Internet may become more expensive for millions of low-income families
- Sixteen million US households rely on federal broadband subsidies to keep Internet access within their budgets.
- The current subsidy is expected to run out of funding next year, and unless it is renewed by Congress, all enrolled households could lose affordable broadband.
- February marked two years since the debut of the Emergency Broadband Benefit, the first of two pandemic-era broadband subsidies.
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Over the past two years, millions of low-income US households have received broadband Internet at a discount through two successive government programs.
But they may soon lose that benefit. More than 16 million US households are currently registered in the federal government’s Affordable Communications Program, or ACP, which offers a $30 rebate on broadband service to qualified low-income households. Its funding is expected to run out next year.
“In 2024, or when the money runs out, the program could be completely scrapped,” said Nicole Turner Lee, director of the Brookings Institution’s Center for Technology Innovation. “Millions of people could be left in the dark without broadband for the same reasons they didn’t have it in the first place.”
The Emergency Broadband Benefit, or EBB, approved by then-President Donald Trump in late 2020 and launched in February 2021, provided a $50 subsidy. About 9 million households were covered. In December 2021, under President Joe Biden, the ACP replaced the Trump-era program.
A third signed the plan competent households. That’s considered an achievement, says Ken Garnett, chief strategy officer Cal.net:a small Internet service provider serving the rural interior of California.
To be eligible, the household must have an income of no more than 200% of the federal poverty guidelines, or the person must receive other government assistance, such as a Pell Grant or food stamps.
The Biden administration drive the expansion of broadband access as part of his infrastructure bill, recognizing Americans’ reliance on home networks, especially earlier in the pandemic, as well as the digital divide that exists in both urban and rural areas.
According to Open Vault, which tracks monthly cable broadband usage, home broadband use spiked in the earlier days of the pandemic. It remains elevated compared to pre-pandemic levels as Americans return to work on hybrid schedules.
The Infrastructure Act provided $14.2 billion, with the remaining funds transferred from EBB to ACP. As of January, about $6.1 billion of the funds were claimed by broadband providers as compensation for discounts on their services and products. Analysts and industry insiders At the current rate of customer acquisition, which some estimates put at 100,000 to 200,000 households per week, the rest of the money is predicted to dry up in 2024.
The survey was shared with CNBC Institute for Digital AdvancementThe bipartisan political research organization found that voters on both sides of the aisle overwhelmingly support the continuation of the ACP. Of 1,000 voters polled in January, 64% of Republicans supported it, 95% of Democrats and 70% of independents.
Congress must decide whether to re-fund the program. One of the decisive factors will be the effectiveness of the programs of the last two years.
Terry Dean, a 67-year-old retiree in the southeastern United States, said the plans made fixed-income broadband more feasible.
“I could afford the $50, but I’m on a fixed budget, like a lot of older people. This helps,” Dean said. He switched to the Spectrum plan for $29.99 a month, which is fully covered by ACP.
Keaton Bishop-Marks, a 27-year-old software developer in North Carolina, began using the ACP benefit in 2022. He said that while he could manage his broadband bills, the costs were becoming a little “exorbitant”, especially as the price has risen over the years. “I’m very much an Internet citizen, so it might be a gas bill for me, and paying less is helpful,” Bishop-Marks said.
However, two-thirds of the eligible population remains unregistered.
For some, the process registrationthat requires submitting personal information online, by mail, or over the phone with an Internet service provider feels too burdensome or invasive.
“Many low-income people from rural areas have a significant reluctance to provide personal information to government agencies, which is one of the eligibility requirements,” says Cal.net’s Garnett.
It is also likely that many eligible consumers do not know about ACP.
Dean said she discovered both EBB and ACP by following the news and called the providers to collect the benefits, while Bishop-Marx was alerted by the state in an email notification.
Although ACP is a public program aimed at consumers, private Internet companies can benefit by investing advertising dollars to promote it and attract new members.
Last year, Cox Communications spent $25 million on awareness campaigns and partnerships with local organizations to help educate customers about ACP, according to Ilene Albert, who heads the company’s digital equity and accessibility division. Some don’t realize they’re eligible, Albert said, because more people qualify for ACP than EBB.
During the 2021 earnings call, Charter Communications’ now-CEO Chris Winfrey, who was CFO at the time, said there were “a lot of people who were in the wireless replacement before or had access issues… [T]Through the things we did in partnership with the federal government, we were able to get them to proper broadband. And we benefited from that last year.”
Comcast has partnered with thousands of “digital navigators,” community organizations that guide customers through their broadband options, to expand digital literacy in underserved areas.
Although the ACP has made progress in making broadband more affordable, it remains to be seen whether Congress will renew it when funding runs out, especially since 2024 is an election year and Congress is currently divided.
Some are not worried.
“Unfortunately, I’ve been alive long enough to know that once the government starts paying for something, they usually end up paying for it forever,” Dean said. “In the scheme of things, the ACP program is a drop in the bucket. I’m sure there are senators and representatives in the House who will fight for this when the money is about to run out.”
Others are less sure.
“There are companies that will make investment decisions on the basis that ACP will last forever, which really makes me nervous,” said Alan Fitzpatrick, CEO of Open Broadband, a small North Carolina-based Internet service provider. “I’m not going to spend on it.”
Fitzpatrick said only about 1% of Open Broadband’s customer base is covered by ACP.
Before the subsidy, many providers offered cheaper plans for low-income customers. Comcast, Cox and Charter have all been investing in broadband expansion initiatives for a decade, assuming their efforts are not dependent on ACP continuing.
For example, providers often compete for funding for broadband, equity, access and deployment, or the BEAD program and other grants that sponsor the development of broadband coverage in underserved, often rural, areas. BEAD is funded and administered by the Department of Commerce and the National Telecommunications and Information Administration.
However, many consumers are more dependent on ACP than ever as inflation has squeezed their wallets.
A Charter executive said in early 2022 that while customers were already dealing with higher prices for groceries and other staples, government subsidies were part of why the company believed it was still in a good position.
If ACP goes away, eligible consumers will still have access to the FCC’s Lifeline Support program. The program provides a $9.25 discount on broadband services, which is common for mobile users.
But without ACP, customers can skip monthly bills, trade in lower rates, or reduce their monthly service altogether.
“What we’ve done has at least affected a percentage of people, even if it’s small, who couldn’t decide whether they were going to eat that night or send their child to an online education,” said Turner Lee. Brookings. “I don’t think we’ll see the full benefit for the next two to three years.”
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