Stimulus Not Seen Making Big Dent in Connectivity Gaps
Cable ISPs and connectivity experts told us not to expect federal stimulus spending for broadband to make a huge dent in adoption gaps due to lack of connectivity, though it could reduce the number of people dropping service in the near term due to pocketbook issues. Some see the FCC Emergency Connectivity Fund potentially having longer-term ramifications, and much depends on finalized ECF rules due Monday. Many hope to see a more-permanent version of the emergency broadband benefit program emerge.
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EBB and ECF "sound like a lot of money ... but it can go very quickly," and the programs are designed as having limited life, said ACA Connects President Matt Polka. They likely won't be used for significant further rollout or deployment and are aimed at needs like low-income broadband and remote education, he said. He said EBB needs to be expanded and made permanent to help fill the gaps around voluntary ISP efforts to provide service for poor households.
States and localities channeled a lot of Cares Act funding into broadband access programs such as bulk agreements, in which a library or locality bought broadband access in bulk accounts and then provided those to low-income households, said Angela Siefer, National Digital Inclusion Alliance executive director. EBB and ECF are becoming extensions of what localities did with Cares funding, with a focus on affordability barriers to broadband, Siefer said. Meanwhile, states and localities are increasingly focused on other barriers to adoption such as lack of digital literacy, she said. "Digital navigators" providing information navigating low-cost offers and programs exploded during COVID-19, she said.
Affordability and digital literacy have received less policy attention because the ongoing cost they represent "scares people," Siefer said. "That expense will never go away." The lasting effect of EBB and ECF might be providing resources that give states and localities additional time to create coalitions and consortiums that push for long-term EBB support, Siefer said.
Mediacom plans "to fully participate" in EBB, said Senior Vice President-Government and Public Relations Tom Larsen. He said close to 100 customer care agents are trained on the program. "If existing state programs like Alabama’s ABC for Students program are any indication, I would estimate that 70%-80% of the households participating in the program will be existing broadband customers," he said. With more than twice the money as EBB, ECF has potential "to have a sizable impact if school districts end up implementing some sort of bulk arrangements with broadband providers to cover the households where low-income students live," Larsen said. He said Mediacom has close to 30 bulk billing arrangements with individual local school districts.
CEO Tom Rutledge said Charter Communications is trying to sell states on the money going toward line extensions and products for schools and municipalities. How it ultimately will get allocated and spent by states "is difficult to say," he told analysts last week. Comcast Cable President Dave Watson told analysts the stimulus money could help with churn of nonpaying customers. CEO Dexter Goei said Altice anticipated "some nice uptick" from EBB. MoffettNathanson's Craig Moffett wrote investors that cable ISPs "will enjoy a strong tailwind from federal stimulus," which will help subscriber growth as it helps with affordability concerns for lower income subscribers.
Until finalized ECF rules come out Monday, impact is tough to gauge, said Mark Miller, president of nonprofit E-rate consultancy Learningtech.org. Differences from E-rate is striking, he said. E-rate was largely restricted to school or library campus connectivity, but ECF is specifically for off-campus connectivity for students, teachers and library patrons. Miller said it could be a big help for districts, and ISPs could be very interested in using the funding for building out to new areas. He pointed to potential concerns, such as the draft rules seeming to indicate projects won't be funded if there's any commercially competitive broadband available without taking into account if that existing offering is often grossly inadequate and hugely expensive.
ECF's covering devices, something E-rate never did, as well as covering retroactively to July 1 eligible expenses that haven't been paid for by other government pandemic programs, also could be "a breakthrough," Miller said. "It could be a bust or it could be a game changer," depending on the rules, Miller said.