“Nutrition Labels: “What’s in Your Internet Service?

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The Federal Communications Commission’s (FCC) requirement that internet connectivity providers create broadband “nutrition labels” could go into effect as early as November. It calls on businesses to create transparent, easy-to-understand language about the costs, speed and data allowances of their internet offerings, says Axios. The objectives of this decision are to help consumers avoid unexpected charges on their Internet bills and to make it easier for them to compare different providers.

These challenges for connectivity providers, along with the issue of broadband unavailability in many parts of the United States, emerged early in the COVID-19 pandemic, but they existed long before working from home. and remote learning won’t go mainstream in 2020. According to an analysis of 2018 data from the Pew Research Center, about six in ten college students (58%) said they used the internet for homework every day or almost. Meanwhile, 15% of U.S. households with school-aged children said they had no high-speed Internet connection, and black, Hispanic, and low-income college students were less likely to have high-speed access. Currently, more than 120 million Americans don’t use broadband, often because it doesn’t reach them or they can’t afford it, according to USA Today.

“Nutrition labels” were first prosecuted in 2016 as part of an Obama-era effort to debunk the language of internet service providers and are now being resurrected as part of a larger initiative of the Biden administration to help ensure that every American has access to reliable high-speed internet. The bipartisan infrastructure bill includes $65 billion for this purpose, a historic investment in the deployment of broadband infrastructure. The legislation aims to help lower prices for internet services and bridge the digital divide so more Americans can afford to access the internet, according to a White House FAQ.

The resurgence of pressure for transparency in Internet costs and services confirms the CIO’s belief that there is a high degree of uncertainty around the growth of net additions in 2022 and 2023 for the broadband industry. “The broadband industry has seen a spike in demand during the pandemic due to remote working and learning,” say CIO analysts Kevin Dennean and Reid Gilligan. “Growth has since slowed as the industry’s net additions fell short of expectations in the past two quarters. We believe there has been a surge in demand, and companies are grappling with difficult year-over-year comparisons, which will ease in the first half of 2022.”

Dennean and Gilligan recommend selectivity within the communication services sector because, although the sector’s exposure to connectivity, content and advertising is supported by strong secular trends in digital advertising and streaming, they see structural challenges in linear television advertising, cord cutting and wireless growth.

Main contributor: Kerry Breen

Contact your UBS financial advisor for a copy of the report “US Communication Services: 2022 outlook in 22 charts” January 4, 2022.

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