The History of Broadband Price Competition

It’s sometimes easy to forget that the broadband business is just over twenty-five years old. Cable companies have adopted another interesting way to compete through what is called hidden fees, which are fees that are not clearly identified when new customers sign for service. Hidden fees have been around a long time, but in recent years have become gigantic. The motivation for having hidden fees is clear – it lets a cable company advertise a low price for basic service by not mentioning the hidden fees. It’s an odd tactic since customers find out about all of the hidden fees when they get the first bill. The Federal Communications Commission has proposed to make it harder to use hidden fees by using a report card that will require internet service providers (ISP)s to report all of their charges. It’s going to be interesting to see how the report card changes the pricing strategies of the big ISPs. I have no doubt that it will force some changes, but as they’ve always done in the past, the big cable companies will find new ways to look like they have low rates while extracting as much money out of customers as possible.

[Doug Dawson is President of CCG Consulting.]