Fairness in Broadband Prices

I recently read a report about broadband prices in California from the Public’s Advocate’s Office (Cal Advocates), that is part of the California Public Utilities Commission. Cal Advocates has a mandate to look at regulatory issues from the viewpoint of the public. Cal Advocates conducted a similar rate study in 2019.

The study found that households paying the highest prices for broadband are those who are buying the slowest speeds. While that might sound counterintuitive, it appears that some ISPs in California are soaking customers who live outside of the reach of big landline ISPs.

The study found that prices for bottom-tier broadband have increased dramatically since 2019. Particularly hard hit are speed tiers of 10-25 Mbps, 25-50 Mbps, and 50-100 Mbps. The study notes that in the past, these tiers were the least expensive due to low rates for DSL. The study notes that since the pandemic, there are a lot of expensive broadband alternatives introduced in the slower speed tiers.

I’ve seen the same trend nationwide. Homes without a lot of broadband options were forced to buy expensive broadband during the pandemic from fixed wireless ISPs, cellular hot spots, and satellite providers.

The report cites some examples. In comparing the range of prices for 25/3 Mbps broadband, the study found the following: Race Communications has the lowest monthly price at $25-$35. The big telcos have DSL prices between $45-$55. Customers living outside metropolitan areas pay a lot more. Small telco prices ranged from $72.50 for TDS to $150 for Ponderosa. Customers using other fixed wireless and satellite technologies are seeing prices between $70 and $229 per month.

I’ve seen this same phenomenon around the country. High-orbit satellite and cellular hot spot broadband can get extremely expensive due to the tiny monthly data caps. I interviewed families during the pandemic who were seeing monthly bills over $500 to support working from home or schoolwork.

The study also found that some ISPs offer a range of speeds but don’t deliver the faster speeds. The study specifically cites the DSL pricing of AT&T which is $55 regardless of the speed. AT&T will sell customers a DSL broadband product that barely works.

The study also found that some of the biggest carriers, like AT&T instantly raised prices in reaction to the launch of the $30 monthly ACP subsidy. AT&T had a low-income product priced at $20 before the pandemic, which appears to have been set to provide free broadband to households using the FCC’s Lifeline discount. AT&T and other carriers raised the price for the low-income product to $30 to collect the full amount of subsidy from the ACP.

The report also cites a statewide survey that showed that a majority of low-income households don’t know that they are eligible for a broadband subsidy discount. Also, only 24% of homes that know they can get a discount have enrolled in a low-income program.

I see similar pricing issues around the country. It’s going to be interesting to see what happens with prices for in BEAD grant areas. State broadband offices are walking a tightrope when it comes to rates since the IIJA law said that states are not allowed to dictate rates for BEAD grant recipients. Some of the early state plans clearly mandate specific rates and also ask ISPs to guarantee rates for five to ten years.

2 thoughts on “Fairness in Broadband Prices

  1. Won’t it be interesting to find that the Federal Government paid billions and billions to build broadband into communities that still cannot afford to pay for it. Solving half the problem does not fix the problem. Preventing states from solving the other half, affordability, only makes the problem worse.

    • price controls are generally very bad for industry and economy.

      I would argue that while internet access is necessary for a lot of people to work and access information, the push for ultra high speed services is driving up costs without providing necessary benefits for the public.

      ie, there are a lot of people that would be very content with a very affordable 25×10 plan but those plans are basically vanishing as the government pushes for gigabit type services everywhere.

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