New Study: US Broadband Prices Fell 42% Since 2016 (due to competition and increased investment)

By Roslyn Layton.

"BroadbandNow, an independent research organization and local broadband price comparison engine, released a study on changes in US broadband prices from 2016 to today. The study compared prices across four internet technologies (Cable, DSL, Fiber, and Fixed Wireless) in four different internet speed buckets (25-99 Mbps, 100-199 Mbps, 200-499 Mbps, and 500+ Mbps), taking the average price over three months in the first quarter of each year from 50 different providers. The study reflects landline prices from national and regional providers. It does not include cellular wireless technologies like 5G. The study observes that prices have fallen between 14-42 percent across speeds. The largest price drop, $60, was found on the highest speed tier, 500+ Mbps. The study concludes that prices reflect local competition.

Why It Matters

The data clearly demonstrate lowered price and increased competition. This contradicts the assertions of many leading media, think tanks and regulatory advocates that US broadband prices are high and that there is little to no competition. For example, studies like the Open Technology Institute’s Cost of Connectivity purport that US prices are not only high, but higher than other countries. The point of these reports is to impugn America’s broadband providers and its light-touch regulatory regime. More largely, such studies reflect a long campaign to regulate broadband heavily, including nationalization efforts to promote government-owned networks by taxing private providers. The Open Technology Institute did not return a request for comment.

The continued price drop and associated increase in broadband competition for some 5 years follows the removal of heavy-handed regulation. In 2017, the Federal Communication Commission (FCC) reversed Title II common carriage rules on broadband. This restored the light-touch regulatory regime under the Federal Trade Commission (FTC), where it resided from 1996-2015. In its decision, the FCC reasoned that market competition will deliver investment and innovation in new technology, lower prices, and competition. In addition to the clear demonstration of lowered prices across all speed tiers, BroadbandNow’s study correlates the FCC’s reasoning. The last 5 years have shown increased network investment, innovation (evidenced by different broadband technologies), and local competition (observable from searches in BroadbandNow’s pricing engine and the presence of multiple landline options).

More broadband competition coming with 5G Home solutions

Prices for landline broadband will likely continue to fall as wireless technologies like 5G are adopted. 5G is an ultra-high-speed broadband technology in which data is delivered securely through licensed radio spectrum from towers and antennas. 5G is a disruptive technology to wireline technologies like cable as it can deliver large amounts of data at high speed without the need for underground wires to the home. Already some 50 million Americans subscribe to 5G.

At least two national 5G providers promote introductory 5G Home plans at 50 percent off the monthly charge of $50 when combined with an existing mobile subscription. Verizon offers 5G Home for as low as $25 per month with no annual contract, equipment fee, or early termination charge. T-Mobile has a similar offer. AT&T offers plans at $35, $40, and $50. 5G Home broadband plans are activated with a simple plug and play internet gateway device with no need for a technician visit. The ease of 5G compared to the agony of traditional landline broadband with complicating wiring, routers, and “Cable Guy” encounters was lampooned in a recent Super Bowl commercial featuring Jim Carrey reprising one of his signature roles.

5G providers also bundle marquee content to fast-track streaming entertainment with Disney+, HBOMax, Paramount, YouTube, and Sling as well as books, video games, and sports.

While these offers are not available at all locations, rollout is moving quickly as 5G providers supplement their urban networks with Fixed Wireless Access (FWA), a powerful broadband technology which can deliver connectivity between two fixed locations up to as much as 5 miles apart or more, depending on the spectrum. In fact, landline providers have also jumped into game by extending their broadband service areas with combo 5G/FWA solutions.  The future only looks brighter when it comes to broadband competition in US."