The FCC Is Taking Steps to Wind Down the Affordable Connectivity Program
fcc.gov
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On its face, the government subsidizing a for-profit company that has a monopoly seems like a terrible idea. Comcast already extracts monopolistic profits and thus captures as much of the economic surplus as possible.
Given that, price caps make a lot more sense to me. That's what has worked for utilities in general. If there's only one producer, they should be negotiating with one consumer.
But maybe I don't see the whole picture. Did the subsidy agreements work as a carrot to entire Comcast to lower its prices for enough residents that it was a net benefit? Are the positive externalities of a connected population worth the cost? Did this program work in some other way than subsidy?
Would love to learn more about this if anyone has good sources
It doesn't seem like this model works either.
As the model works fine in other locations, fixing California’s issues with mismanagement/poor incentives should be the priority not simply giving up.
Now, we have no idea which lines were repaired and not. Since this started decades ago, they have to dig up and inspect a huge number of lines.
Anyway, "mismanagement/poor incentives" is leaving out a lot of details involving graft and corruption, and malicious local governments.
For an example of corrupt/malicious local regulators: the Golden Gate Bridge maintenance road they recently built in Marin cost more than the bridge (inflation adjusted) and took longer to plan + build as well.
Can't say it couldn't help.
These broadband subsidies might be too good, or at least too well captured by too few players. They may be a good idea generally, but it looks like it's time to revisit the details.
The Texas grid is a massive failure in terms of both cost and reliability. Somewhere between 246 and 702 people were killed in 2021 when operators had already seen similar issues in 2011. Similarly people received bills that more than wiped out any long term savings they had received from hourly rate charging.
https://www.businessinsider.com/why-texas-residents-hit-with...
ERCOT is not a model that anyone should strive to emulate.
One company offered a plan where all of the electricity was purchased on the spot market. All of it.
Spot market purchases of electricity are very cheap. Except when they aren't.
Most months my electricity bill was 1/2 of current.
Like you said, most of the time you save a good amount of money. The salespeople and marketing pamphlets emphasize that. Do you really believe that the executives at these utilities are ignorant to the fact that most of their customers don’t fully understand the implications? I think they sell the plans specifically because customers don’t understand them.
Worse for Texas, their system’s market pricing setup incentivizes power utilities to minimize their overhead capacity. The closer their supply is to demand, the higher the price they can get. But it leaves very little wiggle room for emergency situations (99% Invisible has a good episode about this). Therefore, their grid is more prone to spikes in variable rate pricing than other states.
Like financial instruments such as options trading, financial games like this make sense for the wealthy who have a cushion of risk tolerance. I can make more money faster with options trading compared to an index fund!
But for the median and below wage earner, sudden bill surprises shouldn’t be something that the government enables for basic necessities like utilities.
i paid my $2,300.00 monthly electrical bill without complaint. (usual about $75)
the upside and downside were understood.
1. Fully understanding the potential of the downside.
and
2. Being able to financially cover the downside.
The median transaction account balance in America is $5,300, which includes money in the accounts for things like paying mortgage and rent.
https://www.bankrate.com/banking/savings/savings-account-ave...
So the median person signing up for that plan has to be ready to liquidate half their cash on an electric bill. If you’re below the median you’re even more screwed.
And I'm sure to all this you'll say "I made an informed choice and I should have that choice," but I think that's a highly debatable concept that depends a lot on the details – one of those critical details is the maximum rate.
But of course that option isn’t realistic for the vast majority of people.
The piece of data I’m missing is how often a huge spike in costs like the one described happens. It’s unpredictable, it could happen any day for any reason.
Like I’ve said a couple of times, I’m doubtful that most people with these variable plans sincerely knew that a spike that high was even possible. If you bought a variable rate mortgage to save money you wouldn’t expect it to ever be adjusted to 200% APR.
And the truth of the matter is that a $2,000+ electric bill isn’t reflecting anything close to the actual cost of generating the electricity, just like paying $50 for a roll of toilet paper during the pandemic wouldn’t reflect the real cost of producing the item plus a reasonable profit margin.
That’s another good analogy because everywhere else in our society, price gouging due to emergencies is illegal.
Your own numbers had it as doable but unpleasant. Should I not use those?
> I’m doubtful that most people with these variable plans sincerely knew that a spike that high was even possible.
That's a problem but it's a separate issue from whether they're better off financially.
