Whether it's a telco or a cable operator, broadband service providers, in their effort to attract subscribers, have always led in their ads with how fast their download speeds are, but government regulators believe they need to be honest with what speeds consumer's actually will get.
Image source: FCC. Click here for results from the FCC's August speed tests.
Regulators in a number of countries, including the United States and the United Kingdom, have revealed that the actual speeds service providers deliver often is a lot lower than what they advertise.
Working in conjunction with data collection provider SamKnows, the FCC issued a report that said that a number of the major broadband provider's advertised speeds slowed down during peak usage hours. According to the report that was released in August, the FCC said that Cablevision's (NYSE: CVC) advertised speed was only delivered 54 percent of the time during heavy usage hours.
Later, the FCC reported that Cablevision had improved the performance of its 15 Mbps service, delivering over 90 percent of the advertised speed during heavy usage times.
Of course, rival Verizon (NYSE: VZ), which offers its Fiber to the Premises (FTTP) service right in Cablevision's New York City territory, took the liberty to run an advertisement claiming that Optimum Online service delivers slower Internet connections than it advertises.
Cablevision promptly filed a federal lawsuit accusing the telco of false advertising.
"The FCC has recognized the fast broadband speeds we deliver to our customers," a Cablevision spokesman said in a statement, but would not comment on the initial FCC study.
In response to the suit, Verizon said the telco's ads are based on the FCC's study on the accuracy of advertising for high-speed Internet providers, which was released in August.
"In terms of the accuracy of its advertising, Cablevision was the worst. Verizon will defend Cablevision's lawsuit vigorously to ensure that consumers continue to receive truthful information about Cablevision's misleading Internet speed claims," Verizon said in a prepared statement.
The two players will get to make their case heard court in U.S. District Court in Brooklyn, N.Y on Dec. 19.
But the advertised speed issue is not just a U.S. issue alone. In the UK, Ofcom, the country's telecom regulator, and the Advertising Standards Authority (ASA) and Committee of Advertising Practice (CAP), have asked ISPs to be more honest about what consumers actually get.
In March, Ofcom, the UK's telecom regulator reported that there's a disparity between the 13.8 Mbps that wireline-based service providers advertise for their DSL services and the 6.2 Mbps consumers get.
The ASA and CAP took things a step further by announcing in September that they would publish new ISP advertising rules that are set on how broadband providers promote "unlimited" broadband service.
- Wall Street Journal has this article (sub. req.)
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Ofcom wants ISPs to be honest about broadband speeds