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Low-Cost Broadband in Senate Bill Sparks Alarm on Rates

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·4 min read
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(Bloomberg) -- The infrastructure bill moving through Congress requires internet service providers to offer a low-cost option, sparking opposition from a top Republican senator who said the mandate may lead to broadband rate regulation.

The $550 billion bill, which advanced in the Senate late Wednesday, includes $65 billion for broadband expansion. The measure will require funding recipients to offer a low-cost plan, the White House said in a summary. It didn’t offer details on price or speed of the service.

The bill could lead to pressure from an administration that has said it’s determined to bring broadband prices down, said Paul Gallant, a Washington-based analyst for Cowen & Co.

“The story with the Biden administration on broadband was always going to be overhang on broadband prices,” Gallant said in an interview. “Passing a bill with limited broadband price regulation moves that ball forward.”

Providers such as Comcast Corp. and Charter Communications Inc. already offer low-cost plans to a limited set of consumers. There is a risk that a low, government-sanctioned rate spreads to more of the providers’ customer base, Gallant said.

Senator Roger Wicker, the top Republican on the Commerce Committee that oversees broadband legislation, on Wednesday said the language opens the door to rate regulation. He voted against advancing the bill in the Senate on Wednesday and said Thursday that he’s thinking about offering an amendment on broadband.

The measure isn’t final and needs still to pass both houses of Congress.

Under the legislation, the National Telecommunications and Information Administration would vet low-cost broadband plans for aspects such as cost and speed of service, said Greg Guice, director of government affairs for the policy group Public Knowledge that has advocated for a low-cost option.

The low-cost measure could help families that don’t qualify for company programs yet are strapped for funds, Guice said.

“In a lot of communities there aren’t that many options for broadband service so the price may be a little high -- a lot high,” Guice said in an interview.

The bill would have states distribute the funds to partners entrusted to build new networks, and it is their joint proposal that would go for approval to NTIA, Guice said. The bill includes language forbidding the NTIA from setting rates, he said.

The bill’s text hasn’t been released; Guice said he has been briefed by congressional staff. Gallant offered similar details based on a draft he has seen.

Gallant in a note cited the “increasingly progressive tilt of the Biden administration” and the likelihood that a Democratic Federal Communications Commission will reinstate so-called net neutrality rules, which carry with them the power to set rates. It adds up to an “implicit threat” of rate regulation, he said.

President Joe Biden hasn’t named a head for the NTIA, which is a branch of the Commerce Department. Nor has he chosen a permanent chair for the FCC, which has been in a 2-to-2 partisan split since the Republican chairman left in January as administrations changed following the 2020 election.

A spokeswoman for the White House didn’t immediately respond to an email seeking comment on the low-cost requirement.

USTelecom, a trade group with members including AT&T Inc. and Verizon Communications Inc., didn’t immediately respond to an email seeking comment.

Comcast and Charter, the two largest U.S. cable providers, offer low-cost service for poor households that qualify, for instance through participating in federal school lunch and nutrition programs. Comcast’s costs $9.95 per month and Charter says its program costs $17.99 a month or less. Neither company discloses the number of current participants.

The infrastructure bill also would create a program to help more low-income households access the internet, according to the White House summary.

Senator Susan Collins, a Maine Republican who coauthored the new provision with Democrat Jeanne Shaheen of New Hampshire, said the bill would give people with low incomes $30 per month to pay for broadband and it would not set prices for low-cost access.

NCTA, the cable group, on Wednesday said it was “encouraged” the bill helps low-income Americans, said Brian Dietz, a spokesman.

“As an industry that has for many years offered low-cost plans of $10-$15 per month to struggling families, we recognize the importance of helping our citizens that have access to broadband but do not subscribe,” Dietz said in a statement Wednesday.

(Updates with detail of benefit final paragraph.)

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