U.S. Internet users pay more and have fewer choices than Europeans

Areas of service rarely overlap between Internet providers

By Allan Holmesemail Chris Zubak-Skeesemail
5:00 am, April 1, 2015 Updated: 5:00 am, April 1, 2015

Center for Public Integrity

More than a quarter of Americans cannot go online at home to check their children’s grades at school, apply for jobs, pay bills or research health issues. They don’t have what has become a crucial service for participation in modern society: Internet service at home.

The proportion of households with Internet service had been rising steadily for decades, according to the Pew Research Center, until the past few years when the adoption rate slowed.

One reason? The high cost of broadband and the lack of competition that leads to those high prices.

A Center for Public Integrity analysis of Internet prices in five U.S. cities and five comparable French cities found that prices in the U.S. were as much as 3 1/2 times higher than those in France for similar service. The analysis shows that consumers in France have a choice between a far greater number of providers — seven on average — than those in the U.S., where most residents can get service from no more than two companies. The Center’s analysis echoes the findings of several studies on Internet pricing disparities worldwide.

By mapping the service areas of U.S. providers, The Center for Public Integrity also found that telecommunications companies appear to carve up territory to avoid competing with more than one other provider.

Higher broadband prices don’t just mean fewer dollars in Americans’ wallets at the end of every month. They make it difficult for low- to middle-income families to afford fast Internet service, which has become a necessity for job training, education, health care.

According to data in a report by the U.S. National Technology and Information Administration, more than 8 percent of U.S. households say they cannot afford broadband. President Barack Obama this year called for faster, more affordable Internet service for everyone.

“Just like we today expect clean running water, sewage and electricity as essential, so is broadband necessary to partake in society, to interact with government, to learn, to inform and be informed, to be a fully functioning member of society,” said Rudolf van der Berg, a telecommunications and broadband policy analyst who studies policy at the Organisation for Economic Co-operation and Development (OECD).

Many studies have been conducted looking at price and competition. The Center’s research isn’t as comprehensive. Rather, it’s a snapshot meant to show the state of broadband for some American cities. The high prices and lack of competition and in towns like these — and there are many — add to a growing divide between the connected and unconnected. And for the unconnected, the increasing gap will be measured in fewer economic opportunities, less access to healthcare and other inequities.