By Shalini Ramachandran and Inti Pacheco
Internet pricing is a puzzle for many American consumers. It is
an unregulated marketplace where prices vary drastically across the
country, or even just across the street.
Internet download speeds of 100 megabits per second can cost
anywhere from about $25 to $105 a month, according to a Wall Street
Journal analysis of 187 bills from 2019 -- bills largely provided
by BillFixers, a company that helps consumers negotiate better
rates with cable and telecom companies. The tally includes
customers buying internet stand-alone and as part of a bundle with
other services. BillFixers redacted personally identifying
information from the bills it provided the Journal.
Put another way: Some customers are paying the same amount, say
$70 a month, for slower connections (30 Mbps from Cox
Communications Inc. in Tucson, Ariz.) as others are paying for
superfast ones (300 Mbps from AT&T Inc. in Spring Hill, Tenn.).
The bills included customers from all the major U.S. providers. We
want your help to continue to collect data.
Why is internet pricing all over the map? The companies say the
level of competition market-by-market, the varied costs of wiring
different regions and promotional offers play a big role. Experts
say those factors don't account for all the disparities.
"In terms of legal markets, there are exceedingly few where
pricing is so completely opaque," said Sascha Meinrath, a telecom
policy professor at Penn State University. "Prices are completely
unknowable except to suppliers, [and] customers are constantly told
supply is constricted, leading to various price hikes."
The Journal, for example, identified two customers in the same
city (West Hollywood, Calif.), with the same provider ( Charter
Communications Inc.) and the same internet speed (100 Mbps) who are
paying two different monthly prices: $50 versus $66.
A Charter spokesman said the company has consistent pricing
throughout the country, and this difference between customers in
the same city is likely a result of one being on a promotional
offer.
Bundles and Discounts
Of the bills we reviewed, 82 were from customers who got their
internet service as part of a bundle of TV and/or phone services.
Comcast Corp., the largest U.S. broadband provider, doesn't break
out the cost of internet services purchased in a bundle. In a pair
of bundled bills in Omaha, Neb., Cox breaks out the internet cost
for a 100 Mbps customer but not for a 300 Mbps user.
Internet providers often lure customers into service bundles or
faster connections by offering big discounts that will later
expire. Our bills showed that 70% of people with bundles got
discounts, compared with 34% of those with stand-alone internet
service.
When looking at both stand-alone internet and bundled bills, we
found two-thirds of customers with the fastest connections got
discounts. Just a quarter of those with slower speeds got a
discount.
"When customers' circumstances or pricing plans change, we work
with customers to continue to get them a price for the product they
need that fits within their budget," a Cox spokesman said.
An AT&T spokeswoman said "our current standard rates are
consistent across our 21-state footprint."
A recent Journal study found that faster speeds don't
necessarily mean a better streaming experience: Picture quality
doesn't improve much, and video content doesn't load more quickly.
Our bill data indicated that households subscribing to premium
plans of 250 Mbps are spending an average of $36 more a month on
internet service for less than a second's improvement on Netflix
video load times, compared with households on 50 Mbps plans.
The providers said consumers are demanding faster internet
speeds to support the many devices in their households, as well as
activities such as ultrahigh definition (4K) streaming, online
gaming and telecommuting.
Extra Fees
Customers say the additional fees tacked onto service costs are
among the more confusing parts of their cable and internet bills.
About half the bills the Journal reviewed had additional
internet-related fees -- for things like "speed upgrades" and modem
leases -- ranging from 4% to 60% of the monthly internet cost.
Here is a look at some of those fees.
Charter charges a $5 "Wi-Fi" fee for customers leasing combined
modem--plus--Wi-Fi routers. The Journal found this charge on about
a third of the Charter bills in our sample. A Charter spokesman
said this is the only fee included on Charter's bills, and for
customers receiving one gigabit-per-second of internet speed -- a
superfast service tier -- the fee is waived. "Our internet billing
is extremely straightforward," the spokesman said.
Altice USA Inc., which operates the Optimum brand, charged
internet fees on 16 of the 17 the bills we analyzed. They ranged
from $2.50 to $36. An Altice spokeswoman noted the $36 fee was for
the provider's entertainment hub, which helps power the home's
Wi-Fi as well as cable and other services.
Comcast had the highest median internet-related fees in our
sample. One Comcast user in Houston was charged a $50 fee for
exceeding their data limit. All the internet providers have said
they offer a number of affordable internet tiers and options.
Your Bills
We want to learn more about internet pricing and need your help.
Do cord-cutters pay more for internet service? Do people in rural
areas pay more than their suburban and urban counterparts? Do
providers give more discounts when they have competition in a
region?
We need more bills to answer these and other questions. Please
fill out this online form, or send a copy of your latest monthly
bill to checkmybill@wsj.com. Please redact anything, such as the
account number, you don't want to share with the Journal. We won't
publish your personal information without your permission, but a
Journal reporter may contact you to verify details..
--Kara Dapena and Patrick Thomas contributed to this
article.
Write to Shalini Ramachandran at shalini.ramachandran@wsj.com
and Inti Pacheco at inti.pacheco@wsj.com
(END) Dow Jones Newswires
August 22, 2019 11:26 ET (15:26 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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