Report: $15 internet cap for low-income households could save California residents $1B annually
If California enacts a law to cap broadband prices at $15 per month for low-income households, it could collectively save residents over $1 billion annually on internet, according to a report released last month by the California Public Utilities Commission’s Public Advocates Office.
The preliminary report, released on March 18 by the state-appointed, independent advocacy arm of the state’s utilities commission, evaluated the potential effects on residents and internet service providers should California mandate that ISPs offer an affordable, fixed broadband plan for households with an annual income at or below 200% of the federal poverty guidelines. State legislators are currently considering a bill introduced in January by California Assembly Member Tasha Boerner that requires the largest ISPs to cap internet prices at $15 per month for these low-income families. It’s similar to New York’s Affordable Broadband Act that went into effect this year despite several legal challenges from internet service providers.
Should the California legislature mandate a $15 per month price cap on internet services, the savings, the report found, could total more than $100 million for the already 1.4 million households that qualify and are already currently subscribed to one of the four largest broadband providers — AT&T, Comcast, Cox and Charter/Spectrum.
For the four largest ISPs, the price cap would minimally impact their profits, the report said. In fact, it would “potentially reduce the combined revenues of the four largest broadband providers … by less than one percent,” according to the report.
On top of that, if broadband adoption rates by low-income Californians increase to reach 100% — which includes over 5.8 million households — the report found the total consumer savings statewide could top $1 billion per year. And in this scenario, even with the $15 per month cap, the report found that ISPs would actually see their profits increase with the addition of new customers.
The move by California legislators follows last year’s lapse of the federal government’s Affordable Connectivity Program, which provided a $30 monthly broadband subsidy to over 23 million qualifying low-income households. Since the program ran out of money last May, some broadband advocates have warned about the financial impacts to low-income families that relied on the service, leaving states like California and New York to account for the program’s loss on their own.
While the March report is a preliminary evaluation of the bill’s potential impact, the Public Advocates Office said a full report will be published later this year.
