US Community-owned Fibre Networks Best Value

Created January 15, 2018
News and Business

The authors of a new pricing study report that, by one recent estimate, about 9.2% of Americans, or almost 30 million people, lack access to wired home broadband service. This is defined by the US Federal Communications Commission (FCC) as an Internet access connection providing speeds of at least 25 Mbits/s download and 3 Mbits/s upload. Even where home broadband is available, high prices inhibit adoption; in one national survey, 33% of non-subscribers cited cost of service as the primary barrier. The authors, David Talbot, Kira Hessekiel, and Danielle Kehl of the Berkman Klein Center for Internet & Society at Harvard University, note that municipally and other community-owned networks have been proposed as a driver of competition and resulting better service and prices.

This was borne out by the report’s findings. The trio examined prices advertised by a subset of community-owned networks that use FTTH technology. In late 2015 and 2016 they collected advertised prices for residential data plans offered by 40 community-owned (typically municipally-owned) FTTH networks. They then identified the least-expensive service that met the federal definition of broadband (regardless of the exact speeds provided) and compared advertised prices to those of private competitors in the same markets. The authors 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” say the authors. “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 standardisation in Internet service offerings and a shortage of available data.

Download the report at
https://cyber.harvard.edu/sites/cyber.harvard.edu/files/2018-01-10-Pricing.Study_.pdf

John Williamson

This article was written
by John Williamson

John Williamson is a freelance telecommunications, IT and military communications journalist. He has also written for national and international media, and been a telecoms advisor to the World Bank.