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Big ISPs Avoided 2020 Law Banning Predatory Modem ‘Rental’ Fees By Simply Calling Them… Something Else

Mon, Mar 14th 2022 06:06am - Karl Bode
When you’re a natural telecom monopoly in America you get away with a lot.

Take for example broadband ISP Frontier Communications, which has spent the last few years stumbling in and out of bankruptcy while dodging no shortage of scandals, including allegations of subsidy fraud. A few years back, Frontier got a light wrist slap for fraudulently charging its customers a “rental” fee for modems they already owned (something ISPs like Comcast also have a long history with).

The company also paid a tiny $900,000 fine in 2020 to Washington State AG Bob Ferguson for using other completely bogus fees to rip off the company’s captive subscriber base. The problem was bad enough that Congress even passed a law (the Television Viewer Protection Act (TVPA)) specifically banning companies from charging you rental fees for things you already own.

Two years later, and Consumer Reports has found that most ISPs are just tap dancing around the law’s restrictions. In some cases by simply renaming the surcharge… something else:

“Frontier FiOS used to charge me a router fee, although I have my own router. Now they don’t have that explicit fee, but they do charge an ‘Internet Infrastructure Surcharge’ ($6.99) and a ‘Frontier Secure Personal Security Bundle’ ($5.99 after ‘discount’),” a customer in Torrance, California, wrote.

So while Frontier did remove one predatory fee, they simply replaced it with another, bullshit, predatory fee they’d already been fined for by State AGs:

“After the router fee was made illegal by the act of Congress, I quickly called up Frontier to have the fee removed, which they did going forward,” wrote a customer in Flower Mound, Texas. “However, a few months later, Frontier increased their infrastructure charge (another bogus fee) about $3 or $4 if I recall correctly. So in my mind, Frontier did a bait and switch and is just trying to play the bogus fee game but not calling it a router fee any longer.”

The 2020 bill banning the practice had to be hidden in a broader legislative package to make it past a corrupt Congress and be signed by Trump (who I’d guarantee had no idea it existed). And now that it’s formally a law, the FCC under Democratic control is dithering and engaging in a drawn out public comment period before acting on what’s very obvious billing fraud and false advertising.

When the agency does act, it will culminate in a fee that’s a tiny, tiny fraction of the money Frontier made off of predatory fees. A fee that, if history serves, may be reduced or eliminated entirely with some clever lawyering. And this is just one subset of fees. Studies have shown up to 45% of cable and broadband bills are comprised of bullshit, sneaky fees with completely made up names.

This has been a problem in the industry for decades, with ISPs like Centurylink (now Lumen) and at one point charging users a completely made-up “Internet Cost Recovery Surcharge” just to fatten their wallet. Other ISPs charge “regulatory recovery fees” that are just nonsensical ways to fatten revenue dressed up with a name to trick users into falsely blaming government.

The fees serve several functions: one, they allow ISPs and cable companies to advertise one price, then charge consumers a much higher rate. They also allow ISPs to pretend that broadband prices aren’t increasing, because they can point to their static advertised rate. They’re used to help feed Wall Street an insatiable need for quarter over quarter improvements, while doing nothing to better service.

The underlying problem is that, with the occasional exception, U.S. regulators and politicians generally approve of using bullshit fees to rip off consumers. They’re rampant in everything from telecom and banking to the airline and hotel industries. When the occasional policymaker with a backbone does act, it’s always years late and several billion dollars short of having any meaningful impact.

This is, of course, a feature and not a bug.