Analyzing the Trends in Internet Pricing and Affordability

Recent discussions surrounding internet pricing, particularly in the United States, have sparked debate over the accuracy of claims made by various stakeholders, including politicians and organizations. Senator Maria Cantwell (D-WA) has asserted that cellphone service prices are rising, yet Bureau of Labor Statistics data indicate a 4.1 percent decline in mobile service prices in 2025. This discrepancy highlights the need for a nuanced understanding of pricing trends rather than relying solely on static country-level comparisons.

Internet Prices are Falling. Affordability Gaps are Fixable.

The pricing of mobile and broadband services in the U.S. is influenced by various factors, including labor costs and spectrum pricing. For instance, American broadband workers typically earn higher wages than their European counterparts, contributing to the overall cost structure. Additionally, the cost of spectrum in the U.S. is generally higher than in Europe, complicating comparisons. Senator Cantwell's report also criticized streaming services for price increases, which, when adjusted for inflation, show minimal change.

Internet Prices are Falling. Affordability Gaps are Fixable.

The Benton Institute recently reported an increase in broadband prices, attributing this rise to high-speed plans of 2 gigabits per second (Gbps) or above. However, data from the Federal Communications Commission (FCC) reveal that prices for plans below 2 Gbps have actually decreased by 4 to 13.4 percent. Affordability should be assessed relative to household income; the FCC and the United Nations International Telecommunication Union (ITU) define broadband as affordable if it constitutes no more than 2 percent of a household's income. Currently, Americans spend an average of 0.71 percent of their income on home broadband, compared to 1.08 percent for Europeans.

Internet Prices are Falling. Affordability Gaps are Fixable.

Critics argue that rate regulation, which caps prices that Internet Service Providers (ISPs) can charge, may hinder investment in broadband infrastructure. For example, New York has implemented a law capping prices for plans up to 200 Mbps at $20 per month. Opponents contend that such regulations could deter ISPs from upgrading networks, ultimately affecting service quality and reach. This approach is seen as a short-term solution that fails to address the complexities of affordability.

Internet Prices are Falling. Affordability Gaps are Fixable.

Proponents of a different approach suggest that consumer-focused vouchers could better address affordability issues. The FCC's Universal Service Fund (USF) could be leveraged to provide financial assistance to low-income households, ensuring that subsidies are directed to those in need without distorting market prices. This strategy aims to maintain competitive pricing while incentivizing ISPs to invest in infrastructure.

Internet Prices are Falling. Affordability Gaps are Fixable.

• “Rate regulation is thus an anti-consumer policy that lunges at short-term benefits at the expense of long-term network reach and quality.” — Author, ITIF

Internet Prices are Falling. Affordability Gaps are Fixable.

• “Broadband affordability is a solvable problem thanks to falling prices and policy options that can address remaining gaps.” — Author, ITIF

Internet Prices are Falling. Affordability Gaps are Fixable.

Moving forward, policymakers are encouraged to focus on evidence-based solutions that address the specific needs of low-income households while promoting investment in broadband infrastructure. By prioritizing consumer-focused approaches, the goal is to enhance affordability without compromising service quality.

Internet Prices are Falling. Affordability Gaps are Fixable.