The News: The FCC addresses the digital divide with a newly approved emergency subsidy for low-income households that will allow them to get high-speed internet. Read more at The Hill.
FCC’s Emergency Broadband Benefit Program Addresses Digital Divide with $50 Monthly Internet Subsidy — Sort Of
Analyst Take: The FCC’s internet subsidy program, the Emergency Broadband Benefit Program, was adopted on February 25, 2021 and will allow $50 credits to qualifying low-income families that can be applied to their monthly internet bills through their internet providers. This replaces the $9.25 per month that low-income families were previously able to receive in a federal subsidy program aimed at broadband access — and is a much more realistic adjustment, especially considering the average broadband bill in the US is about $68.
In addition to the $50 credits to qualifying low income families, the program also allows families living on Tribal lands to receive $75 per month, along with a one-time discount of up to $100 on the purchase of a tablet or computer.
The Emergency Broadband Benefit Program was intended to address the disruptions of many American lives caused by the COVID-19 pandemic, including the closure of businesses and schools, leading to remote work and distance learning. This program is a much-needed effort and intended to directly address the digital divide that has always existed, but which has been exacerbated as we have and do collectively navigate a global pandemic.
Eligible families include those who are currently on Medicaid, receiving SNAP benefits, who have received a Pell grant, or who have become unemployed during the pandemic. In a study published about a year ago by broadband availability tracking firm Broadband Now, it was estimated that more than 42 million Americans lack access to broadband, and that some 50% of non-broadband subscribers cited high prices (and not always in rural areas) as the reason they lack service. Note that that was a year ago, when we were barely even acknowledging a global pandemic which has now caused thousands of people to either be completely without jobs and/or functioning on drastically reduced income.
Emergency Broadband Benefit Program Challenges
Benefit aside, challenges exist for the Emergency Broadband Benefit Program. Funding for the program is temporary and will expire by September 2021 or when the fund is depleted, whichever is sooner. The program’s success will be entirely contingent upon both the verification and ease of use for providers as well as an awareness initiative getting the word out to potential program participants.
At a time when people across the U.S. are focused on getting signed up for COVID-19 vaccines and finding challenges every step of the way, it is understandable that those who most need a program like this might find it difficult to discover and/or difficult to sign up for the benefits. In addition, and another very significant challenge, is that once the subsidy under the program expires, the participants will be responsible for either cancelling service and/or finding a way to pay for the broadband absent the financial assistant. There is no responsibility on the part of the ISP to inform users of their terms at the conclusion of the program, and the Act reads that “…at the conclusion of the Emergency Broadband Benefit Program, any participating eligible households shall be subject to a participating provider’s generally acceptable terms and conditions.”
Talk about something that hasn’t quite been all that well thought out — at least from an end user standpoint — this seems a perfect example of help designed for people who most need it, but who will be required to jump numerable hurdles in order to benefit, and then in order to extricate themselves from the benefit when they can no longer afford it. There is of course no chance that these folks will magically be able to afford internet service in six months’ time that they cannot afford today.
The Digital Divide is Real — a Global Pandemic Showed Us Just How Real it Really Is
The digital divide is very real — and a global pandemic showed us just how real it really is. The FCC’s Emergency Broadband Benefit program, as part of the 1.4 trillion Consolidated Appropriations Act is a step in the direction of leveling the playing field, but it is certainly not a panacea for all, nor is it for any meaningful period of time. It is actually the largest public investment in broadband since the 2009 Recovery Act, and this is the second public connectivity crisis that has helped illustrate firsthand the vastness of the digital divide in our country. This divide has long impacted both rural communities and low-income households all over the US. What we know for certain is that the future of work, and the future of education are going to rely on us collectively figuring this out for the long term.
For the families camping out in Taco Bell parking lots, or even sitting in school parking lots in order for their kids to be able to access virtual classes and/or those trying to do their work remotely by way of any free internet service they can find (and never mind how secure it may or may not be) this is a short term fix, and one that they’ll likely struggle to find out about, sign up for, and get out of once it’s no longer available.
The FCC is asking for help on operationalizing this fund and seeking public input and commentary on how to roll it out. This is an opportunity for broadband providers to elect to participate in the program and also make suggestions on how the program might be most effectively implemented and managed. There are numerous technology companies, including Cisco, IBM, Microsoft, and Dell, to name just a few, who have initiatives currently underway focused on lessening the digital divide. Companies like Verizon, Ericsson, and Qualcomm are working on 5G initiatives (and devices/components) that will bring faster data speeds and there are many communications service providers (CSPs) and internet service providers (ISPs) that are also committed to initiatives aimed at closing the digital divide. Here’s hoping they can play a significant role here to help make access and affordability, or programs that help low-income and/or rural families get the internet access they need. As an aside, a terrific read on that front is Cisco’s 2020 Inclusive Future Report, which estimates that providing internet access to unconnected parts of the planet has the potential to lift a half a billion people out of poverty. Cisco’s research shows that internet usage and lower levels of inequality have a close correlation — and I don’t think that anyone will argue that point. Looking forward to what’s ahead and how we work together to fix that.
Futurum Research provides industry research and analysis. These columns are for educational purposes only and should not be considered in any way investment advice.
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Shelly Kramer is a Principal Analyst and Founding Partner at Futurum Research. A serial entrepreneur with a technology centric focus, she has worked alongside some of the world’s largest brands to embrace disruption and spur innovation, understand and address the realities of the connected customer, and help navigate the process of digital transformation. She brings 20 years' experience as a brand strategist to her work at Futurum, and has deep experience helping global companies with marketing challenges, GTM strategies, messaging development, and driving strategy and digital transformation for B2B brands across multiple verticals. Shelly's coverage areas include Collaboration/CX/SaaS, platforms, ESG, and Cybersecurity, as well as topics and trends related to the Future of Work, the transformation of the workplace and how people and technology are driving that transformation. A transplanted New Yorker, she has learned to love life in the Midwest, and has firsthand experience that some of the most innovative minds and most successful companies in the world also happen to live in “flyover country.”