Thursday, March 17, 2011

Wealthy (D.C.) Suburbs Get the Cheapest Broadband, Inner (D.C.) City Areas "Overcharged," Rural America "Pillaged"

From the Investigative Reporting Workshop, via Stop the Cap!, we see a plethora of local Internet service data from American University that shows that:
People who live in low-income areas of the District of Columbia on average get less for their broadband dollar than those who live in the wealthy suburbs — and subscribers in rural areas get the worst deals of all.
Just how much more do wealthy suburbanites get for their broadband dollar than people who live in D.C. or in the rural areas? Quite a lot:


Futhermore, cable Internet service seems to provide more value than DSL service, while wireless service provides the least speed-for-your-buck:


What I am most surprised by are the HUGE differences between the average and median costs of one megabit per second of internet service, however - these huge differences mean that there are some people who are getting SERIOUSLY soaked by their Internet service providers, driving up the average price when compared to the median.

Undoubtedly, part of this is self-selection on the part of consumers (especially non-wealthy consumers), who choose far slower Internet service in order to pay a bit less overall. For example, at my apartment, I only have 2 choices for wired Internet - Verizon or Comcast (I'll not bother comparing with wireless providers, because that would never work for me). With Verizon, I can get 1 megabit per second service (Mbps) for $30 per month, or "1.5-3" Mbps for $35. With Comcast, I can get 12 Mbps for $60, or 50 Mbps for $190. I took 2 minutes to create a little graph to illustrate this:

I'm so proud.

The chart is arranged by value - i.e. by how many dollars one Mbps costs, and a lower $/Mbps ratio = a better value. As you can see, you have to spend A LOT more money overall (bigger blue bar = more money paid per month) to get the best value (smaller red bar = better value for money).

I have a 12Mbps Comcast connection, so I'll also point out that my current $5/Mbit cost means that I get significantly less value for my money than I would if I lived in a close-in D.C. suburb, where I would probably pay $3.67/Mbit (a 27% discount - nothing to sneeze at).

For many consumers, it makes more sense to spend less money overall, and get less value, than to spend more money overall for more value. And the lower level of service for less money overall may be "enough" for them - but it's yet another example of poor people paying more than rich people for the same services (and here's another more recent article on the same thing from WaPo).

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