Paying for Low-income Broadband

Digital inclusion advocates for years have been looking for ways to help low-income households connect to the Internet.

The only federal program to do has been the Lifeline program that is part of the FCC’s Universal Service Fund. This fund has been allowing a $9.25 discount for either voice or broadband (only one discount per household). The discount might have felt substantial when first created in 1984, but with inflation, this discount doesn’t make a big difference in a cable company broadband bill that can easily cost $90 today. To make the program even weaker, large telcos like AT&T have opted out of this program in every state where regulators have allowed it.

The only other material option before now has been Comcast’s Internet Essentials program that provides curtailed bandwidth to low-income households for a low price. The program was started in 2011 as one of the terms to allow Comcast to purchase Time Warner Cable. The program started in 2011 by offering a 1.5 Mbps download for $9.95 per month. The speed has been increased many times since 2011 and recently was increased to 50/5 Mbps. Comcast downplayed the program for years, but eventually embraced it and was providing the service to over 8 million homes by the beginning of the pandemic.

The Federal government is back in the game and has provided $3.2 billion of low-income broadband support in the Emergency Broadband Benefit (EBB) program that was funded as part of the $1.9 trillion American Rescue Plan Act. This program provides up to $50 per month to cover broadband bills for qualified low-income homes. The main problem with this subsidy is that it has a finite end and will cease when the fund runs out of money. We’ve also seen this program be misused when Verizon required customers to upgrade to faster broadband to get the discount.

Another attempt to get low-income broadband into homes comes from the New York Legislature that has passed a bill that requires ISPs to provide a low-income connection to qualifying homes for $15 to $20 per month. This bill is being challenged in court.

So where do we go from here? Comcast recently committed to continuing the Internet Essential program for 10 more years. That’s going to benefit families in cities where Comcast provides service.

The FCC’s Universal Service Fund needs a majorly revamped funding mechanism because it’s now funded with a 30% and growing levy on Interstate telecommunications service. It’s becoming clear that this is not sustainable. Additionally, the $9.25 discount does not make broadband affordable for low-income homes.

It won’t take long to use up the new EBB fund at $50 per household per month. The fund will last six months to help 10 million homes or a year to help 5 million. This can only become permanent if Congress decides to embrace it as a needed solution, and Congress has not been forthcoming in establishing permanent subsidy programs. It could be extended, but in the long run, this is the kind of program that will always be on the chopping block with a change in administration. This program also worries me when I contemplate millions of homes losing a new broadband connection after the funding runs dry.

The New York law is not the right answer. While it may feel satisfying to force all ISPs to follow the Comcast lead and offer a low-cost broadband alternative, such a requirement could devastate smaller ISPs and could easily put them out of business. If a law like this remains in effect, we’re going to see extreme redlining as ISPs bypass low-income neighborhoods. In the long run, if this law applied to all ISPs, we might eventually see poor neighborhoods with no ISP choices.

There is no easy solution. It should be clear to everybody that the country is better off if all homes are connected. We know definitively that lack of home broadband has a direct negative impact on school achievement. Unfortunately, none of these solutions feel like the permanent answer. The best solution is being offered by Comcast, but other big ISPs haven’t voluntarily stepped up in the same way. This is a blog that doesn’t suggest a solution as a closing punchline. There is no clean universal solution if coerced low rates won’t work, and if big ISPs don’t instead step up to the plate. That leaves only government subsidies, and I don’t think anybody trusts those to be permanent.

2 thoughts on “Paying for Low-income Broadband

  1. Wouldn’t part of the solution at least be expanding the USF levy to broadband services? It’s an astounding sign of the regulatory capture of the FCC that this didn’t happen years ago.

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