Revising the Record: Six Stylized Economic Facts About Pre-Covid US Residential Broadband Markets

Abstract

This article reviews available public data on the pre-COVID (2014–2018) residential broadband markets in the United States, and presents six data-driven stylized economic facts about these markets. Broadband was a significant household expenditure. There were very limited numbers of competing residential broadband Internet service providers (ISPs) in most local markets. Service prices have not decreased much over time. Quality competition seems quite important. There was very limited entry by new ISPs. Technological innovation in wireless drove much observed new entry.

Effects of Market Structure on Broadband Quality in Local U.S. Residential Service Markets

“…We note that there is not a huge amount of variation in the outcome variable in 2018. In that year, almost 85% of urban census blocks had maximum available download speeds above 900 Mbps, and 55% speeds above 940 Mbps (see Flamm and Varas, 2021). There was much more speed variation back in 2014, however, and the fixed effect models we are using explain changes in download speed over time within census blocks.…”

“…One of the goals of this article is to assess the impact of changes in market structure and concentration on broadband quality outcomes over the five years from 2014 to 2018. Flamm and Varas (2018) have observed that census tract level data significantly overstate the number of broadband providers from which an individual residential household in that census tract may be able to purchase service. That is why we construct our analysis at the census block level.…”

“…The existing literature has established a number of stylized facts about pre-Covid U.S. residential broadband service (Flamm and Varas, 2021). Broadband services were a significant expenditure for U.S. households.…”