The Municipal Broadband Solution – The American Prospect

In the coming weeks, Phyllis Jackson will have a difficult choice to make: home internet service or medicine?

“If it goes away, it would add a hardship for me,” Jackson says of the expiring Affordable Connectivity Program (ACP), a key part of a national “Internet for All” initiative that offers low-income households a $30 monthly discount to help pay for internet service, and $75 per month for Tribal citizens living on reservations.

“I have medication I have to take. And I don’t think I want to stop taking my medication to have internet. I really hope they can keep the program going and, if anything, expand it,” the 78-year-old Pennsylvanian goes on to say in one of several short video profiles of ACP beneficiaries put together by the National Digital Inclusion Alliance (NDIA).

The $14.2 billion Congress initially allocated for ACP via the bipartisan infrastructure law will be depleted by the end of April, despite a recent analysis that shows the ACP generates nearly $2 in economic benefit for every $1 of ACP subsidy, for a total of $16.2 billion in annual financial value for enrolled households. Public-interest groups across the country, including AARP, are lifting up the stories of Jackson and others in the hopes of securing a last-minute extension.

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In the two years since it was first established, ACP has proven to be a digital lifeline for its 23 million beneficiaries, which includes over 800,000 veterans, a million college students, three million families with a K-12 student, and five million seniors. For many ACP enrollees, the voucher cuts their monthly internet bill to zero (or close to it) when used on a low-cost service plan participating providers agreed to offer at the behest of the White House.

Congress created the ACP to soften a harsh reality: Americans pay among the highest prices for broadband of any developed nation in the world, leaving tens of millions unable to afford internet service—something experts have long noted is a telltale sign of a broken market dominated by monopoly providers, and is at the very heart of why the U.S. digital divide is as massive as it is.

However, although federal lawmakers have known for over a year that the fund would be bankrupt by this spring, GOP congressional leaders have not budged on even bipartisan attempts to save the ACP, prompting the Federal Communications Commission (FCC) to announce in January that the agency was being forced to wind down the popular program.

It’s a major setback for the “Internet for All” effort, especially in light of a recent FCC survey that found 29 percent of ACP beneficiaries would be left without any home internet service whatsoever without the benefit, in an age when internet connectivity is a necessity for meaningful participation in 21st-century society.

As ISPs have begun to send out notices alerting ACP recipients of the imminent end of the program, there’s a more hopeful story playing out in the background—one that demonstrates how some communities are in a far better position than others to handle the fallout.

Pardon Me, Is That the Chattanooga Model?

One city that’s well prepared to deal with the demise of the ACP is Chattanooga, Tennessee.

Thanks to the foresight of the city’s electric utility, EPB, Chattanooga built a citywide fiber-to-the-home network over a decade ago, giving Tennessee’s fourth-largest metro area bragging rights to be called “America’s first gig city,” because of its one-gigabyte (or faster) speeds for internet access.

The municipally financed project came with a $220 million price tag, but has reaped a $2.7 billion return on investment for the city over its first ten years of operation. In addition to the supercharged economic jolt, one pandemic-proof benefit of city-owned broadband infrastructure is that it allowed Chattanooga’s leaders to provide a way for those who couldn’t afford service to stay connected.

Working with local school officials, city and state leaders, philanthropists, and the Chattanooga-based nonprofit The Enterprise Center, EPB was able to offer free fiber service to any and all low-income residents in Hamilton County with a school-aged child in the household. The program, known as HCS EdConnect, was established before the ACP was even conceived, and today serves over 28,000 students in 17,000 households within EPB’s service area.

“Back at the onset of the pandemic it became very clear that students needed access. So pretty quickly we worked with The Enterprise Center and the city to put up hot spots across our territory,” Evann Freeman, EPB vice president of government and community relations, explained on a recent panel at Net Inclusion 2024. “But that was not a sustainable solution for families that are going to be working from home and also trying to do school from home.”

