Hidden exit fees, poor transparency and exclusivity agreements are all seen to stifle competition. The result has been higher broadband bills for consumers
Regulators are tasked with addressing unfair exit fees for consumers: The Biden administration has announced new measures to lower the cost of living for US families and “hold big corporations accountable”. The Competition Council – a whole-of-government initiative created by the President in 2021 – was tasked with tackling “junk fees”, a term used to describe unfair and often hidden charges relating to bank overdrafts, credit cards, hotel booking and the termination of telecoms services, which can prevent consumers switching between providers to get a better deal. According to the President, these fees cost American households billions of dollars each year. To help alleviate pressure on consumer finances, the FCC is currently developing rules that would require telcos to be more upfront about their charges. With greater transparency, consumers would be better informed and empowered should they look to change providers.
The retail broadband market in the US is characterised by limited competition: Since President Biden’s inauguration, the US has introduced various measures to drive competition, lower prices and increase choice in the telecoms sector. In January 2022, the FCC approved a proposal to require operators to display “Broadband Nutrition Labels”, which would allow consumers to better compare the costs of different internet services and find the right tariff for them. The FCC has also moved to tackle long-standing exclusivity agreements between landlords and telcos, which lock tenants in apartments and office buildings into just one option for their broadband provider. This type of arrangement is seen to contribute to the poor state of competition in the US retail broadband market, which subsequently fuels relatively high prices. Similar concerns have been raised in Canada, where the pursuit of greater competition and affordability underpins the Government’s consumer-oriented approach to telecoms policy.
Consumer protection is high up on policy and political agendas: In addition, the US has created the Affordable Connectivity Program (ACP), which provides eligible households with $30 per month off their telecoms bills. With operators such as AT&T, Comcast and Verizon having committed to offering ‘high-speed internet plans’ for $30 per month or less, it is possible for eligible families to get broadband at no cost. Policymakers elsewhere are also looking to help consumers cope with a rising cost of living. Rather than direct subsidies, the UK has so far relied on voluntary social tariffs from operators. However, with low uptake, Ofcom and the Government want telcos to do more to support struggling households. One proposed action – that has also been urged by consumer bodies such as Which? – is the removal of exit fees for consumers when moving to a social tariff.
