Harvard Study Shows Community-Owned ISPs Offer Lower, More Transparent Prices

from the when-in-doubt,-ban-it dept

We’ve routinely noted how countless communities have been forced to explore building their own broadband networks thanks to limited competition in the market. As most of you have experienced first hand, this lack of competition routinely results in higher prices, slower speeds, worse customer service, and massive broadband deployment gaps. And thanks to telecom industry regulatory capture (taken to an entirely new level during the Trump administration), countless well-heeled lawmakers make it a personal mission to keep things that way.

Needless to say, the threat posed by angry users building or supporting their own networks is a major reason ISPs have lobbied (read: literally bought and written) laws in twenty-one states banning towns and cities from pursuing this option. In some states, towns and cities are even banned from striking public/private partnerships, often the only creative solution available to the traditional broadband duopoly logjam.

Not too surprisingly, a new study out of Harvard details just what AT&T, Verizon, Comcast and Charter (Spectrum) are afraid of.

The study found that averaged over a four year period, service offered by community ISPs tends to be significantly cheaper that broadband service made available from privately-owned alternatives. In some areas, the researchers couldn’t directly compare community-owned broadband with private service, either because the private ISP in question couldn’t even offer the FCC definition of broadband (25 Mbps downstream, 3 Mbps upstream), or because ISPs went to great lengths to prevent users from seeing their actual prices. But in 23 out of 27 cases, the community option provided lower prices:

“When considering entry-level broadband service?the least-expensive plan that provides at least 25/3 Mbps service?23 out of 27 community-owned FTTH providers we studied charged the lowest prices in their community when considering the annual average cost of service over a four-year period, taking into account installation and equipment costs and averaging any initial teaser rates with later, higher, rates.”

What’s more, the study found that the community options tended to offer prices that were more upfront with the end user, and less reliant on misleading promos or hidden fees:

“While community-owned FTTH providers? pricing is generally clear and unchanging, private providers almost always offer initial “teaser” prices and then raise the monthly price sharply. This price hike in the communities we studied ranged between $10 (20 percent) and $30 (42.8 percent) after 12 months, both imposed by Comcast, but in different communities. Only one community-owned FTTH provider employed this marketing practice for a data-only plan.”

It’s worth noting the study was only able to directly compare stand alone broadband prices, since ISPs often obfuscate broadband pricing via the use of bundles and promotions. Often these bundles “promise savings” to users to combine broadband with TV and phone service, though in reality users are routinely and severely financially penalized for ordering just standalone broadband service. Even then, the study is quick to point out how ISPs go to great lengths to make direct price comparisons “extraordinarily difficult”:

“In general we found that making comprehensive pricing comparisons among U.S. Internet service plans is extraordinarily difficult. The U.S. Federal Communications Commission (FCC) does not disseminate pricing data or track broadband availability by address. Additionally, service offerings follow no standard speed tiers or definitions (such as the specifics of video or phone service bundles).”

ISPs also routinely lobby the government to ensure the FCC doesn’t collect and share pricing data, lest somebody figure out the connection between limited competition and high prices. That lobbying influence is one of the major reasons this country spent $300 million on a broadband availability map that not only over-states broadband availability and speeds, but fails completely to even mention pricing. ISPs and lawmakers paid to love them will often focus on empty promises to “expand broadband availability,” intentionally ignoring the role competition and pricing plays in that equation.

Again, these towns and cities wouldn’t be getting into the broadband business if they were happy with the services being provided by the likes of Comcast. And again, Comcast could quickly nip these efforts in the bud by offering better, cheaper service. But time after time it’s clear that Comcast, AT&T, and other incumbent ISPs would prefer to instead file lawsuits, spread disinformation, and buy laws banning communities from making their own decisions on local infrastructure. Whatever it takes to avoid having to directly compete.

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Comments on “Harvard Study Shows Community-Owned ISPs Offer Lower, More Transparent Prices”

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78 Comments
Richard Bennett (profile) says:

Techdirt rerunning old posts now?

This sad little post – just some copy pastes from a shoddy study utterly destroyed by careful analysis – appears to be a rerun.

Why publish it at all when it says nothing of value?

Bode claimed 22 million people told the FCC to keep regulating the Internet under Title II. Doesn’t he need a fact-checker?

Richard Bennett (profile) says:

Re: Re: Techdirt rerunning old posts now?

I see what happened: Bode has a gig at non-traditional workplace Vice now, and he ran the same story there on the 12th. So this is a non-attributed cross post.

