ITIF Report Addresses Evolving Broadband Market and Regulatory Challenges
'Rate regulation is inapt and ineffective.'
WASHINGTON, July 8, 2025 – The broadband market is so dynamic that regulators can't keep up with the pace of change, according to a new report.
The Information Technology & Innovation Foundation released a report Monday arguing that federal regulations have not kept up with today’s competitive broadband market.
The report also warned that Internet service providers must merge in order to survive in the increasingly competitive market.
FROM SPEEDING BEAD SUMMIT
Panel 1: How Are States Thinking About Reasonable Costs Now?
Panel 2: Finding the State Versus Federal Balance in BEAD
Panel 3: Reacting to the New BEAD NOFO Guidance
Panel 4: Building, Maintaining and Adopting Digital Workforce Skills
ITIF – a science and technology policy think tank – has been a vocal advocate for modernized federal broadband policies. In April, the group applauded the Federal Communications Commission’s “Delete, Delete, Delete” initiative, which aims to eliminate outdated regulations.
“This retrospective review is a welcome opportunity to modernize the FCC’s regulatory framework in light of today’s rapidly evolving communications marketplace and the buildup of ill-advised or outdated rules,” ITIF commented to the FCC.
In its latest report, ITIF echoed its deregulatory stance.
“In this competitive environment, many regulatory frameworks are outdated, and some policy proposals are out of step with the new market realities,” said ITIF analyst Ellis Scherer and ITIF Director of Broadband and Spectrum Policy Joe Kane.
The report specifically criticized New York’s 2021 Affordable Broadband Act, which caps ISP rates at $15 per month for low-income residents. ITIF also pointed to a proposed California law that would set a $15 cap on ISPs, again for low-income people.
ITIF explained that these rate caps have the opposite of their intended effect: rather than helping low-income consumers, they drive ISPs out of business, ultimately shrinking market competition.
As an alternative solution, ITIF proposed a “$30 per month voucher for households at 135 percent or less of the Federal Poverty Level,” arguing this approach would support low-income households, while also ensuring ISPs remain financially stable and continue receiving full payments from those who can afford standard rates.
The ITIF report said the FCC’s $4.5 billion High Cost Fund was “obsolete.” This fund was created to provide connectivity to rural and high-cost areas. However, ITIF argued that the fund has wasted “billions of dollars per year” by excluding newer, more efficient technologies like low Earth orbit satellites, which are increasingly vital for rural connectivity.
“By subsidizing only traditional technologies to reach areas that they cannot profitably sustain, the High-Cost Fund undermines profit opportunities for someone who can invent a way of serving those areas sustainably,” the report stated.
Additionally, ITIF argued that both ISPs and consumers could benefit from industry mergers. Given the high cost of broadband infrastructure – where providers must “sell their product to at least 40 percent of the customers in their service area” to break even – and the fact that most households only need one subscription, the report argues that over saturating markets with too many ISPs can lead to worse service and potential bankruptcy for ISPs.
The report concluded, “The convergence in the broadband marketplace demonstrates that when regulatory frameworks align with technological and market realities, American consumers benefit from expanded choice, improved service quality, and competitive pricing.”
Member discussion