The worse your broadband, the harder price hikes hit, FCC data says

Broadband service is getting more expensive, particularly if you’re on the slow side of the digital divide. The Federal Communications Commission just published its 2017 urban benchmark rate survey, which it uses to set prices and data caps for subsidised rural service – via the Connect America Fund, for example – as well as standards for lifeline service.

In 2016 (which is the benchmark year for 2017 rates), urban customers subscribing to packages with download speeds of 10 Mbps, upload speeds of 1 Mbps per second and a data cap of 100 gigabytes per month – in other words, the slowest and lowest service – paid $76.49 per month. That’s $7.33 more than a year before, an 11% increase. Customers with the highest end service in the survey – 25 Mbps down, 5 Mbps up and no data cap – saw their bills go up only $1.52, increasing 2% to $90.76.

As the table above shows, the lower the level of service you buy, the greater the price increase you have to bear, both on an absolute and percentage basis.

One caveat: the benchmarks are based on the prices and terms that are offered by Internet service providers, and not on the average price that consumers actually pay. In other words, customers with low end packages might be – probably are – paying less on average than the benchmark price because when presented with a choice of comparable packages, the microeconomic assumption is that they’ll opt for the cheaper one.

Urban and suburban residents in California can typically – but not always – choose between service from a cable and a telephone company, for example, so they can make that choice. On the other hand, the benchmark rate, which also factors in expensive fixed wireless prices, would be the best that many rural residents might be able to get from the single, federally subsidised provider that serves their area.