Analysis of the FCC’s ACP Program and Why We Call for Immediate Investigations.
SUMMARY
IRREGULATORS RESEARCH MEMO:
This summarizes a group of separate examinations pertaining to the fact that America just spent $14.2 billion dollars to give a $30 government subsidy, known as “ACP”, Affordable Connectivity Program”, to help low-income families be able to get basic broadband service. And it has ended as of June 2024.
But it should be remembered that there was a previous $3.2 billion spent for the EBB, Emergency Broadband Benefit. According to the FCC:
“On December 27, 2020, the Consolidated Appropriations Act, 2021 became law and established an Emergency Broadband Connectivity Fund of $3.2 billion in the United States Treasury to help Americans afford internet service during the pandemic.”
With over 23 million households impacted, and about the same amount who could have applied for this low income discount, how is it possible that 1 in 3 households can’t comfortably afford basic broadband? (The US Census shows 131 million households.)
Worse, we have whole areas of America, from rural to low income areas, that can’t get high speed broadband, and the government has decided to not investigate how these failed broadband deployments or excessive high prices for services were created over the last 3 decades as this did not happen overnight.
And yet, the government decided to throw low income families under the bus. What was an emergency during the pandemic to make sure that everyone who needed broadband could get it is a fading memory. There are many discussions to continue these subsidies, and potential new legislation to bring new funding, but this doesn’t fix the underlying problems.
We believe that there is an alternative path that must happen — America needs to actually hold the companies accountable for creating the Digital Divide, which we briefly discuss later and in our state and federal filings.
The IRREGULATORS is a consortium of senior telecom analysts, auditors and lawyers that have been working together on different projects for decades. In 2024, our 4th class action suit was successfully settled. It is based on small business customers being put on a package that they did not order or could even use.
Conclusions and Findings.
The FCC’s data and analysis are being manipulated to hide basic material facts, or simply leave out primary critical analyses. The other option is that the FCC is clueless and the staff has institutional amnesia — and has rewritten history. The FCC never even examined basic questions about how the Digital Divide was created and which companies were responsible.
Bottom Line: Exposed by the FCC’s ‘Transparent’ Accounting of ACP
In order to make this research more accessible we created multiple separate articles that supply the bulk of our findings and ties to our previous work.
1) PRICING: Summary of Charges Shows Massive Overcharging of America.
2) FCC MisrepresentedTotal Number of Actual Providers. — 1,600 or 3–5?
5) CODA: They Rewrote History: Telecom Analysts, Auditors and Lawyers from the IRREGULATORS, Use Cutting Edge AI Tools to Defend the Public Interest. We filed in MA, NY, PA, NJ, and CA
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- PRICING: Summary of Charges Shows Massive Overcharging of America.
§ While the government spent $14.2 billion on ACP, it appears that the total spent is closer to $30 billion, as the low-income families’ $30 dollar subsidy did not cover the majority of the broadband expenses so they had to pay almost $46 more a month, on average. This means that an additional $16.3 billion above the $14.2 billion was paid by the low-income families. This is not mentioned or discussed by the FCC.
§ I.e.; The average expense for broadband was $86, counting total charges, and therefore the $30 was only a 1/3 of the total money; the total broadband bill.
§ NOTE: It appears that there were other government subsidies and benefits so that the total government subsidies came to $39.98, an additional $10.00 a month.
§ (However, it varied based on a wired broadband service or a wireless cell service or a fixed broadband service.)
§ The FCC’s ‘transparent’ information and presentation violates the FCC’s own “nutritional labels” and obfuscates the ability to answer basic questions.
Some More Basic Data
- Only 24% of the population receiving the money had their total costs covered through the plan, even with different discounts applied.
- Notice that the price, which is $39.33, is based on the fact that there were other government benefits that a low-income family could get.
- (And there are differences in the information for different categories,)
- Thus, the actual number of customers who were covered under the $30 discount is much less and that number is not available.
Research Shows: The “Base Monthly Price” is meaningless because it leaves out 30–40+% of the charges that a customer pays, but are missing from the advertised price.
What the “Base Monthly Price” Category Leaves Out
This Rogues gallery of additional charges on customers’ bills shows major harms.
Over 8.4 million, 43%, had a one-time “Other Amount” fee of some sort and it added a whopping one-time charge of $74 dollars. (We are using the 19.7 million subscriber number.) Remember, these are all low-income families who can’t afford basic broadband and yet the companies were allowed to pile on additional charges.
In another example, 32% paid an installation fee of $39. According to this, at least 3 million recipients, that’s 16% of the total ACP recipients, paid modem and/or router fees of $8.74 to $13.73 a month. This is outrageous when you consider that the service doesn’t work without the modem and the actual costs of this hardware was nominal, especially the wholesale purchase price with volume discounts, etc.