> If you bought a variable rate mortgage to save money you wouldn’t expect it to ever be adjusted to 200% APR.
That would be pretty surprising, yeah, but if it was only affecting the payment for one month then it could still be a better deal overall.
> And the truth of the matter is that a $2,000+ electric bill isn’t reflecting anything close to the actual cost of generating the electricity, just like paying $50 for a roll of toilet paper during the pandemic wouldn’t reflect the real cost of producing the item plus a reasonable profit margin.
That's not true at all. It's not gouging.
The underlying principle of the Texas grid is that power plants that are almost never used get 0 dollars for months or years on end, and then they make all their money in a short window. The reason wholesale prices are allowed to go that high is to encourage those power plants to exist, because otherwise those power plants would not be built. That huge price is paying for years of maintenance and deprecation.
I'm going to assume, based on this statement, that you have an education that allows you to forecast and do cost-benefit analysis. Most people do not, and just hear "you will pay less". When you knowingly do this to people, it's a swindle.
Yes, we do need to protect some people from bad choices, and yes, that will limit the economic freedom of the very well-educated to some small degree. That's society, baby.
Consumers can select from maybe 50 "retail providers". They all have some kind of marketing deal, like "all green" or "free weekends" or "0.14 a kwh fixed for 3 years".
You pick your deal and deal with this 'company'. All of the electricity comes from the same place. All of the wiring is maintained by one company.
Your "choice" is deciding who sends your bill and collects the money.
Seems like a monopoly would be a lot cheaper. Less employees, less infrastructure, less advertising.
A corporation that is a monopoly has no motivation to keep pricing "fair" and, in fact, has an interest in making prices as high as possible. It is never cheaper this way.
We, as a society, seek to work around the problems that naturally-occur with monopolies by regulating them.
In Ohio, most of our residents have one provider (AEP). AEP owns the local infrastructure, and they also own the transmission infrastructure, and they are pretty tightly regulated.
To help keep pricing in check, it is required by regulation that the rate at which AEP buys their electricity at is set periodically by a competitive bid process. (This is, in theory, a process that works well for consumers and provides a reasonably low price: If a supplier can buy and sell (or otherwise produce) electricity cheaper, then they can put their bid in and have an opportunity to do so.)
The problem with regulation is that it is regulates. It is inflexible.
And sometimes, this bid process goes wrong: Early in 2023, for instance, it resulted in a generation price that was set to approximately double in six months[1].
The solution to both monopolies and regulation is consumer choice in a competitive marketplace.
Obviously, we in Ohio can't usually decide whose lines and infrastructure we use -- they're monopoly-owned. There's some exceptions to this like [2][3], but broadly speaking: Of course AEP is involved, because they have to be involved.
But we do get to choose our generation supplier[4], which is probably similar in function to how folks in Texas can pick their "retail provider" (except we don't get time-dependent metering).
And that very limited aspect of consumer choice does work for me, the consumer. I was able to completely bypass the 2023 price hike by selecting a different generation supplier. In fact, my total billed price per kWh of electricity used (inclusive of distribution, transmission, and fees) was actually slightly reduced compared to what I had been paying previously.
It's not a perfect system, as there are no perfect systems. But this little sliver of competition is better than being completely beholden to either an unregulated absolute monopoly or an inflexibly-regulated absolute monopoly.
[1]: https://puco.ohio.gov/utilities/electricity/resources/histor...
[2]: https://clydeohio.org/159/Clyde-Light-Power
[3]: https://www.columbus.gov/utilities/about/The-Division-of-Pow...
It’s just an illusion of choice and I would rather not deal with the constant door to door utility MVNO salesmen.
The comparison is more to cellular providers where there's open access to the same underlying infrastructure, and we have consistently good pricing nationwide thanks to competition.
The point in referencing national averages is to show that the electric utility model can result in sclerotic and under-performant regions that are impossible to fix.
Considering the geographic size of the electricity grid in CA, that's not surprising. A bigger grid is more expensive to build and maintain.
If we included all CA utilities, CA customers would only pay slightly above the national average.
Baseline allocations are very small (around San Francisco--territory T--you get 177 KWh/mo in the summer and 234 KWh/mo in the winter). Marginal consumption is almost guaranteed to be in the second tier. Under the old default E-1 plan, that means your marginal rate is currently $0.5257/KWh. [2] This is in excess of 3x the national retail average.
