Breaking Down Internet Monopolies: Why Choices Are Limited in Your Area

5 days ago 3

You know the drill. It's time to shop for internet, but you only have one or two options, and neither sounds very appealing. You've heard the woes from friends who signed up with Spectrum and were surprised by two price increases within the same year -- and there's a good chance that Spectrum is one of the two options available at your address. So what can you do?

First, let's do a little research

Type your address into the Federal Communication Commission's broadband map. That way, you can find a list of seven to 10 internet providers, each an alternative to Spectrum if that's a provider you're trying to avoid. But let's say you're trying to stick to a high-speed internet option. Maybe you have a smart TV you use for streaming in crisp 4K, a roommate who games religiously in their room or you're a student who uses Zoom pretty regularly. Whatever the reason, a good rule of thumb is to aim for speeds of 300 megabits per second or higher for average internet usage.

The FCC defines "broadband" as an internet connection with speeds of 100Mbps down and 20Mbps up. Using that definition, go back to the FCC broadband map and rule out each provider with advertised speeds of 100Mbps or less. Why? Even though an ISP advertises that speed, you probably won't get it consistently because of how your router and Wi-Fi work.

For most people, at this stage in internet shopping, there are only one to three decent options left, and if one of them isn't Spectrum, it's most likely AT&T, Cox, T-Mobile Home Internet or Xfinity.

While I don’t personally have anything against Spectrum (and CNET ranks it as one of the better cable ISPs out there), there are some people who do. The leading cause of those frustrations is usually price increases. It’s frustrating not only because your bill increases while your speeds remain the same, but also because not having another internet option means you can’t switch.

At this point, your head is probably spinning. Why is shopping for internet providers such a headache? Will those other internet options be any good? Why can’t you get more than one decent option at your address?

Internet monopolies are far too common

Just 10 years ago, our definition of broadband vastly differed from the FCC's take today (it was previously just 4Mbps down and 1Mbps up). Our conversations about home internet needing to be more accessible, affordable and sustainably fast for average household needs are a relatively recent development.

"The amount of money the average American is spending [on internet] relative to their income is about the same [compared to 10 years ago]," said Blair Levin, a policy analyst from New Street Research and former executive director at the FCC. "In that sense, we have a much faster, better product at about the same price point. Sure, you could say that's good. Does that mean it's affordable? Not for a lot of Americans, it is not affordable, and affordability is a key problem."

According to data collected by the Institute for Local Self-Reliance in 2020, approximately 83 million Americans have access to the internet through a single internet provider.

Only 14 major ISPs have a national availability equal to or greater than 2% of households nationwide, according to June 2024 data from the FCC. Of these 14, Spectrum ranks fourth, with about 30% coverage, making it the second-largest cable provider in the country after Xfinity.

Due to various factors, including geographically diverse terrain, high infrastructure costs and the daunting task of competing with prices from a much bigger ISP, it can be costly for smaller businesses to get a foot in the door without significant funding.

What does that mean for you? Since you likely have only one or two options for internet at your address, your internet provider can keep inflating your monthly bill and you can’t really do anything about it.

"Because of the way that we classify broadband service providers, the FCC has very little authority over prices, which means that [ISPs] can pretty much do whatever they want," Christopher Ali, a telecommunications professor at Penn State, told CNET.

Although there are thousands of local internet providers, our options often boil down to one or two of the ISP giants in the country. Admittedly, CNET often reviews those top providers and may recommend several of them as viable internet options. And it's true, those ISP giants aren't necessarily always bad options: They offer an efficient cost per Mbps especially compared with plans from local ISPs, which are typically DSL or fixed wireless options with much slower speeds targeted to rural homes.

In rural areas that may not have a big ISP presence, internet options are sorely limited and people usually have to fall back on the slow speeds and high costs of satellite internet. Although satellite internet offers extensive availability, it tends to average less than 100Mbps in download speeds, not quite fast enough for average to above-average internet usage.

Although competition among ISPs is often limited, there are pockets of regions where competition -- and fast, cost-efficient internet options -- thrive. In some cases, municipal broadband networks (like the community-owned fiber networks in Wilson, North Carolina or Chattanooga, Tennessee) and public middle-mile networks offer much faster speeds for lower prices than a private-owned ISP. This effectively creates what Ali calls a "Swiss cheese pattern of broadband availability" throughout the country.

Still, those success stories aren't ubiquitous, and all too often, people face high price increases, limited high-speed options and inconsistent connectivity with home internet. Even in urban areas, which typically have higher concentrations of internet serviceability, some neighborhoods may see much slower speeds and fewer options at their address than a neighborhood across town. A study conducted by the University of Chicago in 2022 zeroed in on the trend of inequitable internet access across neighborhoods with marginalized or low-income communities, raising questions about "digital redlining" by ISPs.

Why the difference in the US?

You may find it surprising that the high cost of the internet in the US isn’t necessarily replicated in other countries. According to a study by the New America Foundation, US consumers pay the highest average costs for broadband compared across all studied regions.