The next step, he said, was working with the school superintendent and community leaders to come up with a more lasting solution.

“Somebody threw out the idea: What if we covered every student on free and reduced lunch? And pretty quickly that bold statement became the mission,” Freeman said. “In a relatively short time we were able to partner together with the school system, the county, the city, the state of Tennessee, and several of our local foundations to raise money to be able to cover this program.”

As Freeman explained, having city-owned infrastructure in place made it possible for this “transformational” program to come together. While building publicly owned, locally controlled broadband infrastructure may not be in the cards for every community, Freeman added, “communities should have that option.”

Building A-Fort-Ability in Colorado

In Fort Collins, Colorado, low-income households can get gig-speed fiber service for just $20 a month, thanks to the city-owned broadband provider known as Connexion. Even before the city began building its municipal broadband network six years ago, after years of frustration with the high-priced second-rate service from incumbent providers, city leaders had a plan to make affordability a key component of its service.

“We knew from the beginning that we wanted everyone to get gig [speed] internet,” the city’s broadband executive director Chad Crager shared on a recent episode of the Community Broadband Bits podcast.

“From the very beginning we set aside 6 percent of our revenue and put it into a digital inclusion fund. For those who qualify, instead of paying $70 for one gig, you pay $20. That $50 difference is made up from the money we set aside,” he said.

Crager explained not only how the city is able to offer such an affordable rate but also noted an important difference in incentives between private providers looking to maximize short-term profits and deliver returns to investors, and municipal broadband providers who see broadband as akin to roads, electric, or water service.

“We certainly have to meet our financial goals and pay back our bonds,” Crager said, “but we are already investing back into our network with a goal to make our residents’ life as best as it can be.”

That formula has led to Connexion having a 37 percent take rate (market share) and a rising demand for service that translates into a 45 percent year-over-year increase in revenue for the city. In fact, dealing with the number of people who want their service is the biggest hurdle, Crager explained. Connexion’s goal is to reach all of the city’s apartment buildings and condominiums where low-income families tend to be concentrated.

Hillsboro’s Silicon Forest

Hillsboro, Oregon, is another city not particularly vulnerable to the demise of ACP.

“We didn’t really have a need for it, because well before ACP was formulated we had already made a very aggressive commitment to offering an affordable low-income service on our network,” Brad Nosler, general manager for Hillsboro’s city-owned HiLight Network, said.

They call it the Bridge Internet program, which offers low-income households in Hillsboro gig-speed fiber service for just $10 a month, something Nosler notes is “far more generous than what the ACP discount provides.” That includes a router, home Wi-Fi, and installation at no cost to qualifying households.

Known as the “Silicon Forest of Oregon” and home to several large Intel campuses and a major Nike and Salesforce office, Hillsboro does have its fair share of good-paying jobs. However, Nosler said, the city also includes three of the lowest-income census tracts in the state.

The secret sauce behind Hillsboro being able to offer such affordable rates for both low-income households and the general citizenry, Nosler said, is a tax revenue–sharing program between the state and city. If a community provides a local tax break to attract businesses, as Hillsboro did with Intel, the increased workforce generates increased income tax revenue for the state. As a result, the state shares a portion of that revenue with the city, which can then be used to meet the needs of a growing population base. Hillsboro city officials opted to use that shared revenue to support HiLight’s ongoing efforts to expand the network citywide.

In the fifth-largest city in Oregon, Hillsboro’s municipal network competes with Comcast and Ziply Fiber, both of which offer fiber service across the entire city. However, when it comes to affordability, Ziply relies on ACP and Comcast only offers its slow-lane Internet Essentials at the $10/month price point.

While it is unclear what Ziply will provide after ACP ends, Comcast will continue to offer Internet Essentials for the same price HiLight offers its low-cost plan. But HiLight is offering high-quality, one-gig service at that price. Comcast’s Internet Essentials gives subscribers a 50 megabits-per-second cable connection, which may serve one individual well enough, but when it comes to multiple people in a household, those barely-broadband speeds are not adequate.

