"Access to affordable, reliable, high-speed broadband is essential to full participation in modern life in the United States."

—Infrastructure Investment and Jobs Act

The Broadband Equity, Access, and Deployment (BEAD) Program—established by Congress in the Infrastructure Investment and Jobs Act—gives priority to projects that will result in broadband internet access service being offered in areas where service wasn't available before. Given that federal funds will provide roughly 75 percent of the costs to deploy these networks,¹ the chances that competing networks will be built at any time in the foreseeable future are very slim. Absent any market forces to check price increases, what guarantee do taxpayers have that the networks they are funding will offer services they can afford?

States, Puerto Rico, the District of Columbia, and U.S. territories (known collectively in BEAD as "Eligible Entities") are in the process of winning approval of their "Initial Proposals," a prerequisite for receiving the BEAD funding. Initial Proposals describe the competitive processes the Eligible Entities propose to use to select subgrantees to construct broadband projects. Initial Proposals must describe how Eligible Entities will ensure that every resident has access to a reliable, affordable, high-speed broadband connection.

In the Infrastructure Investment and Jobs Act, Congress mandated that BEAD subgrantees—the providers who receive support to deploy and upgrade broadband infrastructure—each offer at least one low-cost broadband service option. Each Eligible Entity must consult with the National Telecommunications and Information Administration (NTIA) and prospective subgrantees regarding a proposed definition of the term “low-cost broadband service option.”

NTIA's Model Low-Cost Broadband Service Option

NTIA proposed that low-cost broadband service options meet six criteria:

1. Costs $30 per month or less, inclusive of all taxes, fees, and charges if the subscriber does not reside on Tribal Lands, or $75 per month or less, inclusive of all taxes, fees, and charges if the subscriber resides on Tribal Lands, with no additional non-recurring costs or fees to the consumer;
2. Allows the end user to apply the Affordable Connectivity Program (ACP) subsidy to the service price;
3. Provides the greater of (a) typical download speeds of at least 100 Mbps and typical upload speeds of at least 20 Mbps, or the fastest speeds the infrastructure is capable of if less than 100 Mbps/20 Mbps or (b) any subsequent performance benchmark for fixed terrestrial broadband service established by the Federal Communications Commission;
4. Provides typical latency measurements of no more than 100 milliseconds;
5. Is not subject to data caps, surcharges, or usage-based throttling, and is subject only to the same acceptable use policies to which subscribers to all other broadband internet access service plans offered to home subscribers by the participating subgrantee must adhere; and
6. In the event the provider later offers a low-cost plan with higher speeds downstream and/or upstream, permits Eligible Subscribers that are subscribed to a low-cost broadband service option to upgrade to the new low-cost offering at no cost.

Over the past few months, the Benton Institute for Broadband & Society has been reviewing states' low-income plans. Here's what we've noticed.

States Agree that the Cost of Broadband is a Barrier to Adoption

Most states recognize that the monthly cost of broadband service is a barrier to broadband adoption for many households. Here are some examples.

District of Columbia—Eliminating the digital divide requires focus on both access and affordability.

Hawai'i—Affordability is a key factor in broadband adoption among income-constrained and low-income individuals in several covered populations in Hawai'i.

Kentucky—The cost of a broadband subscription is a barrier to broadband adoption in Kentucky.

Louisiana—Approximately two-thirds (64%) of unconnected Louisianians say that the cost of broadband internet is the reason they do not have it.

Maine—First and foremost, these services must be affordable to all Mainers.

Massachusetts—High internet subscription costs are the largest identified barrier that prevents Massachusetts residents from having broadband at home.

Montana—For Montanans, affordability is a main hurdle preventing access to high-speed internet.

Nevada—Nevada's universal access mandate can only be achieved when the internet services offered to consumers are affordable and desirable.

Utah—One key reason for Utahns not subscribing to broadband service is affordability.

