Understanding the fees and surcharges on your business ISP bill can be quite complex, as they vary depending on the provider, location, and the services you are subscribed to. These additional charges can vary and understanding them will ensure that you manage an accurate Tier 1 ISP RFP process when selecting Internet Service Providers.
In addition to the mandatory Federal, State, and Local taxes or other required regulatory charges (i.e. FUSF) that should be the same across providers, some ISPs will add on Administrative Fees, Property Surcharges, Recovery Surcharges, Franchise Cost Recovery fees, Billing fees, and some that might be categorized any number of ways. These are typically not disclosed in quotes and an experienced network consultant can help flush out the actual cost of your quoted business internet service.
Here’s a breakdown of the common fees and surcharges you might encounter on your business internet service provider (ISP) bill:
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Monthly Service Fee:
- Base Service Fee: The main charge for your internet service plan.
- Equipment Rental: Charges for leasing equipment like modems or routers from the ISP.
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Installation and Activation Fees:
- Installation Fee: A one-time charge for setting up the internet service at your location.
- Activation Fee: A fee for activating the service.
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Usage Fees:
- Data Overages: Charges applied if you exceed your data limit (if applicable).
- Additional Services: Fees for extra services like static IP addresses, enhanced security features, or other add-ons.
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Regulatory and Recovery Fees:
- Federal Universal Service Fund (USF) Fee: A fee to support universal access to telecommunications services. More detail on FUSF can be found here.
- State Universal Service Fund Fee: Like the federal USF fee, but at the state level.
- Regulatory Cost Recovery Charge: A fee to cover costs incurred by the ISP to comply with various governmental regulations.
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Taxes:
- State Sales Tax: Applicable sales tax based on your state.
- Local Taxes: Any local or municipal taxes that apply.
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Surcharges:
- Federal Access Charge: Sometimes called the “FCC Line Charge”, this fee helps to cover the cost of providing access to the internet.
- Telecom Relay Service (TRS) Fund: A charge to support relay services for individuals with hearing or speech disabilities in all 50 states, DC, Puerto Rico, and U.S. territories.
- 911 Emergency Services Fee: A charge to fund local 911 emergency services.
- Administrative Fees: Additional fees imposed by the ISP to cover administrative costs.
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Late Payment Fees:
- Late Payment Charge: Applied if you do not pay your bill by the due date.
- Reconnection Fee: A charge for reconnecting your service if it was disconnected due to non-payment.
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Early Termination Fee
- An Early Termination Fee (ETF) is a charge that a customer must pay if they cancel their service contract before it ends. The amount of the ETF depends on the type of service, the length of the contract, and how much time is left in the contract. Some service providers may offer to pay off the ETFs of customers who switch to their network. An ETF may also be called an Early Termination Rate, a Company Termination Fee, or Early Termination Liability (ETL).
Example Tier 1 ISP Bill Breakdown
Suppose your business ISP bill includes the following items:
- Base Service Fee: $100 (Monthly recurring charge or MRC)
- Equipment Rental: $10
- Installation Fee: $50 (one-time non-recurring charge or NRC)
- Federal USF Fee: $2
- State USF Fee: $1.50
- Regulatory Cost Recovery: $3
- State Sales Tax: $6
- Local Taxes: $1
- 911 Fee: $0.75
- Administrative Fees: $1
Your total bill for the first month might look something like this:
| Item | Amount |
|---|---|
| Base Service Fee | $100 |
| Equipment Rental | $10 |
| Installation Fee | $50 |
| Federal USF Fee | $2 |
| State USF Fee | $1.50 |
| Regulatory Cost Recovery | $3 |
| State Sales Tax | $6 |
| Local Taxes | $1 |
| 911 Fee | $0.75 |
| Administrative Fees | $1 |
| Total | $175.25 |
Please note that actual fees and charges will vary based on your ISP, service plan, and location. For an accurate breakdown, it’s best to review the specific details provided on your ISP bill or contact your ISP directly.
Tier 1 ISP Surprise Fees
As noted earlier, an experienced network consultant can help you run a global WAN RFP and can often identify existing or pending fees that can add over 15% to your actual cost. Many ISPs are adding a margin improvement tool called the “Franchise Cost Recovery Fee” to recoup costs associated with running their network in some or all areas that they operate. One global ISP recently posted this notice of a new fee that will impact their business internet customer base:
“A Franchise Cost Recovery Fee aligns the cost of franchise fees and public rights-of-way across the relevant customer base. It’s assessed as a percentage of monthly recurring and usage charges. The rate varies based on the applicable county or city. For example, in Arizona, it ranges from 1.00% in Chandler to 5.00% in Tempe. This fee helps cover the expenses associated with franchise agreements and maintaining infrastructure. The change takes effect on July 1, 2024.”
We can help
The team at Macronet Services has been designing global networks for nearly 30 years. We have access to pricing at over 300 suppliers and can run an unbiased RFP in collaboration with your team.
We also work with the leading Cost Management firms for wireline, wireless, and cloud cost optimization and can help you select the right cost management service with the right team for your business.
Please reach out to us anytime to discuss your project!