Community-Owned Fiber Networks: Value Leaders in America
Pricing Review Shows They Provide Least-Expensive Local "Broadband"
January 10, 2018
by David Talbot, Kira Hessekiel, and Danielle Kehl
By one recent estimate, about 9.2 percent of Americans, or almost 30 million people, lack access to wired home broadband service, which the FCC defines as an Internet access connection providing speeds of at least 25 Mbps download and 3 Mbps upload. Even where home broadband is available, high prices inhibit adoption; in one national survey, 33 percent of non-subscribers cited cost of service as the primary barrier. Municipally and other community-owned networks have been proposed as a driver of competition and resulting better service and prices.
We examined prices advertised by a subset of community-owned networks that use fiber-to-the-home (FTTH) technology. In late 2015 and 2016 we collected advertised prices for residential data plans offered by 40 community-owned (typically municipally-owned) FTTH networks. We then identified the least-expensive service that meets the federal definition of broadband (regardless of the exact speeds provided) and compared advertised prices to those of private competitors in the same markets. We were able to make comparisons in 27 communities and found that in 23 cases, the community-owned FTTH providers’ pricing was lower when the service costs and fees were averaged over four years. (Using a three year-average changed this fraction to 22 out of 27.) In the other 13 communities, comparisons were not possible, either because the private providers’ website terms of service deterred or prohibited data collection or because no competitor offered service that qualified as broadband. We also found that almost all community-owned FTTH networks offered prices that were clear and unchanging, whereas private ISPs typically charged initial low promotional or “teaser” rates that later sharply rose, usually after 12 months.
We made the incidental finding that Comcast advertised different prices and terms for the same service in different regions. We do not have enough information to draw conclusions about the impacts of these practices. In general, our ability to study broadband pricing was constrained by the lack of standardization in internet service offerings and a shortage of available data.