Low-cost broadband access: How do MSOs compare?
A recent Pew Research Center study cited by Comcast (Nasdaq: CMCSA) states that only 45 percent of those with household incomes under $30,000 per year have broadband at home.
In order to address the situation, and possibly break open new market segments, providers like Comcast and CenturyLink (NYSE: CTL) are now offering lower-cost access to broadband, albeit a slower speed tier of about 1.5 Mbps, for $9.95 per month to qualifying households. And other operators are partnering with nonprofits to provide different options.
For example, in March 2010, a nonprofit called One Economy Corporation filed for broadband stimulus funding to support low-income broadband. "The application ... has the backing of AT&T (NYSE: T) and several cable companies, which have agreed to provide free installation and discounts of at least 50% on at least one service tier to qualified residents of low-income housing as part of the proposal," a Connected Planet article reported. Cable MSOs and IPTV service providers that are members of the Digital Adoption Coalition, including AT&T, Charter Communications (Nasdaq: CHTR), Comcast, Cox Communications, Time Warner Cable (NYSE: TWC) and other cable companies, agreed to support the program.
So, what's available out there for economically challenged families? Is Comcast's program--slowly rolling out across its service areas--the best option? Let's take a look.
AT&T and One Economy are partnering on a broadband initiative as part of One Economy's "We Are Now Connected" program. In July, about 600 low-income households in San Diego received free Internet access and training, and in September AT&T launched a free Internet and technology training program in two housing projects in the Greensboro, N.C. area.
One Economy has partnered with other MSOs as well and lists its program service areas on its website.
CenturyLink Internet Basics
CenturyLink's Internet Basics site
CenturyLink is a new entrant to the low-income subscriber game. However, the company is likely not getting into the game to gain new subscribers; rather, it's fulfilling a requirement that was part of its deal to acquire Qwest Communications.
Qualified subscribers would be able to up to get 1.5 Mbps downstream speed. In some areas higher bandwidth services may be available at a "comparable discount."
The catch--and there's always a catch--is that the $9.95 discounted rate is only available for the first 12 months; after that, it increases to $14.95 per month.
- $9.95 a month, for the first 12 months
- Optional netbook for $150 at signup
- Must be located in a CenturyLink service area
- Has not subscribed to CenturyLink Internet service within 90 days
- Must not have an existing overdue bill or unreturned equipment
- Must follow current guidelines for LifeLine/TAP phone service programs
- Application is online and qualifications vary by state, but a significant difference from Comcast is that school lunch is not the only qualifier for the program.
Comcast's Internet Essentials site
Comcast Internet Essentials
Comcast is fulfilling a requirement by the FCC (put in place as a condition of Comcast's acquisition of NBC) to provide broadband Internet service to qualifying low-income families.
- $9.95 a month
- Speeds are 1.5 Mbps download and 384 Kbps upload
- Optional computer available for $149.99 (via provided voucher)
- Free Internet training
- 1 or more children must receive free school lunches
- Must be located in a Comcast service area
- Has not subscribed to Comcast Internet service within 90 days
- Must not have existing overdue bill or unreturned equipment
- Applicants have to fill out a form and mail it back in, and wait 7-10 days for response
Despite recent positive reports on its progress with Internet Essentials, Comcast's low income program is not without its critics. A Stop the Cap article by Philip Lambier pointed out that it won't help a "vast number of income-challenged families who won't actually qualify for the three year program, either because they already scrape up enough for Comcast service, don't have children, or manage to miss a payment due date." He wrote that Baltimore, for example, has about 32,000 people who fall below the poverty line, making them "excellent candidates for inexpensive Internet access," but that "Comcast is apparently making room for just 250."
Like other FCC requirements from the NBCU merger, Comcast only has to apply this program and other commitments for a limited time--less than seven years. On a website FAQ, the MSO notes that the Essentials program "will continue to accept new customers into Internet Essentials for three full school years."
Time Warner Cable
On a billing FAQ that asks, "Does Time Warner Cable (NYSE: TWC) have a discounted rate for low-income subscribers?" The answer was simply "No."
However, Time Warner Cable is expanding its TV Essentials package to more states. And it offers a Broadband Basic service in some areas that features download speeds of 1.5 Mbps and upload speeds of 256 Kbps. The price, however, is not listed on the carrier's website.