80% of Americans Are Overpaying for Internet — Here’s Why
Nearly 80% of Americans are overpaying for the internet. Wondering why? There are numerous possible reasons, but the main one is pretty simple: they don’t know how the internet works.
Perhaps you can easily afford to pay your monthly internet bill, but that doesn’t make this issue any less important. Why not enjoy an internet service that complements your broadband usage patterns whilst saving you money?
Let’s explore what’s causing internet inflation and learn ways to combat it smartly.
Key Findings
- Over 60% of US adults are paying too much for an internet service they are unhappy with.
- About 85% Americans say that the cost of the internet has increased more than other utilities this year.
- Nearly 60% consumers claimed that their internet plan terms and pricing seem misleading.
- More than half the population thinks that more Wi-Fi bars means higher internet speed.
- 80% of questioned Americans failed to explain how the internet works.
- Almost three-quarters of the population are unaware of how much internet speed they actually need.
- 2 out of 5 people don’t know how much internet speed they are currently paying for.
- Close to 70% of the population thinks that the US has the fastest internet.
Why Americans Overpay for Internet: In-Depth Analysis
Many of us take one look at our internet bill and say something like “whoa…that’s a lot!” yet do nothing about it. By the end of the day, we forget, and the cycle repeats when the invoice arrives next month.
If you truly want to bring your internet bill down by up to half, it’s time to understand why the prices are running out of control. Maybe you started off at a reasonable rate, so what changed?
Here’s a breakdown of why the majority of Americans (and possibly you) are overpaying for internet:
1. Billing Complexity & Hidden Fees
When shopping for internet, bear in mind that advertised costs are usually not the same as actual costs. What you see as the price of an internet plan does not cover equipment rentals, installation/activation charges, taxes, and certain “network enhancement” fees.
Confused by the extra charges on your internet bill?
Learn about all mandatory and avoidable fees in detail:
2. Promotional Rates Expiring
If internet inflation is something you’ve only experienced recently, it’s probably related to the expiration of a promotional rate. Your provider wasn’t explicit about the service cost after the promo ends, and you didn’t ask questions, so now your internet bill looks like a second mortgage.
Reality check: The cheap deal you scored has run out of time, and now you’re paying the actual price!
3. Poor Awareness of What Speed You Really Need
Many of us go ahead and sign up for a premium internet plan with supersonic speeds for the wrong reasons. We’re either influenced by advertisements and peers, or don’t want to pass on a good bargain. To conclude, you might be paying for a high-speed plan you never fully use.
Believe it or not, most households don’t need gigabit speeds. Instead of overestimating your internet requirements, do the math and get the right plan:
How Much Internet Speed Do I Need? A Guide for Every Household
4. Lack of Competition/Market Structure
The cost of the internet isn’t the same in every part of the US. Well-developed and crowded urban areas have many internet service providers (ISPs) to choose from, whereas rural/remote regions have limited options. Internet plans come cheaper where competition is high, which is why underserved communities end up paying a lot more.
5. Regulatory & Transparency Issues
The FCC Broadband Labels were introduced to provide clear pricing information for internet services. However, a lack of awareness and enforcement still leads to transparency issues. The next time you decide to subscribe to an internet plan, don’t forget to read the fine print or broadband facts.
P.S. If you encounter policy gaps or misleading info from the ISP, you may file a complaint with the FCC.
How Overpaying for Internet Affects Consumers
Low-income households and rural users are hit the hardest by internet inflation. Rising internet bills disrupt monthly budgets and push families into debt.
People in rural areas often lack access to wired broadband and 5G connectivity. For this reason, they have to make do with whatever is available, even if the pricing is ridiculously high.
The absence of affordable internet options and exaggerated bills leads to:
- Financial burden: families with limited income struggle to pay their bills
- Trust erosion: consumers grow wary of ISPs imposing additional/hidden fees
- Switching behavior: many consumers consider or actually switch to a more affordable service if available
- Downgrading: users often settle for slower speeds to get a cheaper deal
Solutions & Recommendations
As a consumer who is done with overpaying for internet, here’s what you can do:
- Understand your speed and data requirements to pick a suitable plan.
- Run a speed test to verify the speeds you are receiving.
- Switch to a cheaper, lower-tier plan if your current speeds are overkill.
- Negotiate with your ISP or ask for a price lock if you wish to keep your current plan.
- Consider switching service once the promotional price expires.
- Review FCC broadband facts while comparing providers and plans.
Aside from users, the providers are responsible for making the internet more accessible. Here’s what ISPs can do to build trust and credibility:
- Quit false/partial advertising to generate sales.
- Publish broadband labels with accurate pricing info.
- Simplify billing by clearly defining all included charges.
- Offer diverse and flexible plans aligned with varying budgets and internet usage.
- Educate consumers on working out their speed needs.
Last but not least, policymakers and regulators can improve the situation by:
- Strengthening broadband label enforcement.
- Supporting underserved markets by promoting competition.
- Educating the masses about real broadband costs.
Real-World Examples
Before you leave, here’s a glimpse at how Americans end up overpaying for their home internet service. For many, lowering the monthly internet cost is an achievable goal, but others aren’t so lucky.
Small Suburban Family
- A suburban family of four living in a 1200 square feet single-story house subscribed to a 1-gigabit cable internet plan.
- This plan cost them about $60/month during a promotional offer. However, the cost doubled a few months later when the promo ended. Over $100 a month for social media scrolling and casual streaming seemed diabolical
- After some research, the family realized that they didn’t need gigabit speeds. Therefore, they downgraded to a 300 Mbps plan, which cost them under $50 per month at full price.
Low-Income Rural Household
- A middle-aged couple moved to a rural area to save on living costs, but their new neighborhood lacked access to wired broadband services.
- Satellite internet was out of budget, and they couldn’t find a cheaper alternative. Initially, they tried to make do with 4G LTE mobile service, but it didn’t work out.
- Since reliable internet was necessary for their livelihood, they signed up for satellite internet despite the high cost. Unfortunately, no low-income internet plan was available either.
Frequently Asked Questions
How do I know if I’m overpaying for internet?
If you don’t know your speed requirements or how much speed you’re getting from your current service, and the internet bill has increased significantly, chances are that you’re paying too much.
What is the broadband facts label, and how can it help me?
The broadband facts label tells you about everything included in your internet plan and offers a clear-cut breakdown of the pricing. It helps you recognize the actual cost of your service, so you know exactly what you’re paying for.
Do I really need a high-speed internet plan for streaming/gaming ?
A high-speed internet plan can ensure a smooth streaming and gaming experience. However, the ideal speed tier for you depends upon the size of your household and gaming/streaming habits. Typically, an internet plan offering 300 Mbps speed or above is recommended for high-bandwidth activities.
Can I switch internet providers easily when my promo ends?
Switching providers can be a straightforward process if your internet plan is contract-free or your contract ends with the promo expiration date. In case the contract term is longer, you may have to pay an early termination fee.
Why does my internet bill go up after a year?
Internet bills usually increase after the end of a promotional period and due to annual price hikes. The yearly increase in cost makes up for general inflation, increased taxes/tariffs, infrastructure investment, and other regulatory fees.
