Hidden fees that raise price of broadband would be banned by proposed law
US Rep. Anna Eshoo (D-Calif.) today introduced legislation that would require telecom companies to include all charges in their advertised prices, potentially ending the practice of advertising low prices and then socking customers with loads of extra fees.
The bill would also force telecom companies to justify price increases that occur during a contract term, and it would let consumers opt out of contracts without paying termination fees when prices are increased. The bill would also prohibit providers from requiring arbitration in the case of billing errors, thus preserving consumers’ rights to sue the providers over price disputes.
Eshoo’s TRUE Fees Act (Truth-In-Billing, Remedies, and User Empowerment over Fees) would apply to phone, TV, and home or mobile Internet providers. The bill isn’t likely to get much support from Republicans in Congress, who have generally protected Internet providers from new requirements.
Customers “blindsided by higher bills”
Customers today are being “sold a service for one price, only to be blindsided by higher bills at the end of the month from tacked-on ‘service’ or ‘administrative’ fees,” Eshoo said in her announcement. “These ‘below-the-line’ fees add up to hundreds of millions of dollars each year for cable and Internet service providers at the expense of consumers who have little to no option than to pay up.”
Here’s Eshoo’s summary of what the legislation requires:
Specifically, the True Fees Act requires cable and Internet providers to include all charges in the prices they advertise for service; allows customers to end their contract without early termination fees if the provider increases fees during the term of the contract; prevents arbitrary price hikes on equipment fees unless there is actually an improvement made to the equipment; and prohibits forced arbitration clauses for wrongful billing errors.
The bill would let customers seek enforcement actions from the Federal Communications Commission or Federal Trade Commission, a spokesperson for Eshoo told Ars. FCC jurisdiction would apply for common carrier services (i.e. mobile phone service and non-VoIP landline phone service), and the FTC would have jurisdiction for non-common carrier services (i.e. TV, broadband, and VoIP phone services), Eshoo’s office said.
FCC ditched similar rules
Eshoo’s proposal is similar to rules that were enforced by the FCC starting in 2015. But the FCC eliminated those required disclosures under Chairman Ajit Pai when the organization repealed its net neutrality rules.
The full text of Eshoo’s legislation provides more details on the proposed requirements.
The advertised price of service must include “the total amount that the provider will charge for or relating to the provision of such service, including any related taxes, administrative fees, equipment rental fees, or other charges, to a consumer who accepts the offer made in the advertisement,” the bill says. The bill does make an exception for government-mandated taxes or fees that aren’t uniform throughout the US so that a provider’s advertised price wouldn’t have to include taxes or fees required in one state but not another.
Each bill a provider issues to a customer would have to include an itemized breakdown of fees, and telcos would have to justify price increases when they try to raise a consumer’s price in the middle of a contract. Any increase during a contract term to the total price, including any fees, would be banned “unless the increase is the result of an objectively quantifiable increase in the cost to the provider of providing the service, as demonstrated through a change in an indicator such as a prime interest rate or a tax applicable to the service.”
If a provider does raise the price during a contract, it would have to give the customer notice 21 days in advance and let the customer terminate the contract without any penalties.
A provider would not be allowed to raise equipment rental prices during a contract term “unless the equipment is upgraded (whether through a hardware or software upgrade) so as to provide a substantial increase in functionality,” the bill says.
The bill does not prohibit ISPs from raising prices when a customer requests an upgrade in service.
Advocacy group urges passage
Chances of the bill being approved are likely low, but consumer advocacy group Public Knowledge urged Congress to pass it.
“For far too long, consumers have been misled by telecommunications providers by offering service for one price and then charging another,” Public Knowledge VP Chris Lewis said. “Consumers have had zero recourse for dealing with increasing ‘below-the-line’ and equipment fees other than ending service—and paying an unfair termination fee for the privilege.”
The bill provision that lets customers opt out of contracts without termination fees would make it easier to switch providers, but this won’t make a huge difference in cases where customers have only one viable choice for broadband.
Nonetheless, Lewis said that “informed consumers can make clear market choices. This is why we welcome Rep. Eshoo’s efforts to provide consumers with plain-language, transparent billing information and actual remedies for responding to specific fee increases.”
