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Are AT&T and Verizon fleecing rural America?

$60 a month for 10 Mbps DSL broadband? That’s the same price AT&T charges for its 50 Mbps U-verse service.

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon
4 min read
Digital Subscriber Line
Thomas Trutschel

Talk about unfair. Millions of broadband customers in rural and underserved urban markets are paying nearly identical prices for slower DSL service as customers who have access to high-speed fiber services.

That's the conclusion from a report published this week by the National Digital Inclusion Alliance (NDIA), which advocates for more equitable broadband deployment.

In places where AT&T and Verizon don't offer their high-speed fiber-based broadband, they continue to sell customers slower-speed DSL service. But recently, the companies have been eliminating lower-tier plans, which has resulted in higher prices for the base cost of service. But in areas where the networks haven't been upgraded, like rural regions of the country or low-income urban markets, this means customers are paying more for slower service.

Take AT&T as an example. The company is charging $60 a month for DSL with speeds ranging between 6 and 10Mbps, according to the white paper. This is the same price, after the first year discounts end, that AT&T charges its U-verse broadband customers, who get download speeds between 50Mbps and 75Mbps.

Verizon's pricing is similar. It charges $65 a month for 100Mbps Fios service, and about $63 a month for DSL service, which tops out at between 1.5Mbps and 15Mbps.

NDIA argues that AT&T and Verizon have been eliminating their cheaper rate tiers and leaving the midrange price point. But they haven't upgraded the DSL networks and have left the speeds of those services low.

"Each company now charges essentially identical monthly prices -- $63-$65 a month after first-year discounts have ended -- for home wireline broadband connections at almost any speed up to 100/100 Mbps fiber service," the white paper said.

Telecoms: 'We aren't ignoring rural America'

AT&T said in a statement that the results of this study are misleading.

"Attempting to assess internet service offerings by only looking at standard rates does not give a complete picture; the internet service market is more competitive than ever and most customers make their purchases at bundled and discounted rates," the company said in a statement.

The company says it hasn't eliminated speed tiers but instead has "simplified" its pricing with an "entry level price point that's remained relatively constant while the speed offered has increased."

It also notes that DSL is generally more expensive to maintain. And because this service is typically offered in areas where there isn't enough population density to justify the cost of a fiber-based service, there are fewer customers, which increases the cost per customer.

A Verizon spokesman agreed. 

"In terms of pricing, rural areas are challenging in that there's higher costs involved in providing and maintaining DSL and it isn't always feasible to build fiber to the home," said Raymond McConville, a Verizon spokesman. "Our products are priced competitively in all of our markets."

Verizon also disagrees with the assertion that the company is not investing in DSL upgrades in rural markets. In January, it announced it would deploy fiber to over 15,000 homes in rural upstate New York. Last week, New York state announced Verizon would deploy fiber to another 50,000 homes. Verizon has also brought its Fios fiber service to several new towns in southern New Jersey, including some areas that had limited or no broadband access, McConville added. 

"In the areas where we haven't brought fiber, we continue investing to maintain and improve the performance of the DSL network," he said. "It wasn't that long ago that speeds topped out at only a few Mbps -- now we reach 15 Mbps in some areas thanks to our investment in the network."

New technologies like 5G wireless could also be game-changing for delivering high-speed broadband to rural areas where deploying fiber is not feasible, he added. 

The problem persists

Still, the report comes as policy makers take a closer look at broadband access and the digital divide that exists between urban and suburban markets and rural America. Nearly 24 million Americans do not have access to broadband with download speeds of at least 25 Mbps and uploads of 3 Mbps, according to the Federal Communications Commission.

A large majority of these unconnected or underconnected Americans live in rural areas where it's expensive to build infrastructure and deliver service. The situation also happens to be in parts of the country where there's little if any competition. And that seems to be a better predictor of whether the networks have been upgraded to higher speeds.

A report published earlier this week by the Institute for Local Self-Reliance, a public interest nonprofit, shows that big cable and telecommunications companies have invested most heavily in network upgrades in areas where they face competition. Meanwhile, in markets where no competition exists, network speeds lag.

"Efforts to increase investment from the largest firms in more rural areas have largely failed," the report said. "Though states have varied regulations, the same trend results in every state -- investment by the large ISPs is correlated to competition rather than the regulatory environment."

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First published Aug. 2, 3:44 p.m. PT.
Update, Aug. 3 at 8:32 a.m.: Adds comments and information from Verizon.

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