Report: Proposed $15/mo. internet cap could save Californians millions

The California Public Advocates Office (Cal Advocates) released a preliminary report analyzing the potential impact of a state-mandated $15/mo. cap on broadband for low-income households. The report found that if the price cap is adopted, California could provide almost $100 million annually in savings to low-income households.

Proposed $15/mo. internet plan in California

The proposed state mandate would require California’s four largest internet providers (AT&T, Cox, Xfinity and Spectrum) to offer low-income households an affordable broadband plan at a fixed and reduced price of $15/mo. with a speed of 100/20 Mbps.

This proposed internet price cap is intended to fill the gap left by the Affordable Connectivity Program (ACP), a federal program that provided low-income households with a monthly broadband stipend of $30/mo. Many top internet service providers (ISPs) participated in the program, offering plans of $30/mo. or less, resulting in free internet for qualifying households.

The report states that since the end of the ACP, California policymakers have been looking for ways to provide low-income households with affordable broadband solutions that don’t rely on federal subsidies.

Report findings 

The Cal Advocates report claims a broadband affordability law would “significantly reduce costs for low-income households and generate substantial consumer savings.”

If broadband bills for low-income customers were reduced from $30 to $15 per month, customers could collectively save almost $100 million annually.

The report also claims that almost six million California households with incomes at or below 200% of federal poverty guidelines were eligible for low-income broadband assistance.

This suggests that millions of additional households could benefit from a new low-cost broadband offering since more than 1.4 million currently subscribe to the four largest providers.

Further analysis shows that the proposed $15/mo. price cap would reduce the combined revenues of the four largest broadband providers by less than 1%. In fact, if providers expand their customer bases to include the previously unsubscribed population, they could actually see a net revenue gain — even with a $15/mo. price cap.

Legal precedent paves the way for California 

New York State’s Affordable Broadband Act, a state-mandated low-cost internet tier, is being explored as legal precedent for the proposed California internet price cap. The law requires large internet providers (with at least 20,000 customers) to offer internet service at $15 – $20/mo. to qualifying low-income New York households. New York is the first U.S. state to require internet providers to offer a low-cost internet option.

Cal Advocates claims California “has a clear legal pathway to implement such a requirement” because the Court of Appeals for the Second Circuit upheld New York’s Affordable Broadband Act despite challenges by ISPs.

Potential challenges 

If California adopts state-regulated internet, some obstacles could hinder its effectiveness, similar to when the Affordable Broadband Act went into effect.

As a result of New York’s broadband law, AT&T stopped offering its 5G internet service, AT&T Internet Air, throughout New York State as of January 15. At the time, the service offered 5G internet for $60/mo., with download speeds of 40 – 140 Mbps. Instead of offering the service at a reduced rate to qualifying households, AT&T pulled the service out of New York altogether.

“While we are committed to providing reliable and affordable internet service to customers across the country, New York’s broadband law imposes harmful rate regulations that make it uneconomical for AT&T to invest in and expand our broadband infrastructure in the state,” the company said in a statement provided to CNET.

AT&T is one of the largest providers in California and, along with Cox, Xfinity and Spectrum, would be subject to the proposed $15 California internet price cap.

Will other states introduce their price mandates?

While New York remains the first and only state to adopt an internet price cap, several other states including Vermont and Massachusetts are considering similar laws:

• A Massachusetts bill is meeting pushback from ISP trade groups for requiring internet providers to offer 100 Mbps to qualifying low-income households for $15/mo., including taxes and fees. Unlike New York, there is no exception for smaller ISPs
• A Vermont bill modeled after New York’s was introduced, which requires ISPs to provide internet to qualifying households for $15/mo. for 25 Mbps and $20/mo. for 100 Mbps

With New York’s law setting the precedent, more states may follow its lead to introduce affordable internet to low-income households.

Low-cost internet options for you

It will be a while before more states adopt low-cost internet laws, but that doesn’t mean you can’t explore some affordable options from top providers.

Some providers already offer low-income internet options, though they aren’t available everywhere. Always check your address to see which providers are available at your home. Our experts break down cheap internet options from top ISPs as part of their regular services.

Providers also tend to offer promotions and deals, which can include discounts, free tech, equipment, subscriptions and more. Check our best internet deals page for the most up-to-date offerings from top providers.

See Allconnect’s News hub for more broadband information.