I was glad recently to be reminded by a survey from the Leichtman Research Group survey that showed that 45% of homes have no idea what broadband speed they are supposed to be getting or are getting. I’ve seen the same thing in the numerous surveys we’ve done – people don’t fixate on Internet speeds and most just care if their home Internet works.
The surveys we coordinate for communities show one other issue that people care about, which is the price of broadband. In the hundreds of communities where we’ve done surveys, we almost always see that at least half of respondents think broadband is too expensive. In some communities, more than 90% of residents tell us that broadband is too expensive. When we ask people why they don’t have home broadband, the primary response in every survey is the cost of broadband.
I’ve had a half-baked idea floating around my brain for some time that might help address this problem. I’ve been wondering if prices shouldn’t be part of the definition of broadband. There is a lot of discussion about setting a new definition of broadband speed at 100/20 Mbps. But I’ve learned in working with dozens of communities that there is a huge difference between a 100/20 Mbps connection that costs $55 and one that costs $85. As far as the public is concerned, these are not the same product – but we pretend that they are.
We know that as broadband prices increase, households are forced to drop broadband or downgrade to a slow-speed but cheaper alternative like DSL. One thing I’ve learned through surveys is that people in cities keep DSL because it costs less. People are not happy with the inferior performance of DSL, but they choose to spend $50 for a slow DSL connection because they can’t afford a 100/20 Mbps connection from Comcast or Charter.
Some of the new federal grants pay lip service to affordable rates, but none of these rules have any teeth. In fact, the giant BEAD grant legislation specifically prohibits the NTIA from suggesting broadband rates. (Any bet that this language came from the cable companies?) Some grants reward applicants for having a low-income broadband product, but they don’t insist that ISPs put any energy into marketing a low-income plan.
I don’t have specific metrics in mind, but there must be a way to weave affordability into the definition of broadband. Perhaps it’s something like the following. If 100/20 is the speed definition of broadband, then maybe connections under $60 would be considered as served, priced between $60 and $80 might be underserved, and prices over $80 would be considered as unserved. The price tiers I’ve chosen are arbitrary and open for debate, but the concept is that grants and subsidies ought to favor ISPs with affordable rates.
I know that real life is a lot more complex than my simple example. The big cable companies disguise broadband prices by hiding them in bundles. ISPs have jacked up the cost of the modem so that the basic broadband price sounds cheaper. In those markets lucky enough to have competition, the big ISPs offer special low rates for those willing to ask, while still billing the full rates to everybody else.
There is nothing that scares the big cable companies more than talking about regulating broadband prices. This was the main motivation for deregulating broadband at the FCC – cable companies don’t want regulators looking too closely at broadband prices. But prices matter at least as much as speeds, and for millions of homes, price is everything.
I know the big ISPs will say that the new Affordable Connectivity Program (ACP) will take care of this issue – but it doesn’t. Not all ISPs are going to take part in the program, and many of the ones that do will not market it to customers. Besides, how good a deal is it to get $30 off the basic Comcast broadband product that costs $90? The price after the ACP subsidy is still out of reach of many homes and is still more expensive than urban DSL – and many of the homes without broadband today can’t even afford DSL. Besides, there is also no guarantee that the ACP program won’t die in a few years when the funding runs dry.
I have no easy answer for this issue, but I hope this blog might plant a seed with somebody who can figure this out. I know that we have to stop ignoring the fact that prices matter. I’ve said for years that the big cable companies are on a path towards $100 broadband, and they are getting closer every year. Let’s stop pretending that $90 or $100 broadband is the same product as $50 or $60 broadband – even if the speeds are the same.