As Coronavirus spread across the United States and states began closing schools and businesses had their employees work remotely, the importance of broadband became clear. Faced with a dependence on broadband, there have been calls for increased government regulation of providers. The calls for further regulation of broadband providers range from a “nutrition label” that would force providers to provide more information about their services to the reintroduction of net neutrality rules that could see the Federal Communications Commission (FCC) mandating service and setting prices.
While calls for increased government regulation are becoming louder, they ignore the reality that broadband is becoming more affordable, and speeds are increasing. Simply put, the price declines and improved service means further government regulation is fixing something that is not broken. These calls also ignore the reality that greater government regulation may harm consumers by degrading service and increasing prices.
During his campaign, then-candidate Joe Biden correctly recognized that “in a 21st century economy, Americans need broadband.” Without it, students “face substantial barriers to doing their homework, and the sick and elderly cannot access remote healthcare.” Biden also correctly identified that “Broadband is a prerequisite for starting a business, working remotely, accessing government resources, and engaging in public debate.”
Unfortunately, his plan saw expanding government involvement in broadband, including billions of dollars for costly and inefficient municipal broadband networks and reimposing net neutrality guidelines.
What advocates of government intervention in broadband ignore, however, is the fact that the price for service has declined over the past few years. A recent report from BroadbandNow found that the average monthly internet bill fell by between 14% and 42% over the past five years. The most significant decline was found in 500+ Mbps service, which saw a decrease of almost $60 per month.
For low-income Americans, price declines are particularly welcome. Studies routinely show that low-income Americans are less likely to have internet connections than other income groups. In February 2021, for example, Pew Research estimated that only 57% of Americans who earn less than $30,000 per year have an at-home broadband connection. The same study found that 92% of Americans who earn over $75,000 have an internet connection. Lower prices ultimately mean more low-income Americans can access broadband and enjoy the benefits of connectivity, such as remote work, virtual healthcare, and streaming services.
The decline in prices for broadband mirrored an increase in subscribership for low-income Americans. In April 2016, only 49% of low-income Americans had at-home broadband. By February 2021, that number had risen to 57%. Clearly, lower prices are connecting more Americans to the internet without the need for heavy-handed government regulation.
Coinciding with this significant price decline is also the significant speed improvements. The recently released USTelecom report shows that while prices fell, speeds increased. In 2015, the average download speed was just 22.3 megabits per second (Mbps). By 2021, that had increased to 58.4 Mbps, a 94.2 percent increase.
The increased speeds and falling prices are particularly important for consumers because they are experiencing more welfare at a lower price. The consumer benefits of increased speeds are significant. Not only is service more reliable, but consumers can do more with their connection. With faster internet speeds, consumers have better access to virtual healthcare, work remotely, stream TV and movies, and the ability to attend school online.
While then-candidate Biden correctly identified that broadband is integral to participating in 21st century America, his recent calls for greater government involvement in how broadband providers operate ignore the reality that prices have fallen and speeds have increased. The result is enhanced consumer welfare, particularly for lower-income Americans who are less likely to have an at-home broadband connection
Recognizing this trend, it should be readily apparent that calls for greater regulation are trying to fix something that is not broken.