Gigabit Competition Could Save Californians $1B Per Year, Says CPUC
Locations with more gigabit providers tend to have lower promotional prices, report finds.
Jan. 16, 2025 – Greater broadband competition in California could save consumers over a billion dollars a year on Internet service, according to a report released Wednesday by the California Public Utilities Commission's Public Advocate's Office.
The report distinguishes the number of internet service providers from the number of actual overlapping gigabit networks, noting that when gigabit networks overlap, it puts “downward pressure” on prices through competitive promotions offered to customers.
“Residential broadband prices across California’s urban markets are primarily determined by local competitive conditions,” the report found. “Where competition is limited or absent, prices are higher, regardless of neighborhood income levels or overall market size. These pricing patterns are systematic, predictable, and economically significant.”
The study looked at four urban metro centers across the state: San Mateo and Oakland, which have similarly competitive markets and Los Angeles and San Diego, where service options are much more limited. Urban centers were the focus of the study due to the high population density and concentrated demand for high speed service which made it ideal to study, according to the report.
The Advocate's Office, partnered with the University of California, Santa Barbara, utilized the University’s internally developed Broadband Plan Querying Tool which looked at data from selected sample locations and providers available broadband plans, advertised speed tiers, and promotional prices.
This allowed researchers to receive “consistent address-level price information for the four major fixed broadband providers and allowed for observation of near real-time market behavior,” according to the report.
The CPUC report found that in more competitive areas, promotional pricing varies even between “houses on the same street” that receive comparable service. In areas with less competition, providers like AT&T and Cox would offer the highest possible proportional price, with much less variation area to area.
After analyzing the data comparing averages between the four geographic areas, the report found consumers could save over one billion dollars a year with increased competition.
Interestingly, the report concluded that sub-gigabit providers like Verizon’s 5G Home or T-Mobile’s Home Internet do not lead to a decrease in pricing, and in some cases even lead to higher prices, particularly around 500 Megabit per second (Mbps) service.
“This finding reinforces the conclusion that effective price competition is positively correlated with overlapping gigabit networks, rather than merely the presence of additional providers that do not offer gigabit service,” the report said.
The report notes that 97 percent of the state today is serviced by four broadband providers: AT&T, Comcast, Charter and Cox. Smaller ISPs like Sonic and Astound are also mentioned.
The CPUC approved a merger on Thursday between service providers Verizon and Frontier, which commissioners believe will provide an increased competitive landscape in the state for fiber and communication services. The agreement also required Verizon to deploy broadband service to 88 rural centers, to which it had previously objected.
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