Federal funding to pay for internet service took off in the pandemic with programs that provided up to $50 a month to Americans who couldn’t otherwise afford a broadband connection.
But even before COVID, many local internet providers had taken it upon themselves to lower the cost of broadband. There’s a push to address digital equity, especially in urban areas where fast internet may be abundant but financially out of reach.
That’s the case in Longmont, where the nationally recognized NextLight gigabit service now covers most of the city. Its 100-megabit plan is now free to qualified users, while its fastest plan — 10-times faster at a gigabit up and down — is $19.95 for the same households. NextLight, part of the city-owned utility Longmont Power & Communications, normally charges $69.95.
“The city’s mission is to provide fiber-based, highly reliable, affordable internet for any household within the Longmont LPC footprint,” said Valerie Dodd, NextLight’s internet director. “The goal is not to make money. The goal is to provide valuable service, affordable service and then it’s also to reinvest in the network to ensure that we have reliability and excess capacity into perpetuity.”
Fast internet is not cheap to build or operate, as legacy cable and telecom companies know all too well and thus cut short expansion into neighborhoods with few potential customers. But as more community organizations launch internet services, many don’t need to show huge financial returns. They can break even or find alternative funding sources to make up the difference.
Last year, many internet providers participated in the federal Emergency Broadband Benefit program, which paid ISPs $50 per eligible customer per month. After months of remote learning and work due to COVID, the federal program targeted families with children eligible for free school lunch or other federal assistance programs. EBB ended Dec. 31 and was replaced this year with the Affordable Connectivity Program, which reduced the payment to $30 but has no end date in sight. Unless renewed, the program would wind down after the $14.2 billion in Congressional funds is depleted.
That benefit was key to 20 large internet providers, including Comcast, adding faster plans for, not coincidentally, $29.99. Comcast doubled the speed of its existing $9.95 Internet Essentials service to 100 mbps via a “Plus” tier. If customers qualify for the ACP credit — which they can do HERE — monthly internet service is free.
Not all lower-income households want to deal with government subsidies, so that’s why it’s nice when local providers create their own digital equity programs, said Angela Siefer, executive director of the National Digital Inclusion Alliance, which promotes digital literacy and equity.
“Municipal providers, electric co-op providers, those are definitely on the rise. There’s been an awareness of how the broadband market operates (and) more folks are noticing and wanting to have alternate solutions because there’s a lack of competition,” Siefer said. “And when profit isn’t the purpose, they can provide internet at a lower cost. Then the subsidies become irrelevant (to the customer), though some still need them. … If you can’t handle $20 a month, then you go ask for the subsidy.”
Here is how three Colorado communities tackle digital equity — with or without federal subsidies:
Fort Collins slowest speed: 1 gigabit
Before COVID, Connexion in Fort Collins, another city-owned internet provider, created its own program for residents who couldn’t afford the regular $60 price. Its Digital Access Equity Program drops the cost to $19.95 a month. To make up the difference, Connexion uses a tool called payment in lieu of taxes, or PILOT.
Essentially, city-owned utilities don’t pay taxes like other companies in town. So Connexion pays a self-imposed tax of 6% of its revenues, which goes to the city’s general fund. The city could use the money in any way it wants, but the Fort Collins City Council voted to send Connexion’s PILOT revenues to the digital equity program.
The service offers the same speed as all other Connexion customers: one gigabit per second with no data caps and free installation.
“We have a philosophical belief that because you have a financial need, you shouldn’t have to receive crappy service,” said Nina Bodenhamer, director of Fort Collins City Give, who runs the digital-equity program of Connexion.
Residents can see if they qualify at getfoco.azurewebsites.net.
Connexion launched in 2019 so it’s taken time to build up customers and revenues. The internet lines are still not yet built in some neighborhoods or buildings. But Connexion is on track to finish the infrastructure to all premises by the end of the year, said Chad Crager, Connexion’s executive director.
