U.S. President Joe Biden's plans to make broadband more affordable for Americans teeter on a seemingly easy question: How much do Americans actually pay for broadband?
Biden signed an executive order last month encouraging the Federal Communications Commission to work on requiring broadband providers like Comcast Corp., Charter Communications Inc., Verizon Communications Inc. and AT&T Inc. to regularly report price and subscription rates. The order was part of the president's wider efforts to tackle competition and price transparency. The problem is that accumulating the data is hugely challenging in a country as big and as varied as the U.S., given that every individual market has differing providers, all of whom charge customers varying prices, depending on service levels, features or promotions.
It is "incredibly difficult to find accurate, comprehensive information about available service plans" because internet service providers are not currently required to report detailed pricing data, Claire Park — a policy analyst at New America's Open Technology Institute, which supports open technologies around the world — told S&P Global Market Intelligence.
"With cost being one of the biggest barriers to internet adoption, we need data on broadband prices and subscription rates to show us what service people need and whether they can or can't afford it," Park said, noting that the institute's own Cost of Connectivity research has found that prices for internet service are unaffordable for many Americans.
Price check
But collecting pricing data is easier said than done, said Sarah Oh, senior fellow at the Technology Policy Institute think tank in Washington, D.C. Oh noted that the FCC is currently working on updating its deployment data and maps, a project that is set to cost tens of millions of dollars.
"Pricing data is orders of magnitude more complicated and dynamic by place, time, demographic, with differences in quality and quantity. I can't imagine the FCC being able to meaningfully interpret that kind of price data as quickly as it changes," Oh said.
While granular pricing data is not currently available, there are various estimates as to average broadband prices for the country. For 2020, U.S. broadband households spent a monthly $57.37 on average, or 0.7% of their average monthly income, according to Kagan, a media research group within S&P Global Market Intelligence.
While prices rise on an annual basis, they track closely with inflation, said Tony Lenoir, an analyst at Kagan, a media research group within S&P Global Market Intelligence, focusing on the broadband landscape.
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However, the rates varied according to type of service — with satellite broadband costing 2.4x that of DSL service, Kagan found. Satellite broadband often serves more remote locations where fixed and wireless broadband options are not available.
FCC data
Currently, the FCC does track some pricing data as part of its annual Urban Rate Survey. The FCC uses the survey data to "determine the reasonable comparability benchmarks for fixed voice and broadband rates for universal service purposes." Notably, the collection is limited to urban areas and relies on a sampling of provider prices. The 2021 survey, for instance, did not sample any provider plans in Montana.
Separately, the FCC also collects broadband availability data. All facilities-based broadband providers are required to file coverage information twice a year through a Form 477 to the agency, listing all census blocks where they offer internet access service at speeds that exceed 200 Kbps.
The FCC could combine the Urban Rate Survey with nonpublic subscription data from Form 477 to create a quality-adjusted consumer broadband price index, according to Scott Wallsten, president and senior fellow at the Technology Policy Institute.
Beyond the sampling issues inherent in the Urban Rate Survey, there are also problems with the Form 477 data collection. Namely, the FCC's format for submitting information requires providers to report census blocks as "served" even if just one household in a given block meets the criteria.
"There's no nuance to it," said John Busby, managing director at BroadbandNow, a data aggregation company that helps consumers find and compare local internet options and prices of the FCC's broadband availability data. "If there was a census block with 1,000 households and I offered service to only one of those households, I would submit a form that says 'yes,' I offer service to that census bloc, even though only 1/1000th is served."
Price regulation
It is unclear at this point whether the FCC would have the necessary regulatory authority to mandate broadband pricing reports from internet service providers, according to Technology Policy Institute's Oh.
In order to have that authority, the FCC might first have to reclassify broadband as a Title II service under the Communications Act. Broadband was previously classified as a Title II service in 2015 under a Democratic-led FCC. The classification gave the FCC more regulatory authority over broadband service providers, enabling the agency to impose three bright-line net neutrality rules that prohibited broadband service providers from blocking or throttling legal internet traffic or prioritizing certain traffic for payment.
In 2018, under Republican leadership, the FCC repealed the 2015 order, classifying broadband as a Title I information service, reducing the agency's authority to regulate broadband services or pricing.
Under Title II, the agency would arguably have the power to mandate pricing reports and also have the authority to regulate pricing or impose rate caps, experts say.
"The FCC hasn't actively regulated rates in a non monopoly market in decades, it just doesn't happen anymore," said Derek Turner, research director at the media advocacy group Free Press.
Competition
Instead, Turner would like to see the Biden administration encourage greater competition in the broadband market as a means to lower prices.
Busby agreed, citing BroadbandNow data that shows average broadband pricing is about 15% lower for those living in an area with at least three providers to choose from compared to those with only one. The site checks plans and prices offered by 2,000 ISPs in the U.S. every month.
But others note that some studies have indicated that competition is not the prime ingredient for lowering broadband costs.
"There's a lot of conflicting evidence as to what drives prices, and direct head-to-head competition is not really the controlling factor of that," said Jim Dunstan, general counsel at TechFreedom, a Washington, D.C.-based technology think tank.
A fact sheet on Biden's recent executive order cited data showing that more than 200 million U.S. residents live in an area with only one or two reliable high-speed internet providers.