True transparency on residential broadband bundles from U.S. telco and cable operators is lacking, according to a report by GlobalData. The advertised rate is rarely what the customer receives once all the required equipment and mandatory service or technology fees are added in, according to GlobalData.
“In some cases, the final cost is as much as 45% over the advertised rate," said GlobalData's Courtney Rudd, senior consumer Services analyst, in a statement. "For example, Xfinity's $40 ‘Starter Internet plus Basic’ TV bundle jumps to $58 per month once the additional $18 in equipment costs are added. Prices can also vary based on location.”
According to GlobalData’s research, Verizon had the highest additional costs in August at $24 per month, followed closely by Frontier and Altice/Optimum with around $17-$18 in additional equipment fees. In contrast, AT&T and Google Fiber offered the most cost transparency in bundle price with zero additional equipment or technology fees.
Including monthly fees for WiFi routers or set-top boxes has been a standard operating procedure for years by service providers, although some offer the option to buy the equipment outright, or have eliminated the monthly fees. Rudd pointed out that not providing transparency and the monthly sticker shock were factors for inducing subscriber churn.
“The lack of pricing transparency in the U.S. market is an ongoing inconvenience for customers and an open invitation for disruptor aggression," Rudd said. "A lack of transparency regarding additional service and technology fees could be a key differentiator for service providers wanting to sweep up these disgruntled customers.
“Clear and concise online pricing can also go a long way toward easing potential customer frustrations with bill shock and the online shopping experience, especially when combined with contract buyout and/or cash-back incentives to remove potential roadblocks customers face when considering a change of service providers.”