Are High Prices Holding Back U.S. Broadband Adoption? No. New Report Shows Affordability Isn’t the Crisis Alarmists Claim, Though Work Remains to Get Everyone Online

WASHINGTON—The COVID-19 pandemic has highlighted long-standing societal disparities in the adoption of fixed broadband in the United States. Much work remains to be done to ensure anyone can get a broadband connection, regardless of income. But affordability is not the crisis broadband critics portray it to be, according to a new report by the Information Technology and Innovation Foundation (ITIF), the leading think tank for science and technology policy. In fact, the report shows that the prices of basic broadband services in America’s competitive marketplace are comparable with U.S. municipal broadband offerings and similar services in peer nations. Instead of trying to change the industry structure and blow up America’s competitive system, as some advocates want, government should provide a better subsidy program for low-income users.

“Myths and misconceptions around broadband affordability in the United States undermine productive efforts to get everyone online,” says Doug Brake, ITIF’s director of broadband and spectrum policy, and lead author of the report. “Broadband advocates use fuzzy math to claim there is an affordability crisis when their real agenda is to push for government-run broadband services. The truth is that basic broadband prices in the United States stack up pretty well against peer countries—and when you account for all the various taxes and fees, you find private broadband service also costs about the same as municipal broadband. The only thing achieved with government-run networks is reduced economies of scale and incentives for future innovation.”

Examining entry-level broadband rates in the United States on an apples-to-apples basis versus peer nations, such as France or Singapore, the report shows how U.S. service offerings are very competitive. Studies purporting to show U.S. prices are higher typically fail to account for differences in consumers’ purchasing power, or factor in speeds that are advertised in some countries versus speeds that are actually delivered.

More importantly, affordability is only part of the broadband adoption problem in America’s digital divide, the report explains. Additional factors include digital literacy, device costs, and other barriers that Congress should take into account when crafting policies. Congress should provide better, more flexible subsidies directly to low-income users rather than attempt large changes to industry structure, and lawmakers should incorporate automatic stabilizers to surge broadband benefits during economic downturns.

“Fixing affordability is not the silver bullet to fixing broadband adoption, as critics say, and price tells only one side of the story,” adds Alexandra Bruer, policy analyst at ITIF and co-author of the report. “Yes, affordability clearly is a barrier for some low-income Americans, and the government is more than justified to offer support to ensure everyone who wants broadband can afford it. But Congress should also consider the more complex issues holding back broadband adoption and find the best ways to assist users by updating existing programs to fit the times.”

Read the report.