Internet Plans vs. Actual Cost: Why the Internet Bill is Higher?

Why is the internet bill so high?

It was about $35 last month, so why is it nearly $60 now?

Those are the kinds of questions that follow annual internet price hikes or the end of promotional periods; sometimes, right after subscribing to a new service, too.

Where do these so-called additional charges or hidden fees come from?

Well, read on to find out.

Breakdown of Your Internet Bill Per Month

Believe it or not, today, internet service providers (ISPs) are more transparent about pricing than ever – all thanks to Broadband Consumer Labels, introduced by the Federal Communications Commission (FCC).

These labels contain all the information for internet billing, so consumers know exactly what they are paying for. Taking a look at an ISP’s broadband consumer label is highly recommended before you sign up or enter a term contract, as this practice helps avoid surprise fees.

Hidden Fees That Increase Your Internet Cost

The price of an internet plan is rarely all-inclusive. Most of the time, it reflects the monthly cost of the service alone, which is why the internet bill tells a different story. Here’s a breakdown of fees that are typically excluded from the advertised prices of internet plans:

1. Equipment Rental Fees

Most internet providers charge separately for equipment, such as a modem and router, or a gateway (combo device). Rental fees typically range from $10 - $20 per month, which is why many customers choose to use their own equipment instead.

2. Installation/Activation Charges

If you recently signed up with a new internet provider and just received your first bill, you might have been charged for professional installation and/or service activation. While this is a one-time cost, it can be avoided by choosing a self-install option or qualifying for free installation (as part of a deal or promotion).

3. Late Payment Fee

It’s common for ISPs to add a surcharge to the bill when customers are past the due date; the amount is usually a small fraction of the regular monthly fee. Moreover, if your service got disconnected because of non-payment, you may have to pay a service restoration fee.

4. Overage Fees

Internet plans that come with data caps are subject to overage fees. This means if you exceed your data limit before the end of the month, you will incur charges for additional data. As a rule of thumb, most ISPs charge around $10 for every 50 GB of additional data.

5. FCC Universal Service Fund fee

FCC requires internet providers to submit a quarterly fee that goes towards bridging the digital divide, i.e., bringing broadband services to rural and underserved areas. ISPs add a small charge to consumer bills (about $5) to fund the cause.

6. Early Termination/Cancellation Fee

Some ISPs require customers to enter a term contract. This agreement allows them to keep your business for a long time, and in return, you can earn a handsome discount. However, canceling the service before the end of the term results in a penalty.

7. Other Taxes

Federal, state, regional, and local taxes vary from area to area. These make up a small percentage of your internet bill, and are normally mentioned in disclaimers.

Promotional Internet Pricing vs. Long-Term Internet Price

Most ISPs offer internet plans at discounted rates to new customers as an incentive for joining their network. The lower cost is essentially a promotional price, which is short-lived; it may last a few months, a whole year, or more if you enter a contract term.

Once the promotional period is over, you will notice a sudden price hike. In a nutshell, the new increased price reflects the long-term cost of your internet service.

Top 3 ISPs with the Best Promotional Internet Plans

The following internet providers offer amazing discounts across all plans to new customers. While the end of the promotional term will result in a raised price, it won’t be overwhelming – you get competitive pricing with and without promotions.

1. For 12 mos., no term contract. Taxes and fees extra. Incl. up to $10/mo. auto-pay & paperless bill discount. See Broadband Facts: https://www.xfinity.com/broadband-labels
2. For 60 mos., no term contract. Taxes and equipment not included. Incl. up to $10/mo. auto-pay & paperless bill discount. See Broadband Facts: https://www.xfinity.com/broadband-labels
3. See Offer Details for terms and conditions.

ISPs with Straight-Forward Pricing

If promotional pricing seems confusing, and you prefer an internet service that’s free of any surprise charges, the following ISPs should be more your speed.

1. Eligible Autopay & Paperless Bill req’d. *
*Price after $10/mo discount with eligible Autopay & Paperless bill (w/in 2 bills). Monthly State Cost Recovery Charge in TX, OH, NV applies. One time install chrg may apply. Ltd. avail/areas.
See Details
See Broadband Facts: att.com/dapbbfacts
2. Req's AT&T Umlimited Starter® SL, eligible autopay & paperless bill. Taxes and fees extra.
AT&T may temporarily slow data speeds if the network is busy.
*Price shown is after all discounts, which start w/in 2 bills. Eligible plans: AT&T Unlimited Premium® PL, AT&T Unlimited Extra® EL, & AT&T Unlimited Starter® SL. Add’l charges, usage, speed & other restr's apply. See Details
See Broadband Facts: www.att.com/dapbbfacts
3. w/ Auto Pay & any Verizon mobile phone plan. See Details
4. w/ Auto Pay & any Verizon mobile phone plan. See Details

Tips to Lower Your Internet Cost

You might not be able to avoid certain fees in your internet bill per month, but you can still lower the cost by applying these practices:

• Buy your own equipment
• Downgrade your internet plan
• Bundle internet with other services from the same provider
• Switch to a cheaper connection type/internet provider
• Sign up for government assistance or a low-income internet plan
• Look for exclusive discounts for students, veterans, etc., if applicable
• Negotiate with your current provider

Any more queries or insights on the price of internet plans vs. the actual cost? If yes, do reach out to us on the social media handles mentioned below.

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