But E-1 isn't the default plan any more. These days that's TOU-C. It's more difficult to come up with clean comparisons with a time-of-use plan. To keep it simple, I'll just average the rates together. The variation across time and season is not huge, so it should be good-enough approximation. Under that plan your marginal rate is around $0.5388/KWh. [3] This is also in excess of 3x the national retail average.
What about at the other end of the state? I don't know as much about baselines around San Diego since I don't live there. If we use the same assumptions for SDG&E as we did for PG&E, the marginal KWh there comes out to $0.4833/KWh. [4] This is almost exactly 3x the national average retail rate.
And if you're somewhere between these two utilities and on SCE? The same assumptions put you at $0.43/KWh. [5] So you're just barely under 3x the national average.
[1] https://www.eia.gov/electricity/monthly/epm_table_grapher.ph...
[2] https://www.pge.com/tariffs/assets/pdf/tariffbook/ELEC_SCHED...
[3] https://www.pge.com/tariffs/assets/pdf/tariffbook/ELEC_SCHED...
[4] https://www.sdge.com/sites/default/files/regulatory/1-1-24%2...
[5] https://www.sce.com/residential/rates/Standard-Residential-R...
There are still old telephone co-ops from the early days of the telephone in the US. The one I'm thinking of is extremely rural (population density is < 2 people per square mile), with a median county household income under $25K. They put in fiber to the home years ago, and 1GBit symmetric is well under $100 a month. (They have cheaper plans too.)
Similarly, some places have started using companies like this:
You pay them to build out a local fiber network. You just pay the line installation, and then the community owns the network. The minimum project size is about 100 houses because that leads to a $100/month per house bill from the incumbent network's $10,000/month fiber uplink.
Concretely, imagine there was a subsidy for any area that doesn't have 1GBit symmetric for under $100 a month. Starting in the poorest communities, use the ACP money to establish a local co-op (per community, creating jobs) that charges 1.1x the cost of the fiber uplink per month, and saves 10% for network expansion / maintenance.
The ACP burned through $14.2B since 2021. It costs about $10K to run fiber to a house (it's almost all labor, so in urban areas you have short runs with high cost of living for the workers, and in rural areas you have long unobstructed runs with low cost of living).
They could have wired 1.4M low income houses for fiber with that money, and the co-ops could then charge the houses well under $100 per month for connectivity.
Another subtle problem with rural wireless is that you have to point to a well-connected area, so the cheapest way to service houses that are on the side of the hill facing away from town is often either fiber or putting the tower in orbit. Otherwise, you'd need to run a fiber trunk line to the middle of nowhere to support the ISP side of the wireless link.
Fiber has the property that you can run it in parallel to existing power lines, so any house with power already has an existing right of way to piggyback on (owned by the wrong person, but imminent domain exists). Also, you can choose to trench the fiber or run it on telephone polls.
If I were running things, I'd look into strategically deploying fiber-to-the-home to areas with good line of sight to poorly connected areas, and then use a hub and spoke network topology where the spokes are directional wireless and some of the homes are hubs.
That creates a second order problem though: You need backup power at the hubs or parts of the network will go down when the electricity goes out. Long term, it's probably cheaper to maintain a network of buried fiber than it is to maintain the electricity infrastructure needed to keep the towers online.
When it comes to broadband there is a question of “how good is good enough” but for the people living in Hamilton Montana (population 5k) I hope there can be a path to infrastructure investment that leads to high quality internet in town.
During high demand, our local WISP has 1 second latency to the internet because their wired backhaul link is terrible. It's less than 1ms to the tower. Starlink to the internet is in the 20-30ms range, and it's bouncing into orbit and back.
[1] https://www.eff.org/deeplinks/2020/06/why-slow-networks-real...
The ACP tries to make an expensive thing less expensive by artificially increasing demand. What if we tried increasing supply instead?
I worked at a major US telco for a while, their service wasn't anything to write home about either but you better believe they had very specific quotas of how many people they had to hire or contract relative to their customer count. At least in the US, union contracts often get extremely specific on that kind of thing.
I went around and around with the government saying that at&t obviously doesn't want to maintain this network so why not get something up before they let the copper rot in the ground.
Nothing doing.
That's regulatory capture by the majors. They don't want actual competition to reduce the value of their 'investments' so they avoid competing with each other, and smother all other parties in legislation and lobbying.