As Nosler puts it: “If you have a well-crafted local program, you don’t have to worry about what’s going on with the ACP or the federal government.”

Affordable Access: A Bridge in Pharr

Certainly, it could be argued, Fort Collins and Hillsboro do not have as many low-income residents to contend with as most other cities do. And that’s true. But then there’s Pharr, Texas.

Despite pleas from city officials for better citywide service, for years Pharr was considered the worst-connected city in the U.S. But then, in 2022, the city—home to the Pharr International Bridge and a major trade route with Mexico—embarked on eliminating the city’s digital divide. They call it PharrConnect, a citywide fiber network that has brought Pharr residents gold-standard internet connectivity.

Using $16 million of the city’s federal coronavirus relief aid from the American Rescue Plan Act as well as another $48 million in revenue bonds, Pharr’s municipal broadband network is 95 percent complete, covering 18,000 homes in this city of approximately 80,000. Doing so has not only led to a 27 percent subscription rate, but it put the city in a position to do something the big monopoly providers are not built to do: offer affordable, ubiquitous access to high-speed internet, even for those who can’t afford to pay a premium for service.

Pharr Mayor Ambrosio Hernandez, M.D., says the project is just what the doctor ordered.

“We first built into South Pharr, the most underserved area in what had previously been the worst-connected city in the nation,” Hernandez said. In the last month, the city’s ISP onboarded close to 700 homes, putting the city on track to have 5,000 subscribers.

Even without the ACP, the city’s business plan allows them to offer subscribers 500 Mbps fiber service for just $25 a month, gig-speed service for just $50 a month, and two-gig service for $80. For qualified low-income households with a school-aged child in the home, gig-speed service is offered at no cost.

A partnership with the Pharr-San Juan-Alamo Independent School District, the largest school district in the Rio Grande Valley, serving 32,000 students, is funding gigabit broadband to every student household, Hernandez explained. “Currently, there are over 2,200 students’ homes [in Pharr] connected to PharrConnect with many more to come.”

The Writing on the Wall

The bottom-up, community-centered approach taken in Pharr, Hillsboro, Fort Collins, and Chattanooga allows cities and towns to do something the private monopoly providers won’t: treat high-speed internet access more like a utility that seeds transformative economic development, rather than a profit-maximizing business venture primarily concerned with lining shareholder pockets.

Even apart from the politics of ACP, it’s a vision that has fueled a dramatic surge in municipal broadband across the nation in recent years as a growing number of cities and towns now see municipal broadband as a pathway for local communities to take control of their digital futures, bring choice and competition to residents and businesses, and close the digital divide, without having to rely on the whims of a gridlocked Congress or the charitable goodwill of the very monopoly incumbents driving the affordability crisis itself.

Even in cities with no municipal broadband option, digital equity advocates are beginning to understand its promise. In Los Angeles, Shayna Englin, Digital Equity Initiative director for the California Community Foundation, imagines a scenario she hopes city and state leaders will consider more carefully.

Since the onset of the pandemic, Los Angeles has spent over $100 million on hot spots for students, while paying the two incumbent providers (Charter and AT&T) to serve low-income families. That money, she argues, would have been better spent investing in city-owned broadband infrastructure that provides a lasting solution.

“Imagine if the LAUSD [Los Angeles Unified School District] partnered with the L.A. Bureau of Street Lighting to tap into their dark fiber or partnered with the Department of Water and Power to build mesh networks [for low-income families],” she says. She would rather see real and lasting solutions than “writing big checks to Charter and AT&T.”

The end of ACP is certainly bad news for those who will be left without internet access. The good news is that a growing number of local leaders are figuring out how to deliver affordable high-quality internet access in places where the federal government and monopoly incumbents are unwilling to do so.