New OTI Study Finds Internet Affordability Crisis in the U.S.
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July 15, 2020
Today, New America’s Open Technology Institute published The Cost of Connectivity 2020, a study of the price of internet service in 28 cities across Europe, Asia, and North America. OTI collected data on 760 internet plans, finding substantial evidence of an affordability crisis in the United States. The study aims to shed light on the opaque nature of internet pricing, given that no government agency collects this data.
The study’s top-level findings include:
- The United States has some of the highest prices in our global dataset. Across North America, Europe, and Asia, we find the highest average monthly prices in the United States. Only one U.S. city ranks in the top 10 cities when ranked by average monthly costs. The overwhelming majority of the U.S. cities in our dataset rank in the bottom half for average monthly costs.
- Consumers must navigate a maze of additional fees and hidden costs to determine the total price of internet service. These fees include equipment rental fees, installation and activation fees, data overage penalties, and contract termination fees—and they are often substantial. Modem fees can add an additional 75 percent to a monthly bill, compared to just 30 percent abroad.
- Municipal networks appear to offer some of the best value in the United States. The most affordable U.S. city in our ranking is Ammon, Idaho, a city with a municipally-owned open access network that OTI studied in an earlier report. A growing body of evidence indicates that these locally-owned networks yield faster speeds and significant cost savings for consumers.
- The U.S. market suffers from a lack of competition. The U.S. market for internet service is dominated by just four companies: AT&T, Charter, Comcast, and Verizon. This lack of choice directly affects the cost and quality of internet service. Evidence of ISPs’ market power is documented throughout this year’s report.
- There is virtually no pricing transparency in the United States. No government agency collects internet pricing data, and ISPs do not make this data readily available to consumers. Consumers struggle to understand what they are paying for and avoid hidden fees.
The following quote can be attributed to Claire Park, program associate at New America’s Open Technology Institute and co-author of the study:
“Our latest study confirms that U.S. internet consumers pay some of the highest prices in our global dataset. They also face confusing billing schemes, hidden costs, and surprise fees that make connectivity unaffordable for many. If the U.S. wants to become a global leader, the government can start by collecting pricing data, expanding Lifeline, legalizing affordable municipal networks, and banning digital redlining.”
Download The Cost of Connectivity PDF here and infographic here.