U.S. house democrats propose $50 monthly broadband subsidy for low income homes, AT&T and Comcast will be happy to take it

by Steve Blum • , , , ,

With covid–19 pandemic lockdowns continuing in most states, albeit with gradual loosening underway, democrats in the house of representatives in Washington, D.C. want to pump $5.5 billion into broadband access subsidies to ensure that people and institutions can remain connected to the online resources they will be depending on, likely for months to come. It’s one of the opening shots in the negotiations over what might be a second stimulus bill in the trillion dollar range to keep the U.S. economy afloat.

It’s a big leap from the $375 million for broadband that was included in the first, $2 trillion pandemic stimulus bill approved by congress in March. But it’s also broadband funding of a different sort. In March, the money went to supply-side uses, such as $100 million for broadband infrastructure via the federal agriculture department’s ReConnect program. This time around, house democrats want the money to feed the demand side – $4 billion is earmarked to subsidise monthly Internet bills for low income families, up to $50 per month per household. The remaining $1.5 billion would go to school and libraries to pay for mobile network-enabled WiFi devices and service, and other expenses necessary for keeping kids connected to school lessons.

Ultimately, that money will hit the bottom lines of major, monopoly model incumbent Internet service providers like AT&T, Comcast, Charter and the rest. If the bill sets a de facto base price of $50 per month for Internet service, then that’s what those companies will charge. It’s a lot easier to up sell customers from what are, in effect, low income loss leader promotions such as the $10 per month Comcast Internet Essentials or Access from AT&T packages, and move them into expensive long term contracts when someone else is picking up the tab. But $4 billion only lasts so long. When the subsidies run out, those households will be stuck with higher bills for a long time.

The odds of this latest proposal making it into law as is are pretty slim, though. What house democrats seem to doing is setting up for negotiations with U.S. senate republicans and the white house. The D.C. beltway sausage machine is about to crank into high gear.