See https://motherboard.vice.com/en_us/article/d345pv/harvard-study-shows-why-big-telecom-is-terrified-of-community-run-broadband

Richard Bennett (profile) says:

Re: Re: utterly destroyed by careful analysis

M.J. Santorelli & C.M. Davidson, A Closer Look: Berkman’s Municipal Fiber Pricing Study, Advanced Communications Law and Policy Institute (ACLP) at New York Law School, George Ford at Phoenix, Roslyn Layton at Forbes, and mine at High Tech Forum.

The Berkman report is embarrassingly bad. Averaging its findings – which exclude AT&T, Verizon, and shows the average community network is $10/month cheaper and 7 Mbps slower.

Richard Bennett (profile) says:

Re: Re: Re:2 utterly destroyed by careful analysis

Sorry about that reading disability. Here’s a nice paragraph for you:

“As discussed in Section 2, the methodology used in the report is problematic – much more so than the authors admit. Moreover, as detailed in Section 3, the report omits critical details about the underlying conditions influencing the GON prices studied. The authors attempt to brush these failings aside as they call on private ISPs to be more forthcoming about their terms and conditions of service.9 This is pure deflection. The surface-level findings in the Berkman report should not be viewed as dispositive vis-à-vis municipal broadband offering “better” service than private broadband. Accordingly, policymakers should view the report’s findings as flawed (the authors admit as much) and endeavor instead to ask hard questions about its methodology and other aspects of the analysis. Doing so reveals a number of key shortcomings that undermine the report’s takeaways.”

Any questions?

Anonymous Coward says:

Re: Re: Re:15 the prices of AT&T, Spectrum, and Verizon.

Man, with the way Richard tries to push all his garbage, you’d think he was working directly with the FCC as part of some kind of council or something.

Oh wait, Richard actually is on the Broadband Deployment Advisory Council. I feel like that puts everything he says and does into quite the interesting perspective.

MorrisWesternn says:

Re: Re: Re:2 Is that Harvard Study any good?

…wow, kinda tough to make sense of this comment thread !

That Harvard Report has indeed been cited/discussed here in the TD comments in recent weeks; not sure when Report was first introduced here. Oddly, that report only cites “2017” as its publication date.

The Harvard Report itself has a rather casual methodology, unsuitable for drawing any statistically valid conclusions about the general population of Community ISPs in U.S.
There are hundreds of such ISPs, but the study non-randomly selected 40 communities (later reduced to 27)… based purely on the “convenience” to the Harvard researchers of collecting readily available pricing data. The prime conclusions addressed only “entry-level” price comparisons for fiber optic home service, ignoring a host of other relevant comparisons. Government tax subsidies to Community ISPs were ignored by the study. The Report is chock full of disclaimers about “missing data” and “difficulties in obtaining important data”.

From a professional Survey Research viewpoint, that Harvard Study had many significant defects. The Harvard researchers seemed to have a strong bias in all aspects of their study. It is a low quality study of little value.

Anonymous Coward says:

Re: Re: Re:4 dump Harvard

… you can assume the big commercial ISP’s closely watch their Community-based competition and have such comparative data reports, but not available publicly.

other various web data and commentary available … giving a broader (less biased) view of Community ISP’s. For example:

http://thehill.com/blogs/pundits-blog/technology/339232-the-false-promise-of-municipal-broadband-networks

“The false promise of ‘municipal broadband’ networks”

Anonymous Coward says:

Re: Re:

I remember getting dumped on by many like you when I said I would prefer that communities create ISP rather than have the pile of trash that is NN.

When we get “real NN” then I will all for those regulations but we can’t have “real NN” without destruction of the regulations that secure those monopolies. And unlike many in your group I am not willing to compromise on being partially screwed.

There is far more freedom and liberty in communities being able to build local networks than there is in the FCC or local administrations granting little monopoly fiefdoms here and there.

Anonymous Coward says:

Re: Re: Re:

Are you the person I argued with on NN? I agreed with community driven ISPs but don’t get rid of NN. It isn’t perfect but NN does not harm small ISPs but protects against big ones. You would have to purchase 5-6 figures on network equipment and programming to do any of the manipulation that NN protects against. Sure you can do some of manipulation with out it but it would be difficult to financial leverage that with out the nice equipment. No small ISP will want to do that. Go after the stupid state regulation instead. The only thing removing NN does for my state is allow the ISP to financially rape its customer base without any protection and will not help with competition. There are already laws in place that prevent any new startup from happening unless they can spend millions of dollars on infrastructure first. That barrier is too high for pretty much everyone.

Anonymous Coward says:

Re: Re: Re: Re:

“but don’t get rid of NN.”

NN will not even be needed if we can get the protectionist regulations out of the way.

