California’s Public Advocates Office Makes Misleading Claims on Broadband Affordability

The California Public Advocates Office recently published two reports that paint a doom-and-gloom picture of broadband affordability. But when we dug into their data, those conclusions don’t hold up.

First, the report “Broadband Competition and Pricing Strategies in California’s Urban Markets” claims “insufficient competition” is costing Californians $1 billion per year, presumably through higher prices. But the report’s claim only evaluates competition between gigabit broadband service, which is an excessively high speed that doesn’t reflect consumers’ real-world Internet use.

The report claims it’s concerned with broadband for “work, education, healthcare, and communication,” but none of those things require gigabit broadband. The FCC’s broadband definition includes 100 Mbps download speeds, enough for a family of four to all separately and simultaneously stream their own 4K Netflix video, browse the Internet, and play an online game, all while on individual HD Zoom calls. The California report is only interested in service at ten times that speed. So, from the outset, the report doesn’t tell us anything about competition or the affordability of broadband plans that meet real consumer needs, rather than meet an arbitrary, impractically high number.

If the report were interested in high-quality but not supersized broadband plans, competition would look fiercer, in part, because new technologies are joining the fray. Californians can now access the Internet with a fixed-wireless provider (like a mobile company) or low-Earth orbit satellites, both of which can provide 100 Mbps service. By screening out these offerings for not having gigabit speeds, California ignores major sources of competition.

When the report mentions more reasonable speeds it does so only to conclude “sub-gigabit services do not consistently constrain pricing for providers’ 500 Mbps or 1 Gbps offerings.” That may or may not be true (a footnote qualifies this result as “inconsistent”), but again, the effect on speeds five- and ten-times more than what consumers use is irrelevant.

But the data is there if the California Public Advocates Office cared to look. The report’s technical appendices include the price of high-speed but sub-gigabit broadband plans, which often come in below $50 per month, less than the national average. The report doesn’t tell us what price California thinks would be affordable. It just jumps to the conclusion that California should “support entry by additional private or public gigabit-capable providers.” That’s policy-driven data analysis, not data-driven policy.

California’s second report, “Broadband in California: Pricing, Affordability, and Adoption Trends,” does delve into the meaning of broadband affordability, and comes to the eye-popping conclusion that low-income households face an average broadband price that’s more than 100 percent of their income. Unsurprisingly, this sensationalist claim is also based on fuzzy data.

First, the average price evaluates offerings of 100-500 Mbps. As discussed, including plans up to 500 Mbps incorporates higher priced plans that do not meaningfully increase consumer benefit.

Second, the report reaches its $116.68 average monthly price with an unweighted average of all plans available in California. So, the costliest plans drag up the average even if they have few subscribers and even though much lower-priced plans are far more common.

Third, the report helpfully identifies just how rare these very high-cost plans are by breaking down its data by provider type. 97.13 percent of Californians subscribe to one of the “Big 5” ISPs (AT&T, Charter, Comcast, Cox, and Frontier). Taking the same average of the same speed tiers just for those providers yields an average price of $59. The report’s lead finding on affordability thus uses a tiny minority of plans used by less than 3 percent of Californians to claim statewide prices are twice as high as they really are.

Even if one accepts this misleading picture, the trend in prices is downward. The same calculation that produces California’s $116 number indicates that it has decreased nearly 60 percent from $283 in 2021. The report itself acknowledges “average prices for broadband service have declined across speed tiers.” So even in the worst-case scenario, the broadband affordability picture in California is headed in the right direction.

To be sure, broadband affordability is still an issue for people with low incomes, just as automobile affordability is an issue for them. Even a low, competitive price for a reasonably sized plan will be out of reach for some low-income households. That’s why broadband policy should shift to targeted affordability support for those households. With broadband affordability improving, the remaining affordability gaps are easier to solve. Policymakers should focus on calibrating the right support to households who need it rather than cooking the books to make the problem seem worse than it is.