Biden takes aim at ISP ‘junk fees’

Broadband providers got a few shoutouts as U.S. President Joe Biden gave his 2023 State of the Union address this week, but not all of them were positive. While industry groups hailed Biden’s comments reaffirming his commitment to connect every community in the country with high-speed internet, they were notably silent about his support for new legislation which would tackle so-called “junk fees” levied by ISPs and others.

Dubbed the Junk Fee Prevention Act, the bill would crack down on fees imposed by ticket providers, airlines, resorts and internet, TV and phone service providers. On the latter front, the measure specifically takes aim at early termination fees, which the administration said can surpass $200.

“The idea that cable, Internet, and cellphone companies can charge you $200 or more if you decide to switch to another provider – give me a break,” Biden said during the speech. “Junk fees may not matter to the very wealthy, but they matter to most other folks in homes like the one I grew up in, like many of you did. They add up to hundreds of dollars a month. They make it harder for you to pay your bills or afford that family trip.”

In a research note issued Wednesday, New Street Research’s Blair Levin acknowledged the Federal Trade Commission has been looking at the issue since October 2022 but argued the bill’s chances of passage in a divided Congress are likely slim. However, he noted it is possible some states could champion similar legislation at the local level.

“It could be campaign fodder for 2024 with uncertain but potentially problematic impacts on ISP brands,” he concluded.

Buy American

Elsewhere in Biden’s speech, the President reiterated the importance of “Buy American” rules associated with funding the government is planning to dish out for broadband expansions and other infrastructure investments. He added he was proposing new standards which would require all materials used for federal infrastructure projects to be made domestically, including “lumber, glass, drywall, fiber-optic cable.”

“I get criticized about this, but I make no excuses for it — we’re going to buy American,” he stated. “Buy American has been the law since 1933.  But for too long, past administrations — Democrat and Republican — have fought to get around it. Not anymore.”

His comments come despite pressure from the telecom industry in recent months for the administration to waive Buy American rules for some materials. Operator groups have argued certain components of the network just can’t be sourced domestically in the quantities needed to meet deployment goals and timelines associated with forthcoming funding from initiatives like the $42.5 billion Broadband Equity, Access, and Deployment (BEAD) Program.