Most States Adopt $30* Per Month Target

Benton has reviewed the affordability plans of over 20 states. While most ask ISPs to offer 100 Mbps download and 20 Mbps service for $30 per month, many also include exceptions that would allow ISPs to charge more.² 

• BEAD-funded networks in urban areas of Utah will be able to charge up to $30/month for 100/20 service. In rural areas, BEAD-supported ISPs can charge $60/month.
• Arizona, Colorado, Delaware, Hawai'i, Kentucky, Louisiana, and Maine will consider low-cost plans offering service for up to $65 or $70/month.
• Pennsylvania, Nevada, West Virginia, and Indiana will approve low-cost plans of up to $50/month. Montana's low-cost plan is $70/month but this price will be re-evaluated annually.

Eight of the 15 states targeting $30/month low-cost plans will allow ISPs to charge more—if the subgrantee can demonstrate why it cannot provide service at that price. NTIA and state broadband offices are trying to balance affordability with a recognition that small and rural networks in areas with low population density or small service areas have fewer customers to support capital expenditures—even when BEAD is providing most of that capital—and may charge higher monthly fees than providers with higher subscriber counts and density in order to be financially sustainable.

In Louisiana and Kentucky, per-subscriber costs in an area indicating that the target effective rate would be financially unsustainable; and/or the impact on average revenue per user (ARPU) and total project revenue of the target effective rate of $30/month would be financially unsustainable given actual or projected subscriber adoption patterns.

In Delaware, 1) how the proposed rate is affordable to low-income Delawareans, 2) per-subscriber costs in an area indicating that the target effective rate of $30/month would be financially unsustainable; and 3) the impact on average revenue per user (ARPU) and total project revenue of the target effective rate of $30/month would be financially unsustainable given actual or projected subscriber adoption patterns. 

In Colorado and Arizona, subgrantees can charge up to $50/month if they can meet the following criteria:

• Justification for the Waiver—Clearly articulate the specific reasons for requesting a waiver and explain the necessity or benefit of granting the waiver.
• Legal and Regulatory Compliance—Ensure that the request aligns with applicable laws, regulations, and policies.
• Demonstrated Need—Provide evidence of a genuine need for the waiver, such as data, research, or assessments that support the request.
• Public Interest and Benefit—Describe the public interest or community benefit that will result from granting the waiver. Explain how the waiver aligns with broader policy goals or societal needs.
• Cost-Benefit Analysis—Conduct a cost-benefit analysis to demonstrate that the benefits of granting the waiver outweigh any potential drawbacks.

In Hawai'i, a subgrantee must provide evidence that its proposed price in excess of the $30/month threshold is based on actual operational costs, that include necessary costs related to common infrastructure across its service area contained within the state of Hawai'i, and that the documented costs cause it to operate at an unsustainable loss. Consistent with already existing and historical practices in Hawaiʻi, any of the provider's proposed rates must be the same across any of its service areas within the State of Hawaiʻi, i.e. the provider will not be permitted to charge a higher differential rate to less desirable service locations for its low-cost service option. Any such low-cost service option price in excess of the $30/month threshold is subject to approval and acceptance by the State. Providers may decrease costs to consumers and provide discounted offerings at any time, without requesting approval from the State

An ACP-Sized Hole in Low-Cost Plans

Per BEAD guidelines, states planned to require BEAD subgrantees to participate in the Federal Communications Commission's Affordable Connectivity Program and allow ACP enrollees to apply the benefit towards their monthly bill. On networks that hit the $30/month target, that would have meant that any household making less than 200 percent of the Federal Poverty Level would have been able to get 100/20 service at no cost. On these networks, affordability, perhaps the #1 barrier to broadband adoption, would have been addressed. 

However, due to a lack of additional funding from Congress, ACP ended earlier this year. Effective June 1, 2024, households will no longer receive an ACP discount. Chances remain slim that Congress will address ACP funding in 2024 and there is no telling what the priorities of the next Congress—and the next Administration—will be prior to the 2024 elections. 

This means that the lowest-income households will have to consider cost before subscribing to broadband services. 