Solving one problem automatically solves the other.

“The only thing removing NN does for my state is allow the ISP to financially rape its customer base”

That is not correct, people were still getting financially raped when NN was in place and before NN even happened, TD even had stories about those while NN was in effect before and after.

NN just does not protect you financially, does not remove caps, and still allows slow lanes provided they are compliant with Zero Rating loopholes.

“There are already laws in place that prevent any new startup from happening unless they can spend millions of dollars on infrastructure first. That barrier is too high for pretty much everyone.”

And those are the laws I want destroyed but everyone here says I am asking for anarchy when I do. I agree that barrier is too high but NO ONE WANTS TO FIX IT! They just “claim” they want to do that. The moment the word deregulation is mentioned, even if it is bad regulation the nuts come out of the wood work. Do you have a way to keep the crazies out of the conversation? I don’t. The telco’s even give money to minority support groups to shill for them and TD has written about those too.

I want infrastructure to be restored to the public sector, I want the protectionist laws to be destroyed, I want the anti-monopoly and anti-trust laws to be strengthened or expanded. I want the FTC to get off its ass and wreck the fuck out of ISP falsely advertising unlimited internet and bill suffing. I want the DOJ to absolutely fuck over the cities and ISP’s finding ways to build monopolies and conduct anti-trust activities that are giving these ISP’s the power to financially rape you.

But both the left and the right are stuck in their Political Churches treating each side like the enemy. We can’t win because they have been tricked into fighting a war that does not exist!

Anonymous Coward says:

Re: Re: Re:

Net neutrality has come because of monopolies. It is not a cause of monopolies, but rather a customers protecting regulation of monopolies. The practical alternative to net neutrality is regulation of the infrastructure so that multiple ISPs can offer service over a common infrastructure, which is the route that most of the rest of the world has taken, but is even less acceptable in the USA·

Infrastructure is a natural monopoly, and is is an economic waste for two providers to fully duplicate the infrastructure so that they can compete for customers. Where it exists, the cable DSL duopoly is an accident of history dating back to when analog ruled the roost, and phone and cable TV system were incomparable with each other. Now with digital, and phone, TV and Internet all use the same underlying technology for fixed connections. Cellular systems are not a direct competitor to fixed system, but rather enable mobile use but with bandwidth limitations compared to fixed installation

The Wanderer (profile) says:

Re: Re: Re:

If you want to argue against “the regulations that secure [the] monopolies”, go right ahead! I’d agree that such regulations are almost certainly bad. (I’d also like to know which regulations you think those are, since I can’t think of any at the federal level, but that’s a separate point.)

Getting rid of those regulations would not require getting rid of net-neutrality rules, however, since rules requiring that the network be neutral would not serve to secure or entrench the monopolies.

Also, even in the absence of monopolies, network neutrality would still be essential – and while we might not need rules mandating it, they could hardly hurt. (Especially given how hard it’s proving to get those rules put in place to begin with.)

Anonymous Coward says:

Re: Re: Re: Re:

“Getting rid of those regulations would not require getting rid of net-neutrality rules,”

No, it would just make them pointless. My position is I don’t care if NN stays or goes, I am just saying its a wasted effort and will ultimately make no real difference, we have much more problematic issues to deal with! Let’s go get after those and stop dicking around with NN weaksauce laws!

“Also, even in the absence of monopolies, network neutrality would still be essential”

Supposition, if companies are allowed to compete in a market that has a low barrier to entry then anyone offering a contract to people where they will not spy, will not create fast lanes, and will not bill stuff your shit hole every month will get the customers. Will they get them all, no, but more than enough to take a hell of a chomp out of the ISP incumbents budgets and coffers they buy your politicians with.

The problem is getting politicians to let this power go, and since they get paid by the ISP’s for keeping this power, what do you think is going to happen?

That’s right… you are going to lose no matter what you do until that part changes.

The Wanderer (profile) says:

Re: Re: Re:2 Re:

Supposition, if companies are allowed to compete in a market that has a low barrier to entry then anyone offering a contract to people where they will not spy, will not create fast lanes, and will not bill stuff your shit hole every month will get the customers.

And if that happens, then by the very fact of it happening, the network (as provided by those companies) will be neutral.

There may not be rules requiring the network to be neutral at that point, but the network will still be neutral, and that is what matters.

And if market forces are going to lead companies to do an inherently good thing anyway, what’s the harm in having rules requiring them to do it?

