As Inflation Rages, Broadband Prices Fall

Internet Public Policy Issues - The American Consumer Institute

Confronted with the unfortunate reality that inflation is here to stay for the foreseeable future, American consumers may be interested to learn that there is at least one service that has not experiencing price increases — broadband internet. According to the third installment of a new report by US Telecom, the 2022 Broadband Pricing Index, the price of the most popular and highest speed internet services have actually experienced significant declines along two separate time intervals. Using a combination of FCC data and other publicly available information such as the Consumer Price Index (CPI), the organization concluded that between both 2021-2022 and 2015-2022, the price of broadband internet services declined, unlike other goods and services.

For instance, real BPI-Consumer Choice broadband (compares the most popular broadband service in a given year to the most comparable 2022 service) saw prices drop by 14.7% from 2021 to 2022. Similarly, the price of BPI-Speed internet (compares the fastest broadband service in a given year to a comparable 2022 plan) dropped by 11.6% over the same time frame, despite the price of overall goods and services climbing by 8%. These findings are consistent with other recent studies on the matter, such as in a February study by BroadbandNow that found that all broadband prices have fallen over the last five years.

The report also provides a breakdown of price changes for several other goods and services to illustrate the difference in cost savings to consumers. For example, between March 2021 and March 2022, the price of health insurance increased by 6.1%, car insurance increased by 3.5%, and food and beverage increased by 8.5%. Yet, the nominal price for BPI-Consumer Choice and BPI-Speed services decreased by 5.1% and 1.7% respectively.

Price reductions are also evident in the longer time interval. Between 2015-2022, real BPI-Consumer Choice broadband prices declined by 44.6%. while the price of BPI-Speed tier services dropped by 55%. Even more striking, since 2015 the real cost per megabit of broadband services has dropped by 75%. Considering the rapid pace of broadband innovation and improvement, it is truly extraordinary that the average price of high-speed internet service has continued to decline. Consumers now receive nearly “twice as much broadband speed” as in 2015 for roughly only half the cost.

Other notable findings from the report include significant improvements in broadband services such as faster download and upload speeds. For example, download speeds for the most popular tier of service increased 127.7% and 84.6% for the fastest tiers. Changes in uploads speeds are even more impressive, offering 2 to 3 times what they were in 2015.

Overall, the report offers consumers an important piece of good news during a difficult period of economic uncertainty. At a time when the cost of most items has increased, it is comforting to know that the cost of broadband has decreased. Consumers are now paying less for broadband service than they were a year ago, and yet they are receiving far more for their money. This is important because as we move into the future, broadband is bound to play an even bigger role in expanding consumer access and promoting digital equity than it does today. Therefore, broadband must continue to remain affordable. This report provides a good indication that it will.

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