“Six percent is a lot when you have thousands and thousands of customers. But when you have tens or hundreds, it’s not very much,” Crager said. “Luckily, we’re to a point where we need to be regarding the PILOT and that 6%.”
According to For Collins city data, Connexion’s operating revenues were coming in slightly higher than budgeted for April, at $3.4 million. Crager said there’s 9,000 customers with about 120 enrolled in the digital equity program. PILOT also helps fund the city’s programs to increase people’s digital literacy so they understand how to use the internet and technology.
That’s key to creating a successful digital equity program, said Siefer with the National Digital Inclusion Alliance, which pushed to make sure digital equity was addressed in the federal broadband funds so lower-income households not only had access to lower-priced plans but training on how to use the internet and technology.
“Think about all the different barriers to digital equity,” Siefer said. “One barrier is affordability. Connected to that barrier is awareness of programs that help affordability. That’s a big barrier. Then there’s other barriers that have to do with digital literacy, devices, privacy and security concerns, which are related to digital skills.”
Less than one-third of eligible households in Colorado — 134,237 households as of May 16 — are enrolled in the federal Affordable Connectivity Program to get up to $30 off their broadband bills. Others may be suspicious about the government program, may not understand the offer if there’s a language barrier or just may not know about it. Those are similar issues that plague any digital equity program, she said. She recommends internet providers partner with local groups that already serve the target audience, like food banks or English language-learning organizations.
“The messenger matters because free internet sounds like a scam,” she said.
For now, Connexion is not participating in the federal Affordable Connectivity Program, which requires household income to be no more than 200% of the federal poverty guidelines, or about $55,500 for a family of four. Bodenhamer calls that “extreme poverty.” Fort Collins’ area median income for a family of four is $95,900.
She estimates that only about 11% of area households qualify for the federal program. So it’s more important for Connexion to spread the word about its own service and dispel the belief that subsidized internet is too slow.
“The compliance and the reimbursement plan (of ACP) is actually a large labor lift as well,” Bodenhamer added. “So at Connexion, we had to make a decision on is it worth the labor for us to get that reimbursement? Traditionally, it hasn’t been because we don’t have that body of customers. In 10 years, we will. So we’re trying to move alongside (and be) compatible with ACP.”
In San Luis Valley, it’s about economic development
Ciello, in Monte Vista, participates in the federal broadband programs despite official communication being spotty and reimbursements confusing. Ciello customers enrolled in the federal ACP programs pay $13 for 25 mbps, instead of $43.
Even before COVID, the internet arm of the San Luis Valley Rural Electric Cooperative was involved in spreading broadband beyond the digital divide and expanding internet service to unserved rural communities and low-income households.
In 2017, the company received a grant from the Colorado Broadband Fund to roll out gigabit fiber service in Mineral and Hinsdale counties for 278 homes. During the pandemic, Ciello worked with the Alamosa School District and the city of Alamosa to pipe wireless service to a mobile home park where students lived.
The company also has eight free Wi-Fi access points in the valley, with more on the way. Many are at parks like Chapman Park in Monte Vista or Center Community Park in Center to give residents without service a public area to tap in. Another is at Lazy KV Estates in Moffat to help children in the rural community to get online for school.
“It was just something we did as a public service. And then when we saw how necessary it was and how much people appreciated it and how useful it was, we just continued it,” said Monroe Johnson, Ciello’s chief technology officer. “And, frankly, COVID accelerated it. At the Center Park, Center’s (high school) football stadium, they wanted to stream some of the games when people couldn’t attend in person during COVID. And that kind of drove the need for that Wi-Fi access point as well.”
Ciello typically covers installation and service costs though sometimes another organization chips in. Boys & Girls Clubs of the San Luis Valley won a grant for Wi-Fi equipment so Ciello installed it.
