Creating an Affordability Agenda
Thursday, January 23, 2020
Creating an Affordability Agenda
Cost is the primary reason that people do not subscribe to broadband. Current research suggests that low-income people can only afford to pay about $10 per month for broadband. One set of participants told researchers that affording $20 per month would be difficult; even at $10-15/month, low-income households are making tough decisions about paying for internet access vs utility bills (such as phone and electricity) and even the cost of food.
To meet the challenge of providing fixed broadband at roughly $10 per month requires implementation of a variety of strategies. Here are seven ways governments can tackle the affordability challenge.
1. Spur Competition
Competition remains the most powerful tool for ensuring that everyone in America has access to affordable broadband. Competition reduces prices, enhances service quality, and incentivizes innovation. Competition principles are, therefore, critical for making broadband affordable to more people in the United States.
Communities across the nation are experimenting with a variety of strategies to promote competition. They range from work with rural electric cooperatives and municipal electric utilities to the provision of access to middle-mile facilities, which allow private companies to build their own “last mile” access to customers, to the build-out of fiber to residences that supports an open-access model of internet-access competition. Successful efforts will help make broadband more affordable and thereby unleash suppressed demand for broadband services.
2. Protect and Strengthen the Lifeline Program
Another way to make a product or service more affordable is to lower its costs by subsidizing it directly. In 2016, the Federal Communications Commission expanded its Lifeline program, which traditionally provided qualifying low-income Americans with subsidized telephone service, to include both fixed and mobile broadband. But 90% of Lifeline participants use mobile services.
These days both mobility and robust home connections are important. So Congress and the FCC should consider an expansion of the program to provide the subsidies needed to make better broadband affordable for low-income households. Congress and the FCC should consider whether the problem of affordability for some Americans is so serious that Lifeline should be supplemented with additional support for robust, fixed broadband. In considering the issue, Congress and the FCC should consider the extent to which public resources are needed in light of private broadband providers’ efforts, and, if so, under what circumstances.
In addition, in order to make Lifeline service more accessible, more entities, including community anchor institutions, should be allowed to provide Lifeline services. Multiple Lifeline Broadband Providers offering competing services to low-income consumers should lead to more robust service offered at better prices.
3. Provide Assistance to Broadband Providers’ Low-Income Programs
Private broadband providers recognize the difficulty low-income families have affording service. Some—such as Frontier Communications, CenturyLink, RCN, and Windstream—participate directly in the Lifeline program. Some services offered by private providers, separate from Lifeline, are targeted toward families who have qualified for other public assistance programs. Most of these private offerings do not provide service performance sufficient to qualify as broadband under the current FCC standard of 25/3 Mbps.
An important question is whether private service providers could expand their low-income programs if it were easier to ascertain who is eligible for discounted prices—a process that has been described as time-consuming. Governments, through actions like the automated electronic eligibility verification process established for Lifeline, should help lower providers’ costs for offering these services by enabling them to use governmental verification systems.
4. Require Affordable Tiers of Broadband Service When Supporting Deployment
Governments should require broadband providers that receive public funding to provide a minimum service tier with guaranteed low pricing over government-funded networks. The FCC and Congress should consider, as a requirement of funding for broadband deployment, the provision of 50/50 Mbps service (with other requisite performance criteria including unlimited usage) for $10 per month to eligible recipients.
5. Educate and Protect Consumers
Another barrier to Lifeline participation has been lack of awareness of the program. More broadly, access to transparent program and pricing information helps consumers make informed choices.
Consumer protection is important for those on the economic edge who may be tempted to buy service plans that are beyond their economic means—making it harder for them to subscribe to broadband service in the future. According to the Federal Bureau of Consumer Financial Protection, consumer debt for telecommunications services, which includes internet access, ranked third behind only credit-card and medical debts, accounting for 20 percent of debt-collection revenue.
Consumers need the tools to understand the nature of introductory pricing, termination fees, and the relative costs of options that come alongside broadband, such as the ability to use over-the-air television in place of a cable TV service.
The right approach is to restore the Fixed Broadband Consumer Disclosure Label adopted by the FCC in 2016 and then rescinded by the FCC in 2017.
6. Support Programs That Make Low-Cost Computing Devices Available
The availability of low-cost or free computers is often just as important as access to low-cost or free Internet options. A number of nonprofits around the country are providing them. Governments should support these efforts; they are, for example, an obvious source for computers that can be refurbished.
7. Provide Access Via Community Anchor Institutions
Community anchor institutions—including schools, libraries, and hospitals—help connect unconnected people in the United States. In the context of affordability, it is worth noting the efforts of, for example, libraries in a number of cities and towns across the nation that have been experimenting with mobile wireless hotspot programs, which allow people to “check out” broadband hotspots for home use. Of course, other anchor institutions can play similar roles; schools can extend broadband access to K-12 students to access the broadband they need to complete schoolwork after hours.
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Jonathan Sallet is a Benton Senior Fellow. He works to promote broadband access and deployment, to advance competition, including through antitrust, and to preserve and protect internet openness. He is the former-Federal Communications Commission General Counsel (2013-2016), and Deputy Assistant Attorney General for Litigation, Antitrust Division, US Department of Justice (2016-2017).
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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