Policy

The FCC’s emergency internet discounts are leaving millions behind

The FCC's $3.2 billion emergency broadband benefit program has seen slow adoption rates with stark geographic disparities.

An internet router

According to a new report by the Benton Institute for Broadband & Society, only one in 12 households that are eligible for the EBB program are currently enrolled.

Photo: Stephen Phillips/Unsplash

Nearly 4 million households have enrolled in the Federal Communications Commission's emergency broadband benefit program since it launched in May. But as researchers have begun digging into data recently released by the FCC, they're finding that not only are the vast majority of eligible Americans still being left out of the $3.2 billion program, but there are also stark geographic differences in where people are being enrolled.

According to a new report by the Benton Institute for Broadband & Society, only one in 12 households that are eligible for the EBB program are currently enrolled. That's based on an analysis of American Community Survey data and other public benefit data, which found that some other 36 million American households may qualify for the benefit overall.

The study also found that major cities including Houston and Chicago are falling far behind in terms of their enrollment rates, while Puerto Rico and cities including New Orleans, Detroit, Milwaukee, Baltimore, Cleveland and Philadelphia are seeing higher rates of adoption.

That part, at least, is encouraging, says John Horrigan, a senior fellow at the Benton Institute who authored the report, because these are cities that have traditionally had low rates of broadband use. "It's good that the data makes sense," Horrigan said.

But others are not so encouraged. "The data shows that the benefit is not getting adopted at the rate you might hope and might have expected given the magnitude of the assistance available and who's eligible," said Jonathan Mayer, assistant professor of computer science at Princeton University and former chief technologist of the FCC. "I think it's now very likely that the overwhelming majority of the EBB will be unspent by the time the pandemic has come to a close for many Americans."

In a statement, an FCC spokesperson noted that the EBB program had been set up "in record time."

"We're happy that Mr. Horrigan and others are diving into all of the data we're making available and bringing to light new insights that will help the FCC and others make the program a success," the spokesperson said.

Mayer did some number crunching of his own when the FCC released its first batch of enrollment data last month. He found that while enrollment rates were fairly low across the country, three areas stuck out as outliers with particularly high adoption: one area that includes Apache County, Arizona; another that includes McKinley County, New Mexico; and a pocket of Eastern Kentucky.

Mayer dug deeper and found that all of these areas are home to small, locally focused internet service providers that appear to be more proactive about enrolling people in the program. "Communities that have ISPs that are oriented toward the community are adopting this at higher rates," Mayer said, though he cautioned that his findings are preliminary. These are also areas that have high rates of poverty, which means the need for the EBB program in those places is likely greater.

Still, there is ample evidence that large ISPs have erected barriers that could discourage eligible Americans from enrolling. Spectrum, for one, was requiring people to agree to continue service at undiscounted rates after the EBB runs out. Verizon, meanwhile, was forcing customers into more expensive plans in order to qualify for the service. Both companies later changed these policies.

"There's this conflict of interest where carriers are not super interested in customers who are not going to subscribe to fancy plans and might have trouble paying" after the benefit expires, Mayer said.

Small, local providers, Mayer and others argue, often have a different set of motivations than their multi-billion dollar national counterparts. "They're not there solely to extract wealth," said Chris Mitchell, director of the Community Broadband Networks Initiative at the Institute for Local Self-Reliance. "They're going to spend more effort trying to get people online with any tool that's available."

One such provider that popped up in Mayer's research was Sacred Wind Communications, which serves tribal and rural areas in a part of New Mexico where the poverty rate is about five times the national average. It's also a part of the country with one of the highest rates of EBB adoption, according to Mayer's calculations, with north of 35% of households already enrolled in the program.

CEO John Badal said he founded Sacred Wind in 2006 specifically to provide infrastructure to people who had been "neglected" by large telecom giants. "That neglect went well beyond telecom. It's education and health care and roads and water," Badal said, noting that 40% of Sacred Wind's customers don't have indoor plumbing.

The vast majority of Sacred Wind's customers already qualify for Lifeline, a government benefit for low-income Americans that reduces their monthly phone and broadband payments somewhat. But still, Badal said, a large number of customers struggle to pay. When the EBB program came along, Badal said it was "a gift for us and for our customers," covering the full cost of customers' monthly bills.

"Because of their financial circumstances, the delinquency rate of our customers is a lot higher than what I've experienced at any other phone company," said Badal, who previously worked at AT&T and Qwest Communications. Now, he said, "We call the customer or they call us about the failure of payment, and we now have something to offer them to keep their broadband service alive." The company has already enrolled about 500 of its 2,000 broadband customers in the EBB program, with another 300 being onboarded now.

Of course, while that's a big chunk of Sacred Wind's customer base, it's a drop in the ocean of Americans who are eligible for the program but have yet to be enrolled. Mitchell called it "a huge failure of the program and its design" that so few people who qualify for the subsidy are receiving the assistance two months in. He attributes that failure to Congress's decision not to set aside funding to promote the program. "You're distributing billions," Mitchell said. "You should have a plan for how to make it available."

For Mayer, the EBB rollout has been a sort of natural experiment, testing why Americans in general enroll in broadband subsidies at such low rates. Similar questions have plagued the Lifeline program. One hypothesis has been that the benefits from Lifeline — up to $9.25 a month and up to $34.25 per month on tribal land — are simply too small to be enticing. Another hypothesis — the one Mayer subscribes to — is that people either don't know about these programs or they struggle to sign up for them, because leading ISPs have little motivation to push people into low-cost plans.

The anemic adoption rates for the EBB, which offers up to $50 monthly discounts for broadband, seems to point toward a clear answer, Mayer argues. "I think what's going on with the EBB lends a lot of credibility to the hypothesis that what we have here are discoverability and usability problems," he said. "This is a lot of money for a good cause that low income households are entitled to, and that money is not flowing to those households."

This story was updated to reflect that Spectrum has since changed its policy regarding EBB opt-in.

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