Will never happen. Comcast has the power, not the politicians. As Marx showed us 150 years ago, a state under capitalism tends to become a capitalist state.
Personally I think it's a tough spot. Infrastructure projects like ISP connections are best done once to a residence like power or water/sewer which is usually a city or heavily regulated natural monopoly. Ideally you could have the city run fiber to residences in the metro area and companies could compete for the service across those wires if we wanted to cling to markets like some places do with various billing providers for electrical power.
There's a huge need for subsidizing the internet for low income elderly/rural folks though. That's the intent. I work in digital equity and inclusion so tons of my learners/clients utilized the ACP. These are not middle class folks utilizing a loophole. I'm skeptical of these loophole claims as I know many who were denied for being ever so slightly over the poverty level.
So sure, on one hand giving more dollars to Comcast seems terrible, but that's like not wanting a school lunch free program because it's going to benefit Sysco or Aramark. There is a real need for helping low income access the internet.
I don’t know to what extent this program is being abused, but it’s surely happening. The government is basically enabling the cable companies to keep upping their base price, knowing that any customer who is desperate enough for a discount will just find a way to qualify themselves for this program.
I think being able to have internet at home is important. But there should have been limits put in place to ensure that this program was only being used for its intended purpose. Some lobbyist got rich off this thing, for sure.
It's non-zero, sure. And although the GAO identified fraud risks, no fraud assessment has been done. A humane response to this would've been to perform a fraud assessment and allow the FCC to take action against identified risks. This will hurt poor families by widening the digital divide, impact family education and employment, and reduce access to services.
I didn't feel right about it, so I cancelled my service, switched to AT&T, and filed a complaint with the FCC. The FCC then forwarded my complaint to Spectrum, who more or less claimed everything was hunky dory. Nothing really came of it at all as far as I know.
Unlike you, I didn't report my issues at the time, but since this whole thing has blown up in the news (and unfortunately become politicized) I have submitted letters detailing my experience. Hopefully they'll get to the bottom of things and find a way to throw out the bathwater without the baby.
Regardless, the reps make it seem like it's very easy to qualify if your kid gets free/reduced lunch. I assume that if you get handed over to a govt website an you click the "my kid gets free/reduced lunch" checkbox, that's all you have to do. This elides the detail that your kid gets free lunch because all CA schoolchildren do, which the ISP rep told you isn't a disqualifier. So at the very least, they're priming the pump for people to fill out forms incorrectly.
If you're already on the ACP, you will continue to receive the benefit until the funds run out, which is probably April unless Congress adds more funds which may not happen.
If you're not already on the ACP, you still have a chance to enroll. You can send in an application until Feb 7, 11:59 pm ET, and if approved, you will have the opportunity to sign up with your local ISP. After completing both steps, you will then receive the benefit until April as said before.
With Lifeline, in my neighborhood, you have a dozen scammy people on every street corner giving you a free phone or tablet, sometimes with no fees, other times they charge you (whether this is legal I don't know). These devices all come with only 15GB/mo of data which the ex-cons use up on YouTube or PornHub within the first three days of each month and then have no data to do anything essential with.
With ACP I can go into any cellphone store, Cricket, Metro, etc, get them a real 5G unlimited plan and decent phone for $40/mo, take off the $30/mo for ACP and off they go. All they have to do is make sure they find the $10 to keep their plan every month and, believe me, they want that porn to keep coming...
I make plenty, and still had my child's school, my ISP, cell phone carrier, and others browbeating me into applying. I even told them I didn't know much about it, but think I probably don't qualify, and they kinda imply 'oh theres other ways.' I did qualify, because my daughter's school is a CEP school. Out of curiosity I did as they were instructing, and sure enough it was approved without issue. Why? What's in it for my ISP and cell provider to give me a discount? Were they receiving more back in kickbacks?
I didn't renew because ultimately I felt guilty, but have to wonder how many people who didn't need it took advantage.
On the plus side, it did allow me to keep Comcast's "secret" $30/mo plan, that they let me keep after it expired.
the person you're talking to probably earned a commission or bonus based on how many they can convince to sign up.
This is what happens to gov't incentive programs - the cash and value generation is distorted.
Look at how homelessness problems in california is not solved, despite paying more than some $200k per homeless person in subsidies and grants. This is more than most (or any) job would've paid to that person. And yet, it fails to achieve anything of note, because the value generation (taxation) is _not_ aligned with the value recipient (which is not the homeless person, but the various orgs that spring up to eat the value while attempting to prolong the gov't subsidy/grant).
