Affordable Broadband Now and Later
Wednesday, April 1, 2020
Affordable Broadband Now and Later
Today, we face a health crisis that makes plain – again – the importance of broadband to all people in America. As Oliva Wein of the National Consumer Law Center explains, “We’re hearing stories of low-income people without broadband at home traveling to healthcare facilities, risking their health and the health of other people, including healthcare workers, with whom they come in contact. If Americans must stay home, then they need broadband at home.”
In pursuit of achieving truly universal broadband service at a time when we know everyone desperately needs to stay connected at home, the Federal Communications Commission should immediately provide $50 per month to low-income households to subsidize fast broadband service during these crises of health and economic dislocation.
But we must also look past this present emergency and think about long-term solutions for our long-standing problems.
The FCC should establish a $10/month subsidy to make fixed-broadband service affordable for low-income Americans. And, as Congress considers funds for broadband deployment, it should require that federally-funded networks offer a low-income broadband service and an affordable $50 service to everyone. Here’s why.
I. The Emergency Lifeline Broadband Subsidy
Last week saw 3.3 million unemployment claims filed – the largest in U.S. history and an order of magnitude higher than earlier in 2020. How bad will it get? The President of the Federal Reserve Bank of St. Louis has predicted that unemployment could reach 30%. That’s higher than the highest annual rate during the Great Depression: 24.9% in 1933, the year when Franklin Roosevelt became president.
Prices for standalone broadband have been going up, as The Wall Street Journal reported last year, and the number of people with jobs is coming down. That’s why over 252 public-minded groups -- including healthcare organizations, public-interest groups, and labor unions -- called upon the FCC to create, right now, an emergency Lifeline broadband benefit to subsidize robust speeds (and citing the Benton Institute’s Broadband for America’s Future: A Vision for the 2020s).
$50 should allow low-income families to purchase fixed broadband. It’s about what urban customers pay to get baseline broadband. It is needed now as we watch the costs of economic dislocation rise day by day.
II. The Long-term Solution for Low-Income People
Looking forward, after the health crisis passes, low-income people will need on-going support to get and keep broadband service. In 2016, the FCC took a major step forward by including fixed broadband in its Lifeline program for the first time. And yet, 90 percent of Lifeline is used to obtain mobile services today. Being connected while on the go makes sense but when it comes to fixed broadband, we’re basically asking people to make impossible choices.
Consider the circumstances of low-income people, say, a family of four, with an annual income of no more than $26,200. That's hard to live on but they still have the demands of modern-day life: rent, food, medical, transportation, clothes, electricity, heat, and, of course, telecommunications. Every dollar counts for this family.
The research reviewed in Broadband for America’s Future: A Vision for the 2020s suggests that low-income people can only afford to pay about $10 per month for broadband. Nine focus groups of low-income residents in Kansas and Maine showed that many would subscribe at $10 per month. That followed a Benton report published in 2015, which similarly suggests that $10 per month would be broadly affordable.
So, going forward, Congress or the FCC should create a fixed-broadband program that delivers connectivity that is affordable by low-income people. With the time to put the permanent program in place, Congress (or the FCC) can ensure that specially-designed offerings meet the needs of participants. Congress can boost the availability of broadband by also:
- Requiring that federally-funded networks become Lifeline providers and offer service to low-income consumers, and
- Ensuring that Lifeline has the legal authority to subsidize broadband service.
III. The Obligations of Federally-Funded Networks
The emergency $50/month and Lifeline expansion are important steps but, as the federal government funds the construction of broadband to people who lack it, there is another important action that Congress should take. As part of any funding of the construction of new networks, Congress should require that any federally-funded network must provide a $10 low-cost option for eligible low-income individuals and a $50 option available to any residential user of the network. (Benton suggests 50/50 Mbps with unlimited capacity at $50/month; or at least the highest available speed.)
Commissioner Geoffrey Starks has voiced support for the low-income obligation; proposing “that we require rural broadband auction winners to offer an affordable broadband service option.” As he said, “[w]e know that several providers already offer low-cost internet service for around $10 to $15 per month or less to qualifying families.”
Of course, the best way to keep prices down is to promote competition – and Benton’s report lays out a number of steps to accomplish that. But federally-funded networks are most likely to be built in areas where the returns on private investment have been too low to attract network providers. And so, the prospect of a second network being built with private capital to compete with a robust federally-funded fixed network is, at a minimum, uncertain.
Federal dollars should ensure people can connect even if there is no competition in places where these new networks are built. The $10 and $50 service options would provide protection that the new users of these new networks will very much need.
 HighSpeedInternet.Com found that the average advertised package for standalone internet service in the United States is around $50 per month during the initial promotional offer. https://www.highspeedinternet.com/resources/how-much-should-i-be-paying-for-high-speed-internet-resource. See also, Inti Pacheco and Shalini Ramachandran, “Do You Pay Too Much for Internet Service? See How Your Bill Compares,” Wall Street Journal, December 24, 2019, (With “Comcast, monthly internet cost ranged from $45 to $155 for stand-alone customers buying its most popular speed in our sample, 150 Mbps. Cable rival Charter Communications Inc., which sells its services under the Spectrum brand, also had a variety of prices for its most popular speed in our sample, which was 100 Mbps. The monthly internet cost ranged from $40 to $92.” Also, the WSJ found that urban customers could on average get 25 Mbps for a media monthly cost of $47.). Broadband Now also found that $50 is the median lowest price for all five of the top five most densely populated area deciles, id., reflecting its commonality across America. (However, by July of 2019, Broadband Now also found that only 11.9% of the population had access to a plan at $50 or less, https://broadbandnow.com/research/q2-broadband-report-2019, suggesting that the existence of this low cost plan was vanishing.)
The Benton Institute for Broadband & Society is a non-profit organization dedicated to ensuring that all people in the U.S. have access to competitive, High-Performance Broadband regardless of where they live or who they are. We believe communication policy - rooted in the values of access, equity, and diversity - has the power to deliver new opportunities and strengthen communities.
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