FCC Bureaus Approve Use Of Broadband Service Labels
The FCC’s Consumer and Governmental Affairs, Wireline Competition, and Wireless Telecommunications Bureaus released last week a Public Notice approving “broadband labels” for providers of broadband service intended to disclose certain information about their mobile and fixed broadband offerings. Inspired by the rectangular nutrition facts labels that are found on most food packages in the United States, the Bureaus described the broadband labels as a “simple-to-understand format describing the key factors consumers need to know when considering broadband service, including: price, data allowances, speeds, and management practices, among other things.” Broadband providers are not required to use these labels, but the FCC has held that using them would provide a safe harbor against claims that provider’s disclosures do not comply with the format of the disclosures to consumers that the FCC has adopted. But even with the lure of a safe harbor from certain enforcement actions, questions remain as to whether the broadband labels will be adopted widely enough to serve their intended purpose.
The idea behind broadband disclosure labels goes back to even before the FCC first adopted transparency requirements for broadband providers in the 2010 Open Internet Order. In 2009, the Open Technology Initiative of the New American Foundation called for “truth-in-labeling” disclosure standards for broadband providers “in a way that allows consumers to compare them.” Just months before the FCC issued the 2010 Open Internet Order, the National Broadband Plan recommended that the FCC should “develop a ‘broadband digital label’ that will summarize broadband service performance concisely.” Three years later, the Transparency Working Group of the FCC’s Open Internet Advisory Committee issued its Open Internet Study recommending the adoption of a voluntary labeling program similar to the nutrition facts labels.
Two years later, in the 2015 Open Internet Order, the FCC adopted enhanced transparency requirements addressing the content and format of disclosures that broadband providers are required to make. Making reference to the earlier labeling proposals, the FCC delegated to the Consumer Advisory Committee the task “to recommend a disclosure format that should be clear and easy to read—similar to a nutrition label found on food items—to allow consumers to easily compare the services of different providers.” The Consumer Advisory Committee is composed of consumer groups and industry representatives, and it reportedly approved the label format unanimously. It issued its recommendations on October 26, 2015, and the Bureaus approved them, with modifications, on April 4, 2016.
The New Broadband Labels
The Bureaus found that the new broadband labels provided “a simple-to-understand format describing the key factors consumers need to know when considering broadband service, including: price, data allowances, speeds, and managements practice, among other things.” They approved two labels: one for fixed broadband services and a separate one for mobile broadband services. To illustrate, the Bureaus attached to the Public Notice sample labels for mobile and fixed service and annotated versions with instructions.
The approved label for fixed broadband service is designed to include disclosures for a single broadband service speed tier (e.g., a single disclosure label would set forth disclosures only the fixed 15 Mbps broadband service offering). This suggests that a broadband provider offering ten different speed tiers, for example, would have to prepare ten different labels if it wishes to use this format, although the Consumer Advisory Committee’s recommendations allow for providers to list multiple service offerings on a single form. The approved label for mobile broadband service, on the other hand, is designed to include disclosures for multiple plans (based on monthly data allowances) in a single label disclosure. Under this format, disclosures related to pricing and performance would be included for each discrete offering, followed by disclosure of charges and terms that are common to all offerings in the label. Both label formats contemplate providing links to website to disclose information about matters such non-broadband services that could affect performance of the service, a full discussion of network performance metrics, and details on network management, among other things.
As the FCC made plain in the 2015 Open Internet Order and the Bureaus repeated in the Public Notice, carriers are not required to use the new broadband labels. But providers that voluntarily adopt them “will be presumed to be in compliance with the requirement to make transparency disclosures in a format that meets the needs of consumers.” The Bureaus clarified, however, that “to benefit from the safe harbor providers must use the format and terms as they appear in the Attachment [to the Public Notice].” Even then, it is important to note that according to the Bureaus the safe harbor protections extend only to issues with the format of the disclosures. The use of the labels will not provide safe harbor protections against claims that the content in the labels is inaccurate or misleading.
The initial impact of the adoption of the new broadband labels is likely to be limited. Most broadband service providers will not need to take any action right now: the enhanced transparency rules of the 2015 Open Internet Order not yet in effect, and most broadband providers already have been providing most, if not all, of the information covered in the broadband labels in their own website (albeit using formats different from the labels).
Despite the allure of the safe harbor protections, questions remain as to whether broadband providers will widely adopt the new labels. CTIA, for instance, responded that its members “already provide disclosure and transparency s part of the Consumer Code for Wireless Service” and stated that “[t]he competitive nature of the wireless broadband market does more for consumers than regulations can hope to achieve.” Various stakeholders have raised other issues to be considered, including the following:
The nutrition facts labels that inspired the new broadband labels were limited in size and constrained by design because they had to fit in small cans and boxes. That is not true for broadband labels, which would be used in a website environment that has none of these limitations and offers many creative ways to present large amounts of information in a user-friendly manner. Given the breadth of the transparency requirements, one issue to consider is whether carriers will find that their website provide better formatting options to comply with the rules than the restricted rectangular nature of the broadband labels.
Broadband providers, particularly those providing fixed service, are more frequently relying on bundles that combine broadband service with other services and products. In fact, many providers increasingly have more and more broadband offerings that are offered only through bundles and not on a standalone basis. While neither the Public Notice nor the attached labels with instructions address bundling expressly addressed this, the Committee explained in its Broadband Consumer Disclosure Q&A that its proposed labels did not address bundles and that providers could use links to “direct consumers to promotions and bundled offerings if the participating provider offers services in addition to broadband service.” Thus, one question moving forward is how eager providers that rely on bundles will be to use the new labels if they nevertheless will have to make disclosures for their bundled offerings on a separate site and/or using a different format.
The broadband labels appear to be designed to emphasize differences in pricing as a key comparison point among offerings. But broadband providers are increasingly relying on non-price features to differentiate their offerings in the market. As a result, one of the issues moving forward will be whether carriers conclude that the use of creative formatting in their websites is a better tool to make disclosures about their broadband services that highlight market differentiating features, such as zero-rating. This is an issue also in the bundling context: as the FCC’s own Open Internet Advisory Committee put in 2013, “the price benefit of the bundle is not easily reflected in the price data.”