Tag Archives: Urban Rate Study

2026 Urban Rate Study

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.

The FCC 2024 Urban Rate Study

One of the strangest annual undertakings by the FCC is the Urban Rate Study. This is an exercise undertaken every year to determine the highest monthly voice and broadband rates that can be charged by ETCs (Eligible Telecommunications Carriers) and recipients of FCC grants or subsidies. These rates apply to incumbent rate-of-return telephone companies, Rural Broadband Experiment providers, CAF II Phase II Auction winners, Rural Digital Opportunity Fund Auction (Auction 904) winners, and Enhanced A-CAM providers.

The FCC publishes this rate near the end of each year, and by July 1 of the following year, the list of ETCs above must certify to the FCC that it doesn’t charge a rate higher than the benchmarks. On December 15, 2023, the FCC published the benchmark rates for 2024. The method for calculating the benchmark rates is described at this link.

Telephone Benchmark Rate. The average urban rate for voice during 2023 was $34.27. The FCC set the benchmark rate at two standard deviations above the average rate, and ETCs cannot charge a telephone rate higher than $55.13. The average rate includes federal and state regulatory fees like the Subscriber Line Charge.

Broadband Benchmark Rates. Setting a benchmark for standalone broadband rates is a lot more complicated because the various federal requirements established different minimum speed goals over the years for different subsidy programs. The FCC determines the average urban rates for a variety of different speeds, and after applying the same two standard deviations, determined that the highest rates that an ETC can charge in 2024 are listed in the table below for the various broadband speeds.

The FCC also determined in this study that an ETC that uses rate caps must provide at least 660 gigabytes of data before data caps kick in.

Download Upload Capacity
Mbps Mbps (GB) 2024 U.S.
4 1 660 $83.80
4 1 Unlimited $83.80
10 1 660 $83.80
10 1 Unlimited $83.80
25 3 660 $89.41
25 3 Unlimited $89.41
50 5 660 $89.66
50 5 Unlimited $92.19
100 20 660 $91.24
100 20 Unlimited $92.24
1,000 500 660 $133.36
1,000 500 Unlimited $134.29
25 5 Unlimited $88.91
25 5 Unlimited $88.91
100 10 Unlimited $91.35
250 25 Unlimited $104.62
500 50 Unlimited $119.73
1,000 100 Unlimited $134.28

I am sure you are all comforted that an ETC can’t charge more than $83.80 for a 4/1 Mbps connection with a 660 GB data cap. It’s good to know that the FCC has our backs.

This is a bizarre exercise because it shows the extent to which the FCC is prohibited by Congressional rulings to engage in rate setting. The agency is required to go through this exercise every year, and you can see by the description of the methodology that it’s a complicated process. Yet the resulting rates are ridiculously high, and it’s hard to think that there are any ETCs trying to set rates higher than what is shown in the tables.