Study: Some Internet Plans Now Outpacing Consumer Inflation
'One or two years does not necessarily indicate a permanent change in a trend.'
Jericho Casper
WASHINGTON, August 12, 2024 – After years of trailing behind general inflation, internet prices for some speed tiers have recently risen more quickly than other consumer costs.
From June 2022 to June 2024, the Internet price index jumped by around 7.8%, surpassing the 6% increase in the overall Consumer Price Index during the same period, as noted in a new study released by the Technology Policy Institute last Monday.
The TPI study, written by Scott Wallsten and Alice Khayami, identified 2023 as a turning point, marking a departure from the previous trend where internet service prices typically rose at a slower rate than inflation.
“Historically, internet service prices have climbed more slowly than overall inflation, often significantly so. For instance, in 2022, when general inflation reached 9.1%, internet prices increased by just 2.6%,” the study notes.
Prior to that, the Federal Communications Commission reported that internet service prices declined by about 19% in inflation-adjusted terms between 2009 and 2023.
However, from late 2022 to 2024, certain internet plans began to outstrip inflation. While prices for 25 Megabit per second and 100 Mbps plans continued to decrease, the cost of 50 Mbps and, to a lesser extent, 1000 Mbps plans rose compared to 2022.
“Plans offering gigabit downloads have hovered between $105 and $110 per month since around 2018, while other tiers have generally trended downward in price. An exception is plans offering 50 Mbps, where prices increased last year,” the study finds.
Internet affordability has become a pressing issue for policymakers, especially following the recent end of the Affordable Connectivity Program, which provided about 23 million U.S. households with $30 monthly discounts on their internet service. The ACP ran out of funding on May 31.
The TPI study cautioned that “one or two years does not necessarily indicate a permanent change in a trend...Price increases above inflation over the past two years may not be surprising, given that overall inflation was about three times higher than that for internet access from 2021 to 2022.”
The TPI analysis drew from three key data sources to assess the cost of broadband for consumers: the FCC’s Urban Rate Survey, the U.S. Census Bureau of Labor Statistics internet service price index, and the BLS Consumer Expenditures Survey on internet access expenditures.