(Particularly when – as we’ve already learned is the case, from our current experience – the market conditions which lead to those market forces are fragile, and could easily collapse back into (near-)monopoly conditions.)

orbitalinsertion (profile) says:

Re: Re: Re:

Maybe i would have, maybe not. But i would say now that “rather” is a lame position. I would personally prefer the trifecta of no laws against community broadband, NN regulations worth a damn and enforced, and limits on corporations in general. Anti-monopoly laws are underused and too narrowly used when they are considered. Remove the captured regulations that corporations lobby for or write themselves? Sure.

However, treating a thing as a monopoly and regulating it as such when it is one due to lack of competition is not bad regulation. Regulation securing monopolies (blocking others from the market) are bad, and i don’t see anyone arguing against that.

Dumping on everyone because a positive rule doesn’t do all the other things you want, which are in different categories and should also be addressed, certainly, makes no sense. So yeah, people will dump right back. See the thing is, both the bad things you don’t like, and the better goals you want both occur by getting an initial toehold in one thing, then proceeding from there. Because you aren’t impressed with the previous NN rules (which were not entirely great, but a positive step anyway) doesn’t make other people stupid.

Otherwise, i am not sure why people who speak as authority and tell everyone else they are stupid get dumped on sometimes. Is mystery.

The Wanderer (profile) says:

Re: Re: Cities and towns are incompetent

To be fair, that quoted fragment is a general truism. No matter how bad things are, it is essentially always possible to come up with a way they could be worse.

There’s actually a story out there centered on this point. It tells of a poor couple who live in a one-room hut and keep animals outside. As best I recall, when they go to the headman/wise man/what-have you to complain about the cramped conditions and ask for advice, he tells them to take the chickens into the hut; when they go back to say it’s worse and complain again, he tells them to take the pig into the hut; et cetera. Eventually, after they’ve worked their way up to the horse, he gives them the OK to put one of the animals back outside, and one by one they work their way back down to where it’s just the two of them in the hut without any of the animals – and then there seems like so much space, and it’s such a relief!

The moral of the story is presented in its title: “It Can Always Be Worse”.

(The flip side of “it could be worse” being a general truth is that pointing it out doesn’t really have much weight as an argument.)

Lawrence D’Oliveiro says:

Re: Re: Berkman hid behind an obvious misreading

I’m not sure how you are supposed to (mis)interpret things like:

AT&T’s terms of service prohibit "systematically collect[ing] and us[ing] any Content including the use of any data mining, or similar data gathering and extraction methods." Verizon’s terms say that "authorized use of this page is limited to the review of service availability information, for a particular address or phone number, solely by persons interested in purchasing Verizon service or making changes to existing Verizon service."

Please tell me what dictionary you are using to look up phrases like “systematically collecting and using” and “authorized use is limited”.

Richard Bennett (profile) says:

Re: Re: Re: Berkman hid behind an obvious misreading

No researcher has ever been sued for taking prices from ISP websites for purposes of comparison.

Berkman author Danielle Kehl did that several times for the NAF “Cost of Connectivity” reports.

You’re chopping off the relevant text of the phrases you quote: “systematically collect[ing] and us[ing] any Content including the use of any data mining, or similar data gathering and extraction methods

No researcher has ever been sued for taking prices from ISP websites for purposes of comparison.

Lawrence D’Oliveiro says:

Re: Re: Re:2 No researcher has ever been sued for taking prices from ISP websites for purposes of comparison.

You don’t wait for the lawsuit, just the potential threat of a C&D is enough. Particularly when the Ts&Cs are pretty clear that this kind of activity is prohibited.

Remember, when you are dealing with corporates whose legal budget is bigger than your employer’s entire operating budget, you tread carefully.

Richard Bennett (profile) says:

This isn't Kehl's first rodeo

Did you miss the part where I pointed out Kehl took data from websites for three New America Foundation (subsidiary of Google) reports called “The Cost of Connectivity?”

You’re pretty credulous if you believe Berkman’s claim. In any event, you can’t claim a < b if you don’t have the values of a and b regardless of your excuse.

Anonymous Coward says:

Re: Re: Re:2 Self Esteem

Ah, classic weak rebuttal number 23. Accuse your opponent of homophobia.

Dick, you could be a girl and the comment would make sense. The FCC could identify as a girl and the comment would make sense. You’re in a willingly subservient relationship with the garbage Pai puts out of his orifices, and you think nobody notices.

And regarding your claim that it’s a TD thing, That Anonymous Coward is staunchly gay. And he’s very much respected in the community. Being a part of the group that puts copyright trolls to justice will do that.

How about this alternative if you feel your sensibilities have been triggered: you have your tongue firmly rammed up the non-gender specific rectal cavity of the FCC, and you do so willingly.

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