This is another one of those pieces of news you’re going to need to take sitting down: Big cable companies are not, in fact, Good. For all of the supposed advantages that giant, nationwide cable providers are meant to have — better R&D, economies of scale, vast customer-service centers — a new study from Harvard University suggests that municipal broadband networks offer cheaper service with more transparent pricing.
Given that the net neutrality-apocalypse hasn’t descended yet and one connection is still as good as the others, it’s easy to compare the value of different services, provided you can get data about how much an ISP’s service costs — something that’s harder than you think, thanks to the non-transparent pricing schemes major ISPs use.
In order to make an accurate comparison, the researchers pooled data from 40 community-owned ISPs, looking only at the price for 25Mbps service, the minimum connection that qualifies as high-speed broadband under the FCC’s definition. Those prices were then compared to the advertised prices from private companies. The results were unambiguous:
“We found that most community-owned FTTH [fiber-to-the-home] networks charged less and offered prices that were clear and unchanging, whereas private ISPs typically charged initial low promotional or “teaser” rates that later sharply rose, usually after 12 months. We were able to make comparisons in 27 communities. We found that in 23 cases, the community-owned FTTH providers’ pricing was lower when averaged over four years. (Using a three year-average changed this fraction to 22 out of 27.) In the other 13 communities, comparisons were not possible, either because the private providers’ website terms of service deterred or prohibited data collection or because no competitor offered service that qualified as broadband. We also found that almost all community-owned FTTH networks offered prices that were clear and unchanging, whereas private ISPs typically charged initial low promotional or “teaser” rates that later sharply rose, usually after 12 months. We also made the incidental finding that Comcast offered different prices and terms for the same service in different regions.”
Critics would argue that community-run broadband networks are often subsidized by local taxes, accounting for the pricing discrepancy. While this study didn’t specifically address the question of public subsidies and long-term profitability, the authors did note that “the divergence of claims about the merits of municipal fiber networks can be extraordinary,” and making claims one way or the other appears to be difficult. It’s also worth bearing in mind that private ISPs benefit tremendously from public subsidy, both through the grant of land rights to run cables, and also through hundreds of billions of dollars in public grants to build infrastructure distributed over the last two decades.
