Tag Archives: broadband rates

CNET Survey of Broadband Rates

Joey Supan wrote an article for CNET with the headline of Internet in the US Costs $63 a Month. The research for the article is based on the advertised prices charged in different parts of the country by 27 of the largest ISPs. The headline is for the median price found in that research, meaning half of the prices were higher and half lower. The $63 price assumed that customers would take advantage of any auto-pay discount.

The article went on to add that the ISPs add another average $15 to rent the equipment needed for broadband, meaning the average total monthly cost of broadband in his analysis is $78. The report also assumed people pay the advertised marketing rates but that many ISPs jack up advertised rates in the second and third years. The medium price before equipment charged increased to $76 in the second year and $80 in the third year. With equipment fees added, the second and third year median rates increase to $91 and $95.

That is higher than what I’ve been seeing from surveys we’ve been conducting over the last few years in rural counties across the country. Our surveys have shown average broadband bills (not median prices) range from $75 to $80. The differences in average prices is county-specific based on the ISPs operating locally.

I think the difference between my surveys and the results of the CNET article is that a lot of folks are willing to accept slower speeds, and inferior broadband performance to save money. The CNET price assumes that people buy the best broadband available to them.

This article also shows what most other analysis shows – people in rural areas pay more for broadband than people in towns and cities. In many counties Starlink has done well, but they are more expensive than other broadband. Subscriptions to high-orbit satellites or cellular hotspots are also incredibly expensive due to overage charges due to low data caps – something this study couldn’t quantify from a rate sheet.

To offset what CNET reports and we’ve found, prices are currently dropping for lucky rural customers within range of the FWA broadband from Verizon or T-Mobile – but the coverage areas of this new technology is generally not large in the rural counties I’ve examined in detail.

The study only found a few examples of broadband junk fees in broadband prices. This included a $12.97 network access and maintenance fee from Astound, a $12.95 tech assurance fee from Metronet, a $3.99 Internet cost recovery fee from CenturyLink, and $2.97 broadband cost recovery fee from Consolidated Communications. We also see that many ISPs also hide or disguise their equipment fees when they advertise low rates.

The profile of available prices will change in rural areas when new broadband networks are finally built from the many grant programs. That’s not always going to mean lower prices, but it should mean higher-quality broadband. I expect customers paying a lot for satellite broadband or traditional cellular hotspots today will flock to a new grant-funded network. I expect the advent of grant solutions will allow telcos to finally shut down DSL networks and force households to some other technology. In urban areas, competition from fiber and FWA is pushing down prices in neighborhoods that are lucky enough to get a technology alternative.

Consumers have been yelling for broadband competition for many years, and we’re finally seeing it. Unfortunately, it’s happening neighborhood by neighborhood and not industry-wide, but it’s a start. I expect that if CNET repeats this survey in a year they will find even lower rates for advertised broadband.

Should Grant Networks Allow High Prices?

I wrote a blog yesterday about a grant application filed in Nebraska by AMG Technology Investment Group (Nextlink Internet). This is one of the companies that won the RDOF reverse auction at the FCC but is still waiting to hear if it will be awarded the FCC subsidy funding.

One of the things that caught my eye on the grant request was the proposed broadband rate. Nextlink is proposing a rate of $109.95 for a 2-year contract for 100/100 Mbps. I have to assume that the rate without a 2-year contract is even higher – or maybe a customer can’t buy broadband for less than a 2-year commitment.

Today’s blog asks the question – should higher-than-market rates be allowed on a network that is being subsidized with public funding? This is not the first time I’ve seen a rate that high, and I can recall at least two other RDOF winners planning on basic rates of at least $100. One example is Starlink, which also has not yet been approved by the FCC for RDOF and which has a $110 rate.

I don’t think there is any question that a $110 rate is higher than the market. Should an agency that awards grants or other broadband subsidies somehow insist that broadband rates are somehow tied to market rates? That’s a lot harder question to answer than you might think because the question implies that these agencies have the power to regulate or cap broadband prices in grant areas.

The Ajit Pai FCC voluntarily gave away the right for the FCC to regulate broadband rates when it gave up Title II authority. It’s not clear if that decision has any bearing on other federal agencies that award grants like NTIA, EDA, and USDA. Can these federal agencies insist on affordable rates for ISPs that take federal funding? If not, can the agencies at least consider rates when deciding who gets grant funding – can these agencies assign fewer qualifying grant points to somebody with a $100 basic rate compared to somebody with a $50 rate?

I think we got a hint that considering rates is probably allowed since Congress made it clear with the BEAD legislation that the NTIA has no authority to regulate rates – this implies that without that specific Congressional mandate that the NTIA might have had that authority. But even the specific BEAD edict might not mean that rates can’t be considered in BEAD grants.

It’s an even fuzzier question if a State has the right to set rates. There have always been two schools of thought about the scope of State versus Federal authority in terms of regulating broadband. I’ve heard it argued that a State’s right to regulate broadband rolls downhill from the federal ability to regulate. If you believe in this philosophy, then a State’s right to regulate broadband rates was severely weakened when the FCC gave up its rights. But I’ve also heard just the opposite argued – that a State has the right to step into any regulatory void left by federal regulators. We recently saw this concept in action when courts recently upheld California’s right to implement net neutrality rules after the FCC washed its hands of such authority. If you accept this view of regulation, a State can tackle rate regulation if the FCC refuses to do so.

To be fair to Nextlink, the company also offers less expensive broadband rates. Its fixed wireless products, rates start at $69.95 for a 15 Mbps download connection. Fiber prices start at $49.99 for a 25 Mbps download speed. But these lower rates for slower speeds raise more questions for me. Many of the current broadband grants require building networks that can deliver at least 100/100 Mbps broadband. Should an ISP be able to use a grant-funded network to offer anything slower? The whole point of these grant programs is to bring faster broadband across America. Should a network that is funded with public money be allowed to set slower speeds for the most affordable options? If so, it’s hard to argue that the ISP is delivering 100/100 Mbps broadband everywhere. If the agencies awarding grants can’t demand affordable rates, perhaps they can demand that 100/100 Mbps is the slowest product that can be offered on a grant-subsidized network. Nobody is forcing ISPs to accept grant funding and other subsidies, but when they elect to take public money, it seems like there can be strings attached.

I also wonder if ISPs benefitting from a grant-subsidized network ought to have the ability to force customers into long-term contracts? It’s not hard to make the case that the public money paying for the network should justify public-friendly products and practices.

As a final note, this topic highlights another glaring shortfall of awarding subsidies through a reverse auction rather than through grants. With RDOF, the reverse auction determined the winner of the subsidy first, and then the FCC proceeded to find out the plans of the subsidy winners. There were no pre-determined rules for issues like rates that an RDOF winner was forced to accept as part of accepting the public money. Let’s not do that again.