Some Telecoms Lobby Against ‘Net Price Cuts

AT&T (NYSE: T), Charter (NASDAQ: CHTR), Comcast (NASDAQ: CMCSA) and Verizon (NYSE: VZ) are trying to weaken the $42.5 billion BEAD aid by lobbying states against part of the rules, according to The Washington Post. The Post explains the telecoms are trying to block new rules that would require them to lower their poorest customers’ monthly bills in exchange for a slice of the subsidies.

In several states, the telecoms say the proposed price cuts are illegal. That has persuaded regulators in California, New York, South Carolina, Tennessee, Virginia and elsewhere to rethink, scale back or abandon their plans to condition the federal funds on financial relief for consumers. Some state and federal officials fear that the BEAD program could fall short of its potential, especially if Americans cannot afford the new broadband service in their long-neglected communities. “We will not get a chance to spend tens of billions of dollars to connect Americans again,” said NTIA Administrator Alan Davidson.  

The companies are focusing their efforts on states because the states will award the BEAD money to local telecoms. Now, that action is estimated to occur in 2025 to early 2026, Inside Towers reported.

Often, the largest telecom companies have questioned the legality of the government’s attempts to limit broadband prices under the Infrastructure law. Some companies have signaled that undesirable regulation could cause them to walk away from the program. “Rate regulation is exactly a formula that will not allow the kind of flexibility that will ensure the overall [broadband] program will be a success,” USTelecom President/CEO Jonathan Spalter told The Washington Post.

“This is a requirement in exchange for a humongous government benefit,” said Gigi Sohn. The former FCC Commissioner nominee is now executive director of the American Association for Public Broadband, which lobbies for low-cost options. “The kind of notion that government can require something in exchange for giving out billions of dollars, that’s standard.”

In guidelines issued in 2022, the administration suggested that internet plans should cost consumers no more than $30 per month — though it allowed local officials to propose alternatives. To sway regulators, telecom companies and lobbyists have stressed that most internet providers already offer special low-cost plans for poor families. They also point to a provision in the Infrastructure Law that bars the government from trying to “regulate the rates charged for broadband service.” Internet providers lobbied for that prohibition and say most efforts to tie federal funds to specific pricing changes are illegal.

“The statute was to offer a low-income program, not specifically a $30 program,” said Rick Cimerman, vice president for external and state affairs at NCTA – the Internet & Television Association. Cimerman added that some ISPs could face financial hardship if they are forced to cut costs too deeply, arguing that it’s already expensive to build networks in hard-to-reach, sparsely populated areas.

Most state plans have not been finalized. Some have said they intend to allow internet providers to raise prices on low-income Americans in limited circumstances, such as to address market changes or to keep pace with inflation, notes the Post.

The policy disputes have taken on added urgency in recent weeks, as the federal government braces for the imminent lapse of the Affordable Connectivity Program (ACP). Unless Congress passes more money for the ACP, it will run out of funds and stop operating in June, Inside Towers reported.

By Leslie Stimson, Inside Towers Washington Bureau Chief

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