Recently adopted COVID stimulus legislation should boost providers’ broadband revenues in two ways, according to financial analysts at MoffettNathanson. While previous broadband stimulus programs have focused primarily on availability, the new legislation includes programs targeting both availability and affordability.
“The recently passed Consolidated Appropriations Act, 2021 and newly passed American Rescue Plan Act include as much as $20B of broadband-targeted spending,” the research note, penned by Craig Moffett and associates, notes. “And for the first time, around $10B of that spending will be targeted at affordability rather than availability: the $3.2B Emergency Broadband Benefit (EBB) program and $7.2B Emergency Connectivity Fund provide the firepower to potentially bring millions of new households into (or back into) the broadband market.”
When COVID-19 became a national emergency last year, most of the nation’s broadband providers signed on to the Keep Americans Connected pledge, promising not to cut off customers for non-payment of bills for a period of time, which gave subscriber numbers a boost by decreasing cutoffs.
That has changed now that the program is over, but the analysts argue that the trend could flip again as “the stimulus is targeted at precisely those customers who were unable to continue paying under the FCC Pledge.”
COVID Broadband Stimulus Legislation
The analysts highlight four programs in the COVID broadband stimulus legislation that could boost broadband subscribership and revenues. These include:
- Emergency Broadband Benefit Program, which includes $3.2 billion to provide up to $50 a month ($75 a month in tribal areas) toward the cost of broadband service for low-income households. In addition, the program provides $100 toward the purchase of a connected device for those households.
- Emergency Connectivity Fund, which includes $7.2 billion for eligible equipment or advanced telecommunications and information services (or both) for use by students, teachers, and library patrons at locations other than the school or library.
- Coronavirus Capital Projects Fund, which includes $10 billion for “critical capital projects directly enabling work, education, and health monitoring, including remote options, in response to the public health emergency with respect to the Coronavirus.”
- Capital Funding for states, totaling $10 billion, including $100 million for each state, territory, the District of Columbia, and tribal governments. Individual states, territories, etc. will be able to determine how to use the funding, as long as it goes to support remote work, education, and health monitoring. Not all the funding will go toward broadband but some of it undoubtedly will. “The remaining funds will be distributed based on a formula, allocating 50% based on population, 25% based on proportion of individuals living in rural areas, and 25% based on the proportion of individuals living below 150% of the federal poverty level,” the researchers explain.
Further funding for broadband infrastructure also may be coming, the authors note, as bills have been introduced in the house and senate that would provide billions more in funding specifically for broadband infrastructure.
All these programs are bound to increase broadband subscribership, the analysts argue, although they declined to provide a specific forecast.
“We’ll be the first to admit that we don’t quite know how to forecast what all this stimulus will mean to individual operators,” MoffettNathanson wrote in the conclusion section of the COVID broadband stimulus report. “We don’t know how efficiently it will be distributed, over what period it will affect subscriptions, when it will be allocated, and how much will go to services versus equipment or to fixed versus mobile… Still, it seems likely that estimates of net subscriber growth, particularly in the second half of 2021, will have to come up.”