The average cost of internet service in the UK sits at around £27 ($34) a month, while the US averages $63 in monthly internet costs -- not including hidden fees, equipment costs and those yearly price hikes.

Some researchers point to the concentration of US markets compared to the UK, noting that the concentrated telecommunication industry warrants high internet costs and low capital expenditures from both a consumer and investor perspective. Others point to the tendency of US policy to favor larger ISPs, limiting competition and driving up prices.

“According to the New America Foundation, Americans pay the most for broadband in any country in the OECD," Dr Ali told CNET. "We’re averaging somewhere between $74 and $84 a month – and there is no technological reason why costs are this high. Zero. It is entirely price-gouging.”

The size of internet companies like AT&T, Google, Verizon and T-Mobile is staggering when you consider not only how sizable their footprints are but also how much of the infrastructure (from undersea cables to vast middle-mile fiber networks) they own. Although there are countless other local providers, many have to pay network fees to larger providers to use parts of the "middle mile" for internet services.

Plus, it's often easier for those bigger companies to buy out another company and merge their networks than to build out a new network. For example, Verizon purchased Frontier Fiber earlier this year in an attempt to expand its Verizon Fios fiber internet brand. Brightspeed edged into the playing field by buying parts of CenturyLink’s DSL network in 2022, and Charter (Spectrum) bought Time Warner Cable in 2016.

Fixed wireless internet services might make a difference

So far, we’ve mostly discussed wired internet services, which are tricky networks to establish because of zoning, equipment and labor costs. What about other internet connection types, like satellite or 5G home internet? Although a fixed wireless internet service is generally touted as a solution to broadband accessibility, since it’s easier to establish than a wired network, there are only a handful of big companies that dominate the fixed wireless internet market, namely, Starlink, T-Mobile and Verizon.

Starlink, which edged into the satellite internet market in 2020, established itself as a top name in satellite internet by deploying roughly 6,000 low-Earth-orbit satellites and offering speeds up to 220Mbps and relatively low latency (the time it takes for data to get to the server and back). In contrast, competitors Hughesnet and Viasat fall behind with speeds that top out at 100 and 150Mbps, respectively.

T-Mobile presents a popular alternative to rural internet with its network of high-powered cell sites and licensed 5G frequencies. To date, T-Mobile has the largest footprint of any single US internet provider, thanks to the reach of those frequencies.

The catch? Starlink costs roughly $120 a month, not including the hefty up-front cost of satellite equipment, which runs $349 for the basic package. By comparison, T-Mobile offers a much more competitive price. For $50 monthly, you can get speeds typically around 72 to 245Mbps. There’s no equipment rental charge, just the $35 activation fee you pay when you start service.

But although both Starlink and T-Mobile are popular choices for people with limited internet access, neither provider can offer a consistent speed of 300Mbps over a fixed wireless internet connection, which is why, though neither provider enforces a data cap, your speeds will likely be throttled during peak congestion periods. You won’t see the quick, consistent gigabit speeds that you’d get from a cable or fiber internet provider (or at least, not yet). Additionally, over 1 million people are on a waitlist for T-Mobile services, delayed due to network capacity.

The internet services offered by Starlink and T-Mobile are an attractive alternative to solving internet accessibility in underserved or hard-to-reach areas, but the quality of those internet connections and the affordability of monthly prices, equipment and additional fees, are an imperative consideration.

What does this all mean for you and me?

So, what’s being done to ease internet connectivity and affordability? How can we ensure that people have more than one or two options for internet service and that the costs of that internet stay low?

No one really has the answers yet. Since the ILSR published its findings on telecom and cable internet monopolies, Congress portioned $90 billion towards bridging the digital divide. That money was split among various groups, including the Tribal Connectivity Program, but most of it has been funneled into the Broadband Equity Access and Deployment Program -- the largest investment that the federal government has made in internet accessibility.

The Affordable Connectivity Program, which offered over 23 million low-income Americans a monthly discount between $30 to $75 monthly, was perhaps the most significant attempt at ensuring accessible, high-speed internet nationwide. After the ACP ended in May 2024, policymakers disagreed over how to ensure ISPs offer low-cost plans to their customers.

So far, BEAD funding has become tangled with competing interests about how best to use it -- including disagreements with the organization tasked with administering BEAD funding, the National Telecommunications and Information Administration.

The NTIA set guidelines for ensuring a low-cost plan with a baseline cost of $30 monthly, but many states have already planned a price increase for that baseline.

Besides, with the incoming Trump presidency, many Republican lawmakers have urged the FCC to halt new BEAD work, while others still have promised to overhaul program efforts entirely. Plus, Musk's unique position as a satellite internet company owner and incumbent governmental advisor presents Starlink with an obvious advantage going forward.

“Elon Musk will be the most important force in telecom regulation," Levin told CNET. "He owns a satellite company. So what is it that the satellite company wants out of the BEAD program?”

While a new administration prepares to take the reins, the plight of internet monopolies, high monthly internet costs and lack of adequate connectivity still hangs in the balance. In the meantime, the most you can do to trim down your monthly internet costs is to either reduce your monthly data consumption or switch internet providers entirely, if you can.

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