ISP Market Concentration: How Many Americans Have Only One Choice

Understanding Market Concentration

The Herfindahl-Hirschman Index (HHI) is the standard measure of market concentration used by the Department of Justice and Federal Trade Commission in antitrust analysis. It ranges from 0 (perfect competition) to 10,000 (pure monopoly). The DOJ classifies markets with HHI above 2,500 as “highly concentrated.”

We calculated the HHI for every ZIP code in the United States using FCC BDC provider data. The national average HHI for broadband markets is 4,200 — well into the “highly concentrated” range. For context, the airline industry — frequently criticized for oligopolistic behavior — has a national HHI of approximately 2,800. The broadband market is more concentrated than airlines.

This concentration is not accidental. Broadband infrastructure is a natural monopoly in many markets: the high fixed costs of building a network create barriers to entry that prevent new competitors from challenging incumbents. In cable markets, Xfinity (Comcast) and Spectrum (Charter) together control approximately 65% of all cable broadband subscribers nationwide, with little overlap in their service territories.

Source: DOJ Horizontal Merger Guidelines, 2010

Competition Tiers: What Choice Looks Like

Breaking down the nation by the number of broadband providers available at each address reveals a market where the majority of Americans have limited or no choice:

The data is striking. Americans in monopoly markets pay 49% more ($82 vs. $55) for speeds that are 76% slower (185 Mbps vs. 780 Mbps) compared to Americans in highly competitive markets. This is the direct consumer cost of market concentration: worse service at higher prices, with no recourse because there is no alternative.

It is worth noting that the 15% of Americans in “highly competitive” markets (4+ providers) are overwhelmingly in areas where fiber has been deployed as a competitor to cable. Fiber entry is the single most effective mechanism for introducing real competition, because it offers a genuinely superior product that forces incumbents to compete on both price and quality.

State-by-State Competition Index

Competition levels vary dramatically by state:

New Jersey leads in competition (4.8 providers per address, only 5% monopoly rate) thanks to overlapping cable, fiber, and fixed wireless networks in its densely populated geography. Alaska is the least competitive (1.4 providers, 62% monopoly rate), where extreme geography limits infrastructure deployment.

The correlation between provider count and average price is -0.79 (strong inverse relationship): more providers = lower prices. For detailed competition data on any specific market, explore our Broadband Competition Index.

The Monopoly ZIP Codes

We identified approximately 8,400 ZIP codes where a single provider controls 80% or more of the broadband market (effective monopoly). These are concentrated in:

• Rural South: Large swaths of Mississippi, Alabama, Arkansas, and Louisiana where legacy DSL from AT&T or CenturyLink is the only wired option.
• Appalachia: West Virginia, eastern Kentucky, and southwest Virginia, where terrain makes competitive infrastructure deployment prohibitively expensive.
• Northern Great Plains: The Dakotas, Montana, and rural Nebraska, where population density is too low to support multiple providers.
• Suburban cable enclaves: Even in otherwise competitive metro areas, individual subdivisions and apartment complexes may have exclusive agreements with a single cable provider.

In these ZIP codes, the monopoly provider has no competitive pressure to improve service or lower prices. Our data shows monopoly providers increase rates an average of 5-8% annually, roughly double the rate of increase in competitive markets.

What Creates Competition — and What Does Not

Our analysis identifies the factors most strongly correlated with broadband market competition:

1. Fiber deployment (correlation: 0.82). The strongest driver. Markets where fiber has been deployed as an alternative to cable see the most dramatic improvements in competition, pricing, and speed.
2. Population density (correlation: 0.71). Dense areas support more providers because the economics of infrastructure deployment are more favorable.
3. Fixed wireless entry (correlation: 0.45). T-Mobile and Verizon 5G Home Internet have introduced a third option in many cable monopoly/duopoly markets, but the competitive impact is more modest than fiber because of performance limitations.
4. State/municipal broadband policies (correlation: 0.38). States that permit municipal broadband (like Tennessee and Utah) have measurably more competitive markets than states that restrict it (like North Carolina prior to its 2025 reform).

Methodology

HHI is calculated at the ZIP code level using FCC BDC provider-reported subscriber share estimates, supplemented by address-level availability data. Provider counts exclude satellite-only providers. “Monopoly” is defined as a ZIP code where a single provider has 80%+ market share at the 100/20 Mbps threshold.

State and national averages are population-weighted. Full methodology on our methodology page. Published under CC BY 4.0.

Source: InternetProviders.ai Methodology