Empowering Consumer Choice Through Standardized Disclosure

OTI Updates Its 2009 “Broadband Truth-in-Labeling” Proposal
Blog Post
Aug. 3, 2015

As a consumer in the United States, it is extraordinarily difficult to make informed decisions about Internet service providers (ISPs) and their offerings. Consumers trying to pick an Internet plan can’t always find the information they’d like to know about available service packages—basic information on speed and the terms of the contract is sometimes buried in footnotes or subpages of lengthy fine-print disclosures. And even when the information is available, consumers often find themselves comparing apples and oranges: one ISP might calculate the speed of the network based on performance under optimal conditions, while another simply lists its download and upload limits.

Not only is relevant and uniform information about Internet service sometimes difficult to find, but often it’s prone to misinterpretation. A consumer might pick a plan only to be hit with hidden service fees for installation or modem rentals, high fees for exceeding data usage caps, or jacked-up monthly costs once a promotional period ends. As recently as June 2015, the American Consumer Satisfaction Index (ACSI) found that customer satisfaction with ISP websites is 66%, “well below the national average” of 77.9% for websites overall.

To address some of these issues and bring greater transparency to the home Internet market, OTI first called for a “Broadband Truth-in-Labeling” program back in 2009, encouraging ISPs to adopt a uniform format disclosing key information about their service packages. The concept was simple: generate a standardized label for broadband disclosures akin to the FDA-backed “nutrition facts” label. The standardized format would help consumers to understand and compare offerings, and in turn, make informed purchasing decisions.

The FCC, similarly recognizing and working to address consumer confusion around service plans, adopted updated and enhanced transparency measures as part of the February 2015 Open Internet Order. Noting the value of a standardized disclosure format that facilitates side-by-side comparisons, and citing both OTI’s Broadband Truth-in-Labeling proposal and related recommendations from the Open Internet Advisory Committee, the FCC even went so far as to establish “a voluntary safe harbor for the format and nature of the required disclosure to consumers. To take advantage of the safe harbor, a broadband provider must provide a consumer-focused, standalone disclosure.” The FCC declined to specify the format for the standardized disclosure at that time, instead reaching out to its Consumer Advisory Committee for assistance developing the format.

In an effort to contribute to the FCC and Consumer Advisory Committee’s efforts to develop a standardized disclosure format, today OTI is releasing an update to its original Broadband Truth-in-Labeling proposal. The new format has been redesigned to reflect the FCC’s current rules on ISP transparency. It also takes into consideration research on consumer decision-making, as well as OTI’s unique experience examining ISPs disclosures to collect the information used to inform our annual Cost of Connectivity reports.

A Standardized Disclosure Format

In one sheet, the new Broadband Truth-in-Labeling form enables a consumer to quickly glean the key facts about a given plan, helping them figure out which offerings provide the most value, or alternatively, answer the question of “can I afford this Internet?” The new form is easy to read, and highlights the most salient information to consumers (e.g., total monthly fees, average speed during peak hours, and length of contract) while also providing a more granular breakdown of details (e.g., monthly taxes, cost of router, and average packet loss).

Furthermore, to maximize its utility to government, researchers, and information intermediaries, we are also urging that the standardized disclosure format be made in a machine-readable format.

We hope that the form we’ve developed will be a useful resource for the FCC and the Consumer Advisory Committee as they work to develop a standardized disclosure format. But ultimately, we hope that the proposed form will work to empower consumers shopping for Internet service in the US, and perhaps in turn, spur more competition and innovation in the home Internet market.

You can find our full proposal here.