One of the more curious undertakings done by the FCC every year is the Urban Rate Study. This is an exercise undertaken every year to determine the highest monthly broadband rates that can be charged by ETCs (Eligible Telecommunications Carriers). This basically means regulated telcos and other ISPs that participate in some grant or subsidy programs. At a minimum, these rate caps apply to incumbent rate-of-return telephone companies, and ISPs that participated in the Rural Broadband Experiment, CAF II Phase II Auction, RDOF (Rural Digital Opportunity Fund Auction 904), and Enhanced A-CAM. These rate caps will apply to any BEAD winners that are certified as an ETC. These rate caps also apply to any ISP that voluntarily became an ETC in order to participate in any other subsidy program, such as the Universal Service Fund.
The FCC publishes this rate near the end of each year, and by July 1 of the following year, every ETC must certify to the FCC that it doesn’t charge a rate higher than the benchmarks.
The FCC determines rate caps for an interesting mix of speeds that match the minimum speed goals set over the years for different subsidy programs. The FCC samples actual rates in the market and sets the target rates by applying two standard deviations. The FCC also sets the minimum size of any rate cap, and for 2026 has raised any monthly rate caps to provide at least 800 megabytes of data as of July 2026.
Below is a table that compares the 2026 rates to the rates from the Urban Rate Study in 2019.
It’s interesting that the maximum rates allowed for slow speeds have increased significantly between 2019 and 2026. The FCC rate caps for speeds of 100 Mbps or greater have decreased since 2019. I think this is because gigabit rates were somewhat rare in 2019, and some ISPs that offered gigabit then charged a premium rate.
It’s commonly believed that the FCC is not in the ratemaking business, and for broadband, I think this is the agency’s only ratemaking role.
I’ve seen ISPs with rates higher than these benchmarks, but those ISPs are not regulated ETCs. I doubt that consumers are comforted by these rates, and luckily, market competition has pushed rates lower than everything in the table for most ISPs.
A nonsensical exercise that treats IP telecom like a consumable utility like electricity (kilowatt hours) or natural gas (therms).
Yeah, @Fred Pilot. Exactly. And it goes along with my pet grief living in California. If they put 25% as much scrutiny on our power company as they do on ISPs my power bill would average something less than the $500 / month it runs now.
Consumption unit based pricing in consumer telecom makes sense for mobile wireless given the inherent bandwidth capacity limitations. But not for landline delivered prem service.