Now that the lengthy legal beef has been settled and New York’s Affordable Broadband Act (ABA) is set to take effect this month, it marks a potentially pivotal moment in a national effort to address one of the biggest barriers to broadband adoption:
Affordability.
The first-in-the-nation law requiring large Internet Service Providers (ISPs) operating in New York to offer a $15/month plan for qualifying low-income households stands to benefit the approximately 1.7 million New Yorkers who had been enrolled in the federal Affordable Connectivity Program (ACP) Congress allowed to expire last spring.
With a new administration entering the White House – supported by GOP Congressional leaders who blocked previous ACP renewal efforts – the newly enacted ABA “paints a path that other states will look at,” as New Street Research analyst Blair Levin recently noted.
“In a world where the federal government is subsidizing low-income households for $30 a month, states did not need to take action to address low-income broadband affordability,” Levin added. But now, without the ACP benefit, “states may try to assist low-income households to keep them connected.”
Industry lobbyists, and the lawyers who challenged the law on behalf of the big monopoly providers, agree with Levin’s assessment – except they see the law as bad for the bottom line of shareholders. This, despite its obvious benefit to financially-strapped consumers living in a world where broadband access is a precondition for meaningful participation in an Internet-connected society.
God forbid something as important as Internet connectivity, which a recent survey found that 85 percent of Americans consider to be a basic utility, should be affordable.
In a legal brief filed with the US Supreme Court before the matter was adjudicated, industry trade groups argued that if the ABA were to take effect it would be a “watershed moment” and “many state legislators and bureaucrats (in other states) would surely then follow New York’s lead.”
On the other side of that argument are the 22 states most likely to “follow New York’s lead.”
California, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, Wisconsin, and the District of Columbia all signed onto a legal brief making the case that if the ABA was blocked by the courts, it “would undermine the states’ abilities to protect their residents.”
In December just weeks before the new year began, the US Supreme Court decided not to intervene in the case after a US appeals court upheld the law in April 2024.
Fallout From the Big ISPs
At least one major telecom company has already signaled its petty prerogative, perhaps hoping to give other states pause before enacting similar laws.
AT&T announced last week that as a result of the law going into effect, the company will no longer offer its 5G home Internet service in New York, even though it’s only available to about 2 percent of state residents.
As reported by Ars Technica, AT&T’s response to the law going into effect was to say “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.”
“As a result,” the company said, “effective January 15, 2025, we will no longer be able to offer AT&T Internet Air, our fixed-wireless Internet service, to New York customers.”
Meanwhile, Charter Spectrum, the dominant cable and Internet provider in New York, isn’t in a position to say much about the new law, as the company is bound by an agreement with the state requiring it to provide a $15/month plan to low-income subscribers enrolled in the National Free School Lunch Program or who receive Supplemental Security Income benefits.
That agreement was reached as a result of Charter previously increasing the price of its low-income broadband program to $25/month without the state’s approval, which violated the terms of its 2016 merger with Time Warner Cable – a move that nearly got the company kicked out of the state.
As for Starlink, its parent company SpaceX has filed for an exemption from the ABA, which suggests they have fewer than 20,000 subscribers in New York.
Good Bill for Low-Income Subscribers That Could Be Better
While the New York law may be “harmful” (not as profitable) for the corporate bottom line of the big ISPs, it won’t be harmful to small independent ISPs because the ABA offers an exemption for providers with less than 20,000 subscribers.
For those interested in creating the conditions for a more competitive broadband market and loosening the stranglehold monopoly providers have on subscribers, the ABA exemption is a welcome indication that New York state lawmakers are not engaged, wholesale, in what detractors call “rate regulation,” but are also keen to protect small private ISPs from any undue financial burden.
Of course, whether the exemption for ISPs with 20,000 or less subscribers is the right number is worth considering in other states.
A better number may be 100,000 or less subscribers, so that the bill more precisely targets the big monopoly providers who have enjoyed decades of taxpayer subsidies only to regularly raise prices, default on promises made, underinvest in the most vulnerable communities, and offer often unreliable service without consequence or penalty.
Another consideration other states eyeing an ABA-like law should keep in mind is that the New York law was written before the FCC updated the minimum national broadband definition speed to 100/20 Megabits per second (Mbps).
The ABA requires the low-cost plans to offer connection speed of 25/3 Megabits per second (Mbps), the FCC’s outdated benchmark. We would recommend that states seeking to iterate on this law would incorporate the new federal definition and set the affordable tier to be the current minimum of 100/20 Mbps.
Also, the ABA targets download speeds in a world where upload speeds are increasingly important. We would recommend including upload speed minimums in the definition as well.
Additionally, it’s worth noting that a law designed to require ISPs to do something they have refused to do needs to have some teeth to it. The ABA indicates that ISPs in violation of the law can be punished. It says violators can be fined $1,000 per violation, which we take to mean that non-compliance would result in one violation per day.
Lastly, it’s also worth making explicit one minor but important provision embedded in the ABA: which is the requirement that ISPs cannot hide the low-cost offering from the public.
Given how difficult it is for subscribers to find the broadband nutrition labels that the FCC requires ISPs to disclose (monthly price, download and upload speeds, data allowances, and any fees), it’s wise to have a provision that specifically requires ISPs not to bury information on low-cost plans as they seem to have gotten away with on the consumer labels.
Which Other States Will Follow?
We fully expect a number of states to consider enacting similar laws. In Massachusetts, for example, State Sen. Pavel Payano has already submitted “An Act Preserving Broadband Service For Low-Income Consumers” for the upcoming legislative session that also seeks to establish a $15/month offering for qualifying Bay State residents, except in the proposed legislation the bill calls for such plans to offer a minimum of 120 Mbps download.
The question now is: how many other states besides Massachusetts will follow New York’s lead?
*For broadband affordability advocates in other states, we created this fact sheet to explain what the law means for New York residents as well as options other states may want to consider.