Additionally, many states planned to rely on ACP eligibility to determine which households will qualify for low-cost options. It remains unclear how households will demonstrate their eligibility based on income. Households might be able to demonstrate their participation in certain other federal assistance programs—think SNAP, Medicaid, Federal Public Housing Assistance, SSI, WIC, Lifeline—but states will have to figure out new ways for ISPs to verify that participation. Rather than one central system to verify eligibility, the U.S. could end up with 50+ separate procedures to check if customers are eligible for low-cost plans.

BEAD-supported ISPs will be required to carry out public awareness campaigns in their service areas that are designed to highlight the value and benefits of broadband service in order to increase the adoption of broadband service by consumers. Awareness campaigns must include information about low-cost service plans and any federal subsidies for low-income households such as the Lifeline Program, the ACP (if Congress refunds it), and any successor programs (if Congress establishes any). Subgrantees must utilize a variety of communications media (e.g., online, print, radio) and provide information in languages other than English when warranted based on the demographics of the community. 

ISPs that participated in ACP were also required to publicize the availability of the program in a manner reasonably designed to reach those consumers likely to qualify and in a manner that is accessible to individuals with disabilities. To comply with these requirements, service providers were to utilize outreach materials and methods designed to reach eligible households that do not currently receive broadband internet access service. 

BEAD and Non-BEAD Networks

Neither NTIA nor state broadband offices have any regulatory authority over broadband networks built without public support. However, a number of states are encouraging—but not requiring—BEAD-supported operators to adopt low-cost plans on their non-BEAD networks.

The Washington State Broadband Office strongly encourages the low-cost broadband service option to be available to all eligible prospective customers across the subgrantee’s service territory.

In West Virginia, BEAD applicants are encouraged, but not required, to provide the same low-cost plans to their existing broadband deployments not associated with the BEAD program.

The Maine Connectivity Authority expects that ISPs will make their affordable broadband service option available to all potential customers across their service territories. However, at a minimum, this service option must be available to locations within the awarded BEAD Project Service Areas.

The Kentucky Office of Broadband Development will require ISPs that have their own low-cost service plans on non-BEAD networks in the state to make those plans available to all eligible locations within the awarded project areas under the BEAD program.

Notes

1. In very high-cost areas, the 25 percent matching requirement may be waived. And projects that pledge greater than 25 percent matches will be given priority.
2. States have adopted NTIA's model and are requiring the monthly charge to be inclusive of all taxes, fees, and charges with no additional non-recurring costs or fees to the consumer. Montana exempts taxes and fees "that may be imposed by the government."

More in this Series

• Louisiana's Plan for Affordable Broadband
• Pennsylvania's Plan for Affordable Broadband
• Washington State's Plan for Affordable Broadband
• The Kansas Affordability Plan
• Affordable Broadband for Nevada
• Will BEAD Networks Deliver Affordable Broadband for All in West Virginia?
• Delaware Wants to be the First State to Achieve Universal Broadband—Affordability is a Key Component
• Eliminating the Digital Divide in the District of Columbia Requires a Focus on Affordability
• A Plan to Bridge the Digital Divide in Colorado
• Ensuring All Hoosiers Have Reliable and Affordable Broadband
• Increasing Broadband Availability, Accessibility, and Affordability for the Benefit of All Utahns
• The Connection Between Affordability and Internet Adoption in Oregon
• Connecticut Working to Ensure Universal Broadband Availability, Affordability, and Accessibility
• How Maryland is Working to Make Broadband More Affordable
• Arizona Aims to Make the "6th C" More Affordable
• Illinois Committed to Changing the Broadband Affordability Picture
• Broadband Affordability is First and Foremost in Maine
• Universal Access to Affordable, Reliable Broadband in Kentucky
• Hawai'i is Working to Connect All to Affordable Broadband
• Equitable Access to Affordable Broadband in Wisconsin
• Connecting Massachusetts with Affordable Broadband
• Montana's Data-Driven Affordability Plans

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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Benton Institute
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