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New York City’s Broadband Reversal

New York City has done a 180-degree turnaround on the concept of the City providing broadband to low-income households. In 2020, then-May Bill de Blasio announced a plan to bring affordable broadband to low-income households. That Master Plan said that the City would make a $157 million infrastructure investment to provide broadband to around 600,000 homes that includes 200,000 residents of public housing.

The current mayor, Eric Adams, quietly killed the broadband Master plan after putting it on hold after coming into office a year ago. The mayor recently announced a new plan called Big Apple Connect, where the City will pay either Charter or Altice to provide broadband, depending on the neighborhood. Qualifying low-income customers who take basic broadband will get the service for free, with customers paying if they want more than the basic broadband product or other products in the cable bundle.

It’s hard to imagine a bigger philosophical turnaround. The original Master Plan provided for reasonable access for ISPs to city-owned infrastructure like rooftops and poles to help build the needed infrastructure. Five ISPs began offering broadband service under a pilot project that covered 30,000 residents, including Silicon Harlem, Starry, Sky Packets, Flume, and NYC Mesh. The $157 million plan would have constructed a fiber backbone to make it easier to get broadband into the poorest parts of the city. It was rumored that de Blasio was in conversation with People’s Choice Communications to oversee the construction of the new infrastructure. This is a cooperative formed by former employees of Charter that were locked out for years over a labor dispute.

The new Big Apple Connect plan will instead have the City covering the cost of broadband connections from the cable companies. It’s likely that the City has negotiated a bulk purchase rate for the large volume of connections. Interestingly, there is no discussion of requiring residents to enroll in the FCC’s ACP plan that reduces cable rates for low-income and other qualifying households by $30 per month.

There are obvious big pros and cons for the two contrasting plans. The plan to build infrastructure would likely provide the lowest long-term cost to the City by using city-owned infrastructure to connect homes to ISPs. The downside to the infrastructure plan is that it would take time to build the infrastructure, delaying the time when folks get free or cheap broadband.

Paying the cable companies can mean connecting a lot of homes now (assuming that the cable companies are connected to the low-income buildings and are willing to promote the low-income connections). Paying the cable companies also means providing a solution for homes throughout the community, not just those in specific neighborhoods. But it also must mean a significant annual subsidy by the City to pay for home broadband connections. I’ve worked with many cities over the years that considered this idea, but the long-term cash obligation to pay for broadband always scared them off.

Like anything in a huge city, part of this is political theater. A mayor can score big points by bringing free broadband to folks now instead of a few years from now. This kind of subsidy always grows legs over time, and it will be difficult for a future mayor to ever end the subsidy if that means turning off broadband to huge numbers of homes. It will also be interesting to see how the City puts a cap on who is eligible for the subsidy.

I talked to a few advocates for broadband for low-income homes and got mixed reactions. There were a few folks who think that infrastructure is the only way to go and that paying the cable companies is a dreadful idea. But a few folks I talked to said that a solution that brings broadband to most homes quickly sounds like a reasonable plan.

In many ways, New York City is unlike anywhere else in the U.S., even other large cities. That means that a solution that works or doesn’t work for NYC might not be that instructive for other communities. But this big turnaround gives digital access advocates a lot to consider. Are other cities willing to pony up the monthly cost of broadband to solve the digital divide?

By Doug Dawson, President at CCG Consulting

Dawson has worked in the telecom industry since 1978 and has both a consulting and operational background. He and CCG specialize in helping clients launch new broadband markets, develop new products, and finance new ventures.

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