December 15, 2022

A 2022 Status Report on Broadband in America—and a Look Ahead to 2023

By Brian Hurley, ACA Connects Chief Regulatory Counsel

As we approach the end of 2022, it is worth taking stock of the state of fixed broadband service in America.  In brief, the news is very good:  service performance continues to soar while prices remain reasonable; service reliability remains high; and competition has become even more vibrant.  Nearly all Americans – 110 million households out of about 130 million – already receive the broadband service they need to participate fully in our society, economy, and other walks of life, and with additional private sector builds and expanded government availability and adoption programs, we are well on the way to connecting everyone.

Even to the casual observer, none of this should come as a surprise.  Over the past 20 years, broadband providers have invested in their networks some $1.5 trillion, while the government has spent about $100 billion to support connectivity in more economically challenging areas.  As a result, fixed broadband speeds have increased from one meg to one gig.  All ACA Connects Members today provide at least 100/20 Mbps service, and they are moving toward providing one gig symmetric service in a few years, if not sooner.

Huge investments by broadband providers also have made their networks more reliable.  As Americans lived and worked from home during the pandemic — and broadband usage grew enormously. As we have documented, our fixed broadband networks more than met the challenge.  Additional investments since 2020 have further increased network reliability.

Not only have providers invested in upgrading their existing networks, they have expanded their network reach.  It is no secret that over the past five or so years, we have been in the midst of a gold rush to install fiber wherever old copper infrastructure was in place.  Many of our Members are “fiber miners,” rushing around the country to bring this future-proof infrastructure to new communities, including in rural areas.  Our Members’ reach has grown from about 16 million households to 23 million in the past five years, including some six million in rural areas, and continues to grow rapidly. 

Further, in areas where the private sector finds it too economically challenging to build, the federal government is stepping in with a broad array of programs that will provide about $75 billion over the rest of the decade to deploy broadband.  It took about 50 years to install copper lines to achieve universal voice telephone service.  We are on track with broadband to reach that goal – wiring even more of America – in about half that time.

Moreover, the price per meg for broadband service has dropped — and continues to drop — like a rock.  As USTelecom found, “Adjusting for inflation, prices for providers’ most popular broadband service dropped by 14.7% from 2021 to 2022. Similarly, prices for the fastest speed services dropped by 11.6%.”  In other words, consumers are paying less each year for broadband service while getting more reliable, higher performance service.  This is in sharp contrast to prices for other essential services, like gas, electric, and water.  Today, the average price for “always-on” broadband service is about the cost of half a tank of gas for your car.  Moreover, through the Affordable Connectivity Program, about 15 million low-income households are getting their broadband service at a steep discount or even free of charge.

On top of all that, investment in fixed broadband has given consumers choice.  As the analysts at OpenSignal concluded in their just issued report, “Consumers have more choice of broadband providers than ever before.  Now, cable companies and incumbent telephone companies face competition from new fiber overbuilders and fixed wireless players using the latest 5G technology.”  We can verify that OpenSignal’s finding is on the mark.  In a study we released a few months ago, we found, using 2021 FCC data, that competition in America is thriving.  Over 85% of American households now have a choice of two robust broadband providers, and that should increase to 95% in a few years.  Indeed, most Americans have access to three providers, and that should continue to grow, especially as 5G mobile providers offer fixed service.  Analysts predict these 5G providers will sign up more than 10 million subscribers within a few years.  As fixed 5G growth and the fiber gold rush continue, virtually all Americans in a few years should have a choice of not just two or three fixed broadband providers, but four or more.

The Path Forward for Broadband Policy in 2023

Of course, government policy has a critical role to play in ensuring that increases in broadband deployment, competition and adoption continue.  In recent years, the government has contributed to the “broadband boom” by establishing a light-touch regulatory regime, providing targeted support to close the digital divide, and removing deployment barriers. To build on past success in 2023, government should follow a similar game plan:

1.  Do not regulate (or even threaten to regulate) broadband prices:  As discussed above, the competitive environment for fixed broadband service has kept prices reasonable. With providers continuing to invest tens of billions of dollars annually, there is every reason to expect this will continue.  Accordingly, there is no reason to regulate prices—and there are great reasons not to.  Rate regulation would reduce the incentive to invest in network upgrades and expansion, especially by new entrants, thereby creating a far less dynamic and responsive industry.  We killed off Ma Bell some 40 years ago for good reason, seeking to rely on entry and competition, and today we are reaping the success of that policy.  Reversing course would be a grave error.

2.  Spend limited government support efficiently and effectively:  With the federal government providing so much funding to close the broadband availability gap, we have within our reach universal reliable, high-performance broadband service.  But, to achieve that aim, there are two critical policies we must pursue.  First, we need to prioritize using government support for future-proof fiber builds, except in the most economically challenging areas.  Second, we must not use this funding to subsidize deployments where locations are already served.  Not only would this be a waste, but spending government money to build to already-served locations will be counter-productive, driving out the private investment that supports the vast majority of deployments in the U.S. – in other words, no government-funded overbuilding.

3.  Remove barriers to deployment:   Anyone who has deployed broadband facilities will tell you that it is critical to gain access to rights-of-way, poles, and other infrastructure promptly and reasonable cost.  And, these same “deployers” will tell you that virtually every project runs into barriers to obtain such access from government agencies, pole owners, railroads, and others who control private rights-of-way, which can either delay a build or stop it entirely.  Congress and the FCC have made headway in addressing these problems, but far too often they persist.  It is time for a national “permitting” law to address these concerns.

4.  Appropriate additional funding to ACP:  The ACP has proven to be a vital program for broadband adoption; some 14 million low-income households now participate and millions more still need to join.  But the program will run out funds within the next year or two, so the only way to ensure the program’s long-term viability is for Congress to step up and appropriate additional funds.

By following this plan, policymakers can help make 2023 another banner year for broadband.