The American Jobs Plan (AJP), unveiled by the Biden administration in March, is the most recent federal proposal written under the misleading notion that American consumers have the least affordable broadband among Organization for Economic Co-operation and Development (OECD) member nations.
The plan includes provisions to address the issue of inadequate internet access and calls for a $100 billion investment to be made in broadband infrastructure to solve the problem. It claims that the lack of access in places like rural areas was due in part “because the United States has some of the highest broadband prices among OECD countries.”
Contrary to the provisions set in the AJP, broadband is much more affordable in the U.S. than in other countries. In fact, the price of internet access for consumers in the U.S. is lower than the vast majority of OECD countries worldwide when accounting for income and purchasing power, and these prices are falling each year. Not only is U.S. internet access more affordable, but speeds in the U.S. also rank in the top 15 in the world and are getting faster each year.
Arguing that the United States has the highest broadband prices among OECD nations is misleading. Reports claiming only review advertised prices and fail to compare these prices to the average wages of workers in each nation. While advertised prices in the U.S. are around $25 higher per month than the average for all OECD nations, salaries in the U.S. are nearly $20,000 higher on average than salaries in other OECD countries. Nations like the United Kingdom, for example, boast internet prices that are about $20 cheaper per month than what providers in the U.S. charge. However, workers in the U.K. make around $20,000 less than employees in the United States, making the internet much less affordable.
After accounting for the purchasing power, the United States finds itself ranked at the top in affordability. Data from The Economist Intelligence Unit ranked the U.S. 3rd among the 99 countries measured, propelled by a first-place ranking in affordability. A similar study from the International Telecommunications Union ranked the U.S. 6th globally for affordability of broadband prices as a percentage of residents’ gross national income.
Data from U.S. Telecom shows that prices for internet service are decreasing even further. A summary of the prices of popular broadband services found the real price of the most popular tier of broadband service dropped 28% from 2015 to 2020. This reduction runs counter to inflation, which has raised the overall cost of goods and services by 9% over the same time period.
Internet speeds are also faster in the United States than in many countries around the world. An analysis measuring average upload and download speeds ranked the U.S. in the top 12 in internet speeds, behind only a handful of nations in Europe and Asia.
While the U.S. currently lags in speeds behind a few countries like South Korea and Switzerland, data from internet service provider Fastmetrics also shows that U.S. internet speeds are increasing faster than speeds in these nations. A report from U.S. Telecom on broadband price and quality showed a similar result, concluding that internet speeds in the U.S. in 2020 were around 15% faster than in 2015.
Speed increases have created greater value for consumers in the U.S. Faster speeds allow for more people to operate on the same network and to do so without network congestion. Having access to faster speeds also means consumers are better connected to online activities like HD streaming and video games. For business owners, faster speeds increase productivity.
These speed increases have also attracted a higher number of internet users. The United States now ranks 3rd in the number of total internet users, behind only China and India, both of which have much larger populations than the U.S. The percentage of American consumers who use the internet increased from 90% in 2019 to 93% at the start of this year. These statistics show broadband is trending in the right direction, despite what the AJP claims about internet access.
American consumers are not struggling to afford internet service in the way the plan implies. In reality, prices for internet service are much more affordable than in other nations and are falling every year. Not only are prices improving for consumers, but speeds also increase the quality of internet service each year.
While important steps should be taken to build broadband for consumers who do not have internet access, the AJP is a complete overreaction to a problem that does not really exist.