BROADBAND PRICING INDEX: American Broadband Prices Continue Decline in 2021 Learn More

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Jonathan Spalter

Pssst… The Truth About U.S. Broadband

Let it be said that the Biden administration’s $100 billion investment in broadband infrastructure was a bold proposal to permanently close the digital divide and deliver affordable connectivity for every home, school, hospital and business in America.

But tucked away in the plan – presumably, to justify an expanded role for Washington in running communications networks and setting internet service prices – is the suggestion that America’s broadband providers face little competition, while consumers experience lagging speeds and increasing costs.

That’s flat wrong.

It’s a persistent myth about the modern broadband marketplace that policymakers – especially those in Congress – should reject and not use to waste an otherwise historic commitment to universal connectivity.

Let’s stipulate this: America’s shared communications networks are backed by $1.8 trillion in private investment and are still helping the country navigate the depths of the pandemic with reliable and resilient connectivity (that happen to have outperformed every developed nation).

In fact, today’s broadband marketplace is ultra-competitive, defined by increasing speeds and lots of capacity (see streaming, zooming and gaming), new providers (hello SpaceX and Amazon) and next generation technologies like 5G.

FCC data shows the percentage of Americans with access to two or more broadband service providers increased four times between 2015 and 2019. In the same period, 16 times as many households had access to three or more providers.

Against this backdrop, the White House proposes a bigger role for government, municipalities and certain non-profit cooperative organizations in running the country’s networks – even beyond areas where there are recognized access gaps.

Putting government’s thumb on the scale in favor of government-run networks is the wrong approach. Shouldn’t government be prioritizing competition for access to federal funds from a range of providers?

Besides, a number of government-run, broadband efforts have failed over the last several years, often at a big cost to local taxpayers. Broadband deployment is hard and expensive work, and the cost of maintaining and upgrading state-of-the-art communications networks to meet modern performance demands can strain taxpayer funds. Even companies like Google (with a strong stomach for capex) have scaled back or given up all together on broadband deployment in some communities.

Today’s broadband marketplace is ultra-competitive, defined by increasing speeds and lots of capacity, new providers and next generation technologies like 5G.” 

The surest way for government to help finish the connectivity job is by deepening its partnership with private broadband innovators to serve communities (already happening everyday all over the country, by the way) while lowering the barriers to deployment that saddle projects with red tape and wasteful delays. This is the less glamorous world of pole attachment fees and permitting, but it makes a difference.

Washington shouldn’t be setting broadband prices either, especially in a red hot competitive market with lots of consumer choice, but the White House plan suggests it will “find a solution to reduce internet prices for all Americans…”  That sounds perilously close to rate regulation of one of the country’s most innovative sectors.

We studied residential fixed broadband pricing a few months ago and found broadband prices are not increasing. FCC and public data showed that from 2015-2020 there were substantial reductions in price for the most popular and highest-speed broadband internet services – and significant improvements in overall broadband speeds.

To break it down: the most popular tier of broadband service in 2015 is now priced about 20 percent lower and offers nearly 16 percent faster speeds in 2020. These price reductions run counter to inflation, which increased consumer costs for overall goods and services by 9.3 percent over the same five-year period. When inflation is considered, the real price of the most popular tier of broadband service has actually dropped – 28 percent since 2015.

Here’s the deal: it’s easy to take a whack at your internet service provider, but providers are investing $80 billion each year in faster and more reliable U.S. broadband infrastructure. Those investments produced a shared network that was nothing short of an economic lifeline the past 14 months.

Policymakers at the White House, Congress and in state capitals should remember this fundamental context as we drive toward our collective connectivity goals with affordability and accessibility solutions that are fast and smart – and incentivize continued private investment.

That’s how we’ll finally and fully get the connectivity job done.


This article was also published to Medium.

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