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Trump admin warns states: Don’t try to lower broadband prices
ISPs getting grants must offer “low-cost” plan, but they get to pick the price.
Credit:
Getty Images | Andrey Denisyuk
The Trump administration is telling states they will be shut out of a $42 billion broadband deployment fund if they set the rates that Internet service providers receiving subsidies are allowed to charge people with low incomes.
The latest version of the National Telecommunications and Information Administration (NTIA) FAQ on the grant program, released today, is a challenge to states considering laws that would force Internet providers to offer cheap plans to people who meet income eligibility guidelines. One state already has such a law: New York requires ISPs with over 20,000 customers in the state to offer $15 broadband plans with download speeds of at least 25Mbps, or $20-per-month service with 200Mbps speeds.
Other states have been considering similar laws, and were initially emboldened by New York winning a yearslong court battle against ISPs that tried to invalidate the state law. But states may now be dissuaded by the Trump administration’s stance against price mandates being applied to the grant program.
As we wrote in a July 22 article, California Assemblymember Tasha Boerner told Ars that she pulled a bill requiring $15 broadband plans after NTIA officials informed her that it could jeopardize the state’s access to broadband grants. The NTIA’s new FAQ makes the agency’s stance against state laws even clearer.
ISPs get to choose price of low-cost plan
The NTIA rules concern the Broadband Equity, Access, and Deployment (BEAD) program, which is distributing $42.45 billion to states for grants that would be given to ISPs that expand broadband access. Although the US law that created BEAD requires Internet providers receiving federal funds to offer at least one “low-cost broadband service option for eligible subscribers,” it also says the NTIA may not “regulate the rates charged for broadband service.”
The Trump administration points to the latter language in its argument that ISPs alone must choose the price of the low-cost option. The new version of the BEAD FAQ says that states may not require specific rates for the low-cost service option (LCSO), even when required by state law.
The BEAD law “prohibits NTIA or the Assistant Secretary from engaging in rate regulation,” the FAQ said. “Because the Assistant Secretary must approve the LCSO in the Final Proposal, the rate contained may not be the result of rate regulation.”
The NTIA released a BEAD Restructuring Policy Notice (RPN) in June. The RPN eliminated Biden-era “requirements dictating price and other terms for the required low-cost service option,” the FAQ said. “Per the RPN, states may not apply state laws to reimpose LCSO requirements removed by the RPN… Violation would result in rejection of the Final Proposal.”
The RPN said that states are barred “from explicitly or implicitly setting the LCSO rate a subgrantee must offer,” and that the NTIA would only approve plans in which ISPs get to choose the low-cost rate. But while the RPN said that states may seek waivers when state laws conflict with the NTIA’s requirements, the new FAQ appears to rule out any waiver requests for broadband price laws. The update makes it clear that the Trump administration would reject any grant plan that includes enforcement of a state law requiring specific prices.
Cable lobby loves Trump admin update
America’s Communications Association, a lobby group for cable companies, last week urged the NTIA “to expressly condition access to BEAD funds on an Eligible Entity agreeing not to apply or enforce rate regulation in the context of BEAD deployment projects and to make clear that no waivers of this policy are forthcoming.” The group was satisfied by the NTIA’s update, saying today that the new FAQ “hold[s] the line against harmful rate regulations.”
Boerner told Ars last month that the NTIA’s guidance is a “complete farce,” but said she didn’t want to jeopardize $1.86 billion that California is expected to receive from BEAD. Boerner was criticized by California-based consumer advocates who said the state shouldn’t back down, particularly since the Supreme Court rejected ISPs’ requests to overturn the New York law.
New York is expected to get $664 million from BEAD, but its proposal last year said that ISPs would have to offer a low-cost option of no more than $15 per month. The NTIA said on July 21 that every US state submitted “corrections” to comply with the new guidance, which likely means that states removed proposals for specific prices.
While New York defended its Affordable Broadband Act in court against industry lawsuits, its approach to the Trump administration guidance is not yet clear. When we wrote about this a couple weeks ago, we were unable to obtain comment from the offices of New York Attorney General Letitia James and Gov. Kathy Hochul.
New York Assemblymember Amy Paulin, who proposed the bill that became the state’s $15 broadband law, was hopeful that it would be enforced on ISPs that receive BEAD funds.
“The NTIA rule that removed affordability requirements really comes into play in states without mandates (every state except NY),” Paulin’s office told Ars recently. “It’s our understanding that any BEAD awardee would have to comply with the Affordable Broadband Act regardless of federal subsidy.”
Jon is a Senior IT Reporter for Ars Technica. He covers the telecom industry, Federal Communications Commission rulemakings, broadband consumer affairs, court cases, and government regulation of the tech industry.
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