Survey Shows Rising Broadband Costs, Broad Support For Government Help

Tuesday November 12, 2024

A recent U.S. News And World Report survey of U.S. broadband subscribers shows that Americans are increasingly paying more money for broadband access.

The survey also indicates broad public support for the recently defunded Affordable Connectivity Program (ACP), and other government-backed efforts to cap soaring broadband subscription costs.

The organization surveyed 2,500 adults from the country’s five most populous states; 500 broadband subscribers each in California, Texas, Florida, New York, and Pennsylvania.

Not too surprisingly, the survey found that consumers consistently are paying more for broadband than the advertised price, either thanks to steady rate hikes, or the broad use of often sneaky, hidden fees to jack up the advertised cost of service.

Most Americans remain trapped under a monopoly or duopoly for next-generation broadband (broadband defined as faster than 100/20 megabits per second, or Mbps) access. This lack of competition results in high prices, slow speeds, spotty access, substandard customer service, and an increased occurrence of net neutrality, privacy, or other anti-consumer violations.

The survey found the average U.S. subscriber bill at sign up is now $81 – up from the $77 average monthly price seen in the outlet’s April 2024 survey report. But the average broadband subscription cost when the bill actually arrives was now $98 per month; up from $89 just six months earlier. For most, $100 broadband access is right around the corner.

User costs can of course be significantly higher, thanks to some providers’ use of broadband usage caps – technically unnecessary data usage surcharges that exist exclusively to price gouge customers trapped in uncompetitive markets.

Many studies avoid measuring these various below the line additional costs, which are used by some ISPs to artificially lower the advertised price, resulting in sticker shock when users actually receive their broadband bills. Telecom industry reported data, for example, routinely omits below the line consumer costs – highlighted as far back as 2014 in a bipartisan letter to the FCC calling on the agency to investigate ISP billing practices.

Though 28 percent of respondents say they have at some point had to tighten their budgets to afford broadband services, 72 percent of respondents to the U.S. News And World Report survey say they haven't yet had to cut expenses to pay their monthly Internet bill.

A whopping 53 percent of survey respondents stated the increased cost of groceries and other household goods has made it more difficult to pay their monthly Internet bill, with 14 percent often finding it difficult and 39 percent occasionally finding it difficult.

There are limitations in the self-reported data: many surveyed customers aren’t always sure what speeds they are currently subscribed to. Many others tend to subscribe to broadband as part of a bundle with phone, wireless, and television services, which are often specifically designed to make direct broadband cost comparisons between ISPs difficult.

Still, numerous other studies have shown that U.S. consumers tend to pay some of the highest prices in the developed world for mobile and fixed broadband access. Most studies tend to avoid naming the culprit however: consolidation, monopoly power, and the state and federal regulatory capture that tends to protect regional giants from competition and disruption.

Looking For Federal Government Help

The survey makes it clear that most U.S. broadband subscribers would like the federal government to do much more to combat the rising cost of broadband access with 76 percent of survey respondents indicating they want the U.S. government to cap what broadband providers can charge Americans for Internet service.

While entrenched regional monopolies routinely fear monger over this sort of price cap rate regulation as a dangerous imposition on supposed “free markets,” it’s rarely ever seriously considered by the U.S. federal government. In part because of massive lobbying influence, but in part because defining and enforcing “acceptable pricing” is difficult.

At the very least, 87 percent of survey respondents want Congress to reinstate the FCC’s Affordable Connectivity Program (ACP), a COVID-era program that provided a $30 discount off the broadband bills of low-income Americans. That program was killed after House Republicans refused to continue funding the program last April, leaving 22 million Americans suddenly facing higher rates.

There are numerous steps the federal government could take beyond restoring ACP, policing usage caps, or engaging in rate regulation. The primary reason for high U.S. broadband prices is consolidated monopoly power as muted competition is directly tethered to high costs.

Generally, federal lawmakers refuse to even acknowledge that monopoly power causes consumer and market harm in public-facing statements, much less take any meaningful action. More often, federal regulators focus on things like consumer transparency, like the FCC’s recently implemented “broadband nutrition label.”

The FCC has also recently stated that it’s “looking into” the continued usage of broadband caps by some providers, but it remains unclear if the investigation will actually result in any hard limits or restrictions on the practice.

Such efforts make it clear to consumers how and when they’re being ripped off by their regional monopoly, but they don’t actively take aim at the underlying cause of the dysfunction. It’s hard to solve a problem that studies and regulators often refuse to acknowledge even exists.

Enter The Community Broadband Solution

Regular readers know that one of the best ways to counter the monopoly logjam is with community owned and operated broadband networks – whether they are direct municipal builds, cooperatives, extensions of the city-owned electric utility, or public private partnerships.

Such networks not only bring new options to struggling markets, they force regional monopolies to try and compete.

That’s particularly true for open access networks: centralized, community-owned infrastructure that lowers the high costs of market entry, resulting in significantly more competition and consumer choice.

But instead of cultivating such popular, community-backed alternatives, community broadband is often met with hostility by federal and state lawmakers, manifested in a range of policies – from enacting state-crafted legislation ghost written by monopolies to stifle choice to efforts that seek to impose a federal ban on community broadband.

Federal telecom policy, when it has functioned, has historically fixated on access, while only paying lip service to affordability – a key obstacle to adoption. While policy experts say that’s slowly started to change in recent years, there’s plenty more state and federal policy experts can and should be doing to drive down access costs.

“Affordability is real, and affordability is an issue,” Gigi Sohn, Executive Director of the American Association For Public Broadband, recently stated on the 100th episode of our Connect This! show. “People are going to just keep fighting for some policy that’s going to help low income and middle income families online.”