Have a watch of https://www.youtube.com/watch?v=PNxQ8JWxWMA
That said, I had dinner tonight with a formerly unhoused person here in SF, who is now living her life successfully because of that help, has an apartment, is paying bills, etc.
So while you think it fails to achieve anything of note, I think the problem would be a heck of a lot worse without it.
Basically: they don’t describe what happened. They describe how other people are less good.
“These concerns are drummed up by people who what to add every conceivable resistance to wealth redistribution possible”
Not the language of an open hearted soul. I’m going to default to “unconvincing argument” as the infinitely more plausible explanation.
K
> Not the language of an open hearted soul.
Found some.
That said, welfare programs are probably more efficient if they applied more broadly to society as opposed to adding paperwork barriers to people applying for aids.
Mandatory drug testing almost always costs more then it saves.
And yet we're told universal basic income is too expensive.
Give People Money [2018] https://www.amazon.com/Give-People-Money-Universal-Revolutio...
Am policy noob, so I don't know how to articulate this properly:
I support whatever social safety net wrap around services people may need.
But I don't support our top-down welfare bureaucracy. When a mere fraction of our spending benefits the actual people in need, wtf are we doing.
How I usually phrase it:
Help people help themselves. Then help those who can't.
(Rant over, thanks for listening.)
Giving jobs to the people "worthy" of a non-profit position (unemployable anywhere else). Which isn't to say that non-profits are particularly useless, just that a large swath of jobs in the US are just there so that someone's friend or family member or neighbor won't become destitute. If you're not in the network? Tough luck.
Honest people finish dead last in the race that is life. The winners are people who know where to draw the line between honesty and God Damn Lies(tm).
I say that as another fellow honest person (or at least I like to think I am...).
At the end of the day we all end up in a pine box. And if I'd taken advantage of people for money, it'd probably keep me up at night feeling guilty. Heck I felt guilty accepting money back from people I'd loaned it to that needed it.
I like to think there's enough of 'us suckers' to keep society as a whole running functionally, and don't want to know if not :).
So yeah, we aren't suckers, and without us our civilization will collapse.
0: https://www.oipa.org/international/animals-sense-of-fairness
He's saying people with religious beliefs lean more towards maintaining an honest society.
Personally, I'm inclined to agree. I'm Japanese and one of our old sayings is that "The Sun is looking down on us.", which is to say the Sun sees everything we do so we shouldn't do anything we would be ashamed of.
>Even without belief in gods, birds will 'take note' when other birds receive food non-proportionately[0].
By what measure are you so decisively saying that birds don't believe in gods? I'm not aware of any means with which we can communicate with birds to such a detailed extent.
>That's not even mentioning how religion has been used in the past to tear societies apart as well as individuals.
Every single religion is fundamentally about uniting peoples together and maintaining the public peace. It is unfortunate that this gets warped and abused when two different religions meet and end up viciously disagreeing, but murdering each other has never been the primary point of religion.
It depends on what race you're running. The problem is letting the con artists define the race - for money, for power. If you are running for something else, the cons are the ones that are losing. For some reason, our society defers to the cons, especially these days.
The cons disparage honesty because it doesn't work in their race - how can you be an effective con if you act honestly? - and they don't understand how to operate it; they've accumulated skills and habits in manipulation, not honesty (which takes skill and experience to do effectively in real life situations).
The ACP has the same problem our healthcare often does: Rather than forcing corporations not to fleece people, the government foots the bill and gets fleeced itself instead.
The US government seems unwilling or unable to just put their foot down and say "you're charging too much, and we're putting a stop to that".
https://www.cbo.gov/system/files/2022-01/57422-medical-price...
"The prices that Medicare FFS pays providers are set administratively through laws and regulations, and providers can either take them or leave them."
https://www.cbo.gov/system/files/2022-01/57422-medical-price...
And in 2016 only about 10% of health costs in the US were prescription drugs.
https://www.actuary.org/content/prescription-drug-spending-u...
I don't know why the school would push ot so jard, except making sure that everyone who needs it gets on it so they jave internet at home. Schools do push everyone to apply for the Free and Reduced lunch program, wether they need it or not, because there are many other funding programs tied to it. I don't know of any programs tied to the ACP directly, though.