Internet providers want federal broadband cash, but ask states to let them say who qualifies for 'low-cost' broadband

The recently signed infrastructure package had $42.5 billion to expand broadband in rural and other underserved areas. To ensure that the money helps lower-income people access broadband, companies that get that funding must offer new customers a low-cost option. "But in a debate that will be played out in statehouses across the country, the broadband industry and consumer advocates are clashing over how states should define 'low-cost'," Kery Murakami reports for Route Fifty.

In general, Republican-led states and internet companies want the money with minimal oversight on how to spend it. In particular, the companies don't want the federal government to dictate how much they should charge for "low-cost" broadband, Murakami reports. It's worth noting that large internet providers often maximize profits by getting federal contracts for rural broadband buildout and then installing the cheapest (and slowest) equipment that meets the federal minimum for broadband speed.

Under the terms of the infrastructure package, "whatever definition states come up with for whether companies’ prices are 'low cost' could be rejected by the Commerce Department’s National Telecommunications and Information Administration as not low enough. NTIA is the agency overseeing the roughly $42 billion available for broadband projects through the law’s Broadband Equity, Access, and Deployment program," Murakami reports. But industry lobbying group NCTA — The Internet & Television Association — "said NTIA should judge companies to be offering a 'low-cost' option if they are giving low-income households a $30 monthly discount through an existing Federal Communications Commission initiative known as the Affordable Connectivity Program."

Consumer advocates reject that reasoning. "They see the 'low-cost' requirement as an opportunity to do exactly what the companies oppose—get the government to force companies to offer inexpensive broadband for low-income customers," Murakami reports. As consumer groups have noted, a study found low-income households may only be able to afford $10 a month for broadband. And since popular broadband plans cost an average of $47.15, even a $30 discount would leave such households unable to afford broadband.

"As a result, groups like Public Knowledge and the National Digital Inclusion Alliance, are urging the NTIA to require broadband companies receiving infrastructure funds to charge low-income customers no more than $30-a-month," Murakami reports. "They would also be required to offer the $30 discount—essentially making access to the internet free for those in need."

Stakeholders are also debating who should qualify for the low-cost plans. Internet lobbying groups believe only those who qualify for the existing $30 federal discount plan should get the low-cost option. That means households whose incomes are under 200% of the federal poverty level ($27,180 for a single adult or $55,940 for a family of four), and those who qualify for other federal aid such as Medicaid, Murakami reports. But even if internet providers build out broadband to rural areas, such families still might not be able to afford the service without a very low-cost or free option; that would undermine the main goal of the funding.