Analysis Group Team Studies Effects of Broadband Competition for US Residential Customers
November 16, 2016
High broadband internet pricing for many US residential consumers, combined with relatively slow broadband speeds compared with those in many other developed countries, have spurred interest in policies that could help to lower broadband prices while increasing download and upload speeds. Some have advocated for increased competition in the broadband marketplace; however, the degree of change generated by such competition is unclear.
In a research report prepared for the Fiber to the Home Council, Analysis Group Vice President Greg Rafert and Associate Dan Mahoney examined the degree to which introducing competition into high-speed broadband markets affects pricing as well as download speeds for US residential consumers. Using data obtained from Telogical Systems, which collects data on broadband plans for the 100 largest Designated Market Areas (DMAs), they examined the effects of introducing higher-speed services, as well as of introducing additional service providers.
The team determined that the presence of high-speed gigabit (Gbps) internet service in competition with lower-speed services resulted in a statistically significant decline in broadband prices. DMAs in which an existing Gbps service is joined by a Gbps competitor are associated with even larger monthly price decreases for the high-speed service. They also determined that the availability of high-speed plans in a DMA increases the likelihood that other providers will introduce matching high-speed plans, increasing consumer access to higher-quality Internet services.