Aaron Miltenberger, president and CEO of the local Boys & Girls Clubs, called Ciello “awesome” for the added bonus of working with the organization’s intern to help install public Wi-Fi in communities with no service.
“These areas were at an extreme disadvantage during the pandemic as young people had nowhere to access online school, families could not work remotely and there was no ability to connect with services like telehealth,” he said.
Johnson said Ciello does get something else out of it. There’s branding, since free customers must pick the “CIELLO” network. There’s also future expansion. He wants to get fiber — not just wireless — to the Lazy K-V neighborhood north of Hooper to build a more reliable fiber path up U.S. 285 to Villa Grove.
“We’re just really concerned about the San Luis Valley as a whole going forward,” Johnson said. “It’s largely been a farming community, which is great. We’re 100% behind it. But with the water shortages and different things, if our valley is going to be viable economically going forward, we’ve got to be able to provide educational opportunities for the kids. We’ve got to be able to provide work-at-home opportunities for people that want to run small businesses from home. And we’ve got to have the infrastructure in place to support other types of business.
Longmont’s nonprofit venture
Longmont’s NextLight began construction on the gigabit network in 2014 and the first customers signed up that year. From the start, it offered a relatively low price to all customers for gigabit: $70, which at the time was in the lower end of broadband costs in the U.S., though at speeds magnitudes faster. NextLight customers who opt in within three months of service starting in their neighborhood could also secure a lifetime deal of $50 for gigabit service. Those prices haven’t changed.
Its digital equity efforts didn’t begin publicly until 2019, after it partnered with Longmont Community Foundation to provide school children with 25 mbps connections for free through Sharing the NextLight.
“Families could just come to us directly and apply for the service and it would be funded through the foundation,” said Dodd, from NextLight. “We’re proud of the program because we did it before we had any additional subsidies. Then we recognized that there was an opportunity to provide discounted services for other families that might be in financial need or have some hardships or not have the money to put towards broadbands. We were just in the process of getting that turned on when March 2020 happened.”
So, NextLight quadrupled the speed to 100 megabits and offered it to more families, at $14.95 a month. They also discounted gigabit service to $45. Essentially, the company covered $25 of the $70 bill for low-income users.
Then last year, as the federal Emergency Broadband Benefit subsidy became available offering to reimburse up to $50, NextLight stopped funding the programs and used federal dollars instead. Its low-income customers paid $19.95 for gigabit service. Then the Affordable Connectivity Program replaced EBB but only provided $30.
NextLight decided to keep digital-equity program prices the same.
“We decided that we wanted to keep the service coming to our customers. We didn’t want to give them that kind of shock,” NextLight spokesman Scott Rochat said. “We continue to maintain the $50 discount, which means using some of our own funds.”
That, Dodd steps in to clarify, means that the company covers $10 to $20 per discounted customer.The initial plan was to discount gigabit by $25 anyway to increase digital equity, she said. With 25,000 customers, of which 800 are on discounted plans, there’s wiggle room within the margins.
“To a large extent, we are able to cover that cost within our existing pricing. It just means we reduce our margins,” Dodd said. “But we’re not for profit and really, we’re just here to pay back the bond. … We have enough customers paying $70 and $40 that it’s OK.”
The city is 91% covered by NextLight fiber and of those households and businesses, 60% are customers. Those not connected are households that haven’t ordered it or facilities that don’t want it, such as apartment buildings where the owners may have opted for cable internet service instead.
“We’ve made it look easy and wildly successful. It’s not easy,” Dodd said. “But in our feasibility study, we had a 35% maximum penetration and we’re at 60%. We’ve blown out the assumptions on the business case in terms of customers and revenue. … The end game is really for everyone to have fair and equal access to ensure that in this digital age, we’re all sitting at the table with equal footing.”
This story was updated on May 31, 2022 to note that funding for the Affordable Connectivity Program is from a $14.2 billion allocation as part of the trillion-dollar infrastructure bill passed by Congress last year