The Effect of Net Neutrality Rules on the Cost and Availability of High-Speed Internet Service to Urban and Rural Consumers

Many have debated the implications of classifying internet service providers (ISPs) as common carriers (“net neutrality”). In this paper, we examine the effect of net neutrality rules on ISP investment in broadband internet. Using a difference-in-differences approach, we compare outcomes for 10 states that retained state-level net neutrality rules following the Federal Communications Commission’s national repeal of net neutrality rules in 2018. We find that the number of ISPs increased more in states without net neutrality regulations. Internet speeds improved faster for urban consumers (16 percent increase) in states without net neutrality, but rural consumers experienced the opposite effect (11 percent decrease). Average monthly broadband prices for urban consumers decreased less in states that repealed net neutrality, with an estimated treatment effect of approximately 10 percent for urban consumers in states without net neutrality rules. This estimated price difference disappears, however, when adjusted for internet speed. Our findings highlight differences in effects for urban and rural communities