Comcast said today it will expand eligibility for its discounted Internet Essentials service that targets low-income users and will increase the speed of the Internet service from 1.5 Mbps to 3 Mbps. The cable company also issued a progress report on the five-month old offering, which currently provides Internet service at $10 a month to households with at least one child eligible for the free school lunch program. Beginning in the second quarter of this year, the program will be expanded to households with at least one child eligible for a discounted school lunch.

“Schools are our most important partners,” said Comcast EVP David Cohen on a conference call with reporters today—noting that about half of program participants said they learned about Internet Essentials through a school.

About 30,000 schools are participating in the program, which is offered throughout Comcast’s service area. To date 41,000 households have signed up for the service, which according to Comcast, translates to 80,000 children and 160,000 people in total who did not previously have Internet connectivity. In addition to promoting the program through schools, Comcast also has promoted it through 3,000 government officials and community organizations.

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The number of people who have signed up for service is considerably smaller than the 91,000 applications that have been sent out. But Cohen said that 94% of completed applications have been approved. In addition, he noted that 81% of people who received surveys and have not returned them say they plan to do so eventually.

Another element of Internet Essentials is a discounted computer available for $150 to qualified program participants. To date 5,500 discounted computers have been purchased and delivered, Cohen said. The reason that number is so small in comparison with the total number of participants is that more than 80% of participants said they already had a computer, Cohen explained.

Despite the rosy picture that Comcast painted today, the Internet Essentials program has not been without critics. Action United, an activist group of low- and moderate-income people, argued late last year that Comcast wasn’t doing enough to promote Internet Essentials. In a report published by the Philadelphia Inquirer, Action United cited an informal survey of 107 families that found 62% had not heard of the program.

On today’s call, Cohen said Comcast plans to increase community and school outreach, including increasing literature distribution by schools and engaging libraries, recreation centers, employment centers and computing centers.

Comcast was required to offer discounted Internet service to low-income people as a condition of its acquisition of NBC Universal. But the voluntary program expansion suggests Comcast is finding that the offering makes good business sense. Perhaps that’s not surprising, considering that Internet service offers higher margins than cable companies make on traditional video services—and considering that the video service market appears to have reached a saturation point.

Beginning this fall, other carriers including Time Warner Cable will be joining Comcast in offering discounted Internet service to low-income people. Late last year the carriers announced they would participate in the Connect to Compete  initiative spearheaded by the FCC, which also will offer discounted Internet service and computers.

Also today, the FCC announced reforms to the voice-focused Lifeline program, which pays part of the phone bill for low-income households. The FCC said it will reduce the amount of subsidy per household to $9.25 per month from its current $10 and will tighten oversight of the program with the goal of freeing up money for a pilot test of a broadband-focused program. The commission said it will soon begin accepting proposals for the pilot program from service providers—and after what we heard today from Comcast it won’t be surprising if we see the cable company first in line with such a proposal.

 

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