(C) Daily Yonder - Keep it Rural
This story was originally published by Daily Yonder - Keep it Rural and is unaltered.
. . . . . . . . . .
Rural Internet Subscribers Pay More, New Data Confirms [1]
['Brian Whitacre', 'The Daily Yonder']
Date: 2023-11-28
Broadband access continues to be a hot topic for Daily Yonder readers, as state broadband offices work to get access to the first chunk of the $42.5 billion that will be doled out over the next 5+ years as part of the Infrastructure Act’s Broadband Equity Access and Deployment (BEAD) program.
Rural advocates have high hopes for the BEAD program. While it primarily focuses on providing infrastructure to places that are “unserved” (no providers that offer speeds of at least 25 Mbps download / 3 Mbps upload) and “underserved” (no providers that offer speeds of at least 100 Mbps download / 20 Mbps upload), there is also a requirement for states to describe how their plan to award funds will address broadband affordability.
Dig Deeper
How is your state progressing with its BEAD proposal? See the federal government’s BEAD Proposal Dashboard.
Read your state’s proposal via the National Telecommunications and Information Administration public notice postings.
Both are important topics for rural residents. The most recent data we have show dramatic rural – urban gaps in both broadband access (simple availability) and adoption (percent of households signing up for broadband). It’s widely recognized that affordability plays a large role in why households remain offline. But because there is no federally collected data on broadband price that includes both rural and urban areas, very few studies have been able to quantify the price differences across these geographies.
Source: Conlow, 2023 (adoption data from 2017-21 American Community Survey; access data from December 2022 FCC Broadband Map)
Thankfully, BroadbandNow (an independent broadband availability website) went through the painstaking process of gathering pricing data from over 4,000 terrestrial broadband providers in late 2020 and compiled them into a Zipcode-level database that is publicly available. Their pricing data is for the lowest-priced terrestrial (wired or fixed wireless) residential standalone internet package for 25 / 3 service and contains entries for over 26,000 Zip codes in the continental U.S.
The BroadbandNow dataset also includes the number of wired providers at different speed thresholds (25/3 and 100/3) as well as the number of fixed wireless providers. This is all taken from the slightly outdated June 2019 FCC Form 477 dataset, but it still represents a reasonably accurate portrait of the availability situation when the pricing data was collected. When this data is combined with a Zipcode-level measure of rurality, it allows for examination of how broadband price varies by both rurality and number of providers.
Source: Broadband Now; RUCA Codes from WWAMI Rural Health Research Center
The data show that in late 2020, the average monthly cost of a 25/3 broadband connection was nearly $13 higher in rural Zip codes. In many ways, this is expected. After all, rural areas tend to have dramatically fewer options for connecting – and there is a good argument that this “competition gap” is driving higher prices. But the BroadbandNow data also allows us to break out urban vs. rural prices based on the number of providers available in a Zip code.
Source: BroadbandNow, Author’s Analysis. (Note that the price represents the lowest-priced 25/3 service, not the price of 100/3 service. Areas that do not have 100/3 service (“0 providers”) are still likely to have providers who offer broadband at slower speeds.)
This breakout shows us a few different things. First, the “competition gap” is real – for both urban and rural locations. Urban Zip codes with just a single provider are paying nearly $25 more per month (!) than those with two or more providers, and this gap is nearly $10 for rural Zips. Second, rural and urban monthly prices are about the same in Zip codes with either 0 or 1 high-speed provider (only a few urban Zips have 0 high-speed providers). But, in Zip codes with multiple high-speed providers, a significant rural-urban gap of more than $10 exists. Some of this is because “2 or more providers” typically means a higher number in urban (4) than in rural (2) Zips. Some of it is also likely because infrastructure is more costly to provide in less densely-populated areas – and rural providers may need to charge higher prices to recover that investment.
This leads us to the BEAD funding’s affordability requirements. States are generally going to be spending this money in locations without another viable high-speed option, which by itself should decrease consumer costs in those locations (i.e. help them move from $88.44 to $64.90 in the above figure). Beyond this, all BEAD funding recipients are required to “offer at least one low-cost broadband service option for eligible subscribers.” Many states are interpreting this as offering an option for $30 per month or less, so that it would be fully covered by the Affordable Connectivity Program monthly subsidy. Notably, most Zip codes with 2+ high-speed providers will not be getting BEAD funds, so we shouldn’t expect many $30 or less options to pop up in these locations.
Beyond the low-cost option, the BEAD program requires each state to develop a “middle-class affordability plan.” Preliminary plans from Louisiana and Virginia suggest that these states will include a component for affordability when they score each grant applicant prior to distributing their funds. Louisiana, in particular, will award applicants additional points if they commit to specific rates at a variety of broadband speeds.
Others have asked for additional guidance about the middle-class affordability plans, and at least one analysis has suggested that broadband is already affordable for middle-class households. It seems likely that this requirement will be implemented differently across states – and will be worth following as the BEAD plans progress.
(Note that you can follow your state’s progress on the BEAD proposals here. The plans are required to obtain public comments, and direct links to these plans are here.)
Brian Whitacre, Ph.D., is professor and Neustadt Chair in the department of Agricultural Economics at Oklahoma State University and is an extension specialist for rural economic development. Read more of the research Brian has published in the Daily Yonder.
Related
Republish This Story Republish our articles for free, online or in print, under a Creative Commons license.
[END]
---
[1] Url:
https://dailyyonder.com/research-and-analysis-rural-internet-subscribers-pay-more-new-data-confirms/2023/11/28/
Published and (C) by Daily Yonder - Keep it Rural
Content appears here under this condition or license: Creative Commons CC BY-ND 4.0 International.
via Magical.Fish Gopher News Feeds:
gopher://magical.fish/1/feeds/news/dailyyonder/
