The Daily Yonder looks at the rural-urban broadband gap…

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.

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  This is all taken from the slightly outdated June 2019 FCC Form 477 dataset, but it still represents a reasonably accurate portrait of the availability situation when the pricing data was collected.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.

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.

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.