult to determine whether these fees are associated with broadband or other elements of a service bundle. Some of these fees, such as the cost of renting a modem or wireless router from the provider, are avoidable, but most are not. 
  • Data cap charges. Several providers, including fixed broadband providers Comcast (Xfinity), Cox, Suddenlink, AT&T, and Wave Broadband, impose data caps in at least some areas and charge overage fees for exceeding those caps, or fees for unlimited data. Unlimited data can add as much as $49.99 per month to the base cost of service. 
• Speed limitations: Some study participants clearly experience severe broadband speed limitations. Download speeds routinely fail to match the advertised “up to” speeds of several ISPs. This was especially true of consumers paying for “premium” plans purporting to offer download speeds of between 940 and 1,200 Mbps, who in fact experienced median speeds of between 360 and 373 Mbps.  
• Lack of competition: CR collected 9,116 bills from ZIP codes where we detected just one ISP. In ZIP codes where bills from two ISPs were present in our sample, that number dipped to 7,273. Three or more competitors were spotted in ZIP codes accounting for only 1,802 bills. 

[Editor's note: the Benton Institute for Broadband & Society is a partner in the Consumer Reports effort.]