I.e.; the modem should never have been charged at these super retail prices and it is clear that they have created a separate profit center for the Digital Divide. It can be argued that the government allowed this wholesale overcharging of customers.
There are also ‘made up fees’, “junk fees”, that are not government mandated and should never have been allowed on the bill. The “other amount”, is most likely the “Cost Recovery Fee” and the “Admin Fee”, which AT&T and others are charging. There is also this $8.70, ‘Universal Service Fee”, and it is also not mandated but is a tax at almost 30%.
BASIC ANALYSIS OF PROVIDERS IS RUBBISH
2) FCC Misrepresented the Total Number of Actual Providers. — 1,600 or 3–5?
- The data on the number of ACP providers was statistical gibberish. The FCC lists 1,600 providers, only to find that:
- The holding companies, including AT&T, had a collection of subsidiaries and partners listed. AT&T alone had 93 listings but oddly, the companies listed, such as Michigan Bell, are long gone; this name was retired in 1992 and changed to Ameritech Michigan.
- IMPORTANT: All of the top wireless ISP providers were reselling only 3 companies: AT&T, Verizon and T-Mobile.
- The cable companies, Comcast, Spectrum-Charter and Cox all resell Verizon.
No Competition = Unaffordable Prices in America.
- According to Rewheel Research and the EU Broadband Commission, as well as actual bills, the prices overseas for broadband and wireless are a fraction of what we pay.
- Rewheel also found that countries with only 3 carriers are always 3–5 times more expensive than countries with competition.
- In previous research we detailed that the cable networks have been able to allow the other services, like voice or even the internet to accumulate enormous profit margins — but they are franchised and are mostly monopolies because the phone-wired companies failed to properly upgrade their networks.
How is it possible that overseas, the prices are a fraction of US communications expenses? As we discuss in separate articles and reports, using both actual bills, as well as respected analyses by the EU Broadband Commission and independent experts on wireless, including Rewheel Research, America’s communications prices should have been investigated. America is being overcharged, big-time.
When we compared the French Free Telecom offerings, including the triple play, we were stuck with a sharp contrast. (1 Euro = $1.09 dollar as of July 21, 2024. This chart was created when the Euro=$1.08. )
- The French Free Telecom company offers a triple play service, and examining an actual bill, the basic rate was 29.99 Euros, which went up after 1 year to 39 Euros, or about $44 dollars. The service is a 5 GB broadband fiber optic line, with cable TV, voice service, with the equipment included, and they even through in the world soccer games.
- The US prices, using a NY Spectrum triple play bill, with no frills, was $225.37.
- Notice: Free-France “plan” price was the total; no other additions were charged, such as made up fees, or even a modem fee.
- Spectrum base price was $156, and that base price includes none of the other charges, that include modem, taxes, fees, and made up charges.
Exposing that there are only 3 underlying wireless networks is only part of the story. As we previously documented, Verizon and AT&T were able to use their state telecommunications public utility budgets to build their wireless networks as well as charge wired phone customers for this construction. Though it varied by state, every Verizon and AT&T state had obligations to build out their wireline networks for fiber to the home as part of the state utility infrastructure. Instead, the companies diverted these billions per state to build out their wireless networks.
But that is not the end to the harms. In every state, laws were changed to charge customers for fiber optic network upgrades of the state telecommunications public utilities, and this happened multiple times. Customers were overcharged thousands of dollars per household — for services most never received, but also illegally funding these wireless networks.
Thus, the Digital Divide was created because AT&T and Verizon failed to properly upgrade their state telecom utilities to replace the aging copper wires with fiber and diverted the utility budgets to build out wireless. This also meant that there would be no serious wired high speed broadband competition of the cable companies or the delivery of fiber to the rural areas.
AT&T’s 21 State “Footprint” are the collection of state-based telecommunications public utilities.
In fact, when AT&T offered its EBB funding discounts it was always in the “AT&T footprint”; which is ironically, the original state utility franchised territories.
AT&T Puts Its ’21 State Footprint’ in Its Mouth.
CODA: To Summarize the Dirty Little Secret — They Rewrote History.
America is now starting the new round of financing to ‘close the Digital Divide’ with a $42 billion dollar BEAD program. We expect the largest recipients to be the phone and cable companies that helped to create the Digital Divide.
1) All Americans have the right for a fiber optic future because as a nation we already paid for it multiple times.
2) By 2024 it is inconceivable that the FCC did not start investigations into the 3 decades of state-based fiber optic networks that were to be deployed — starting in 1993 and to be completed by 2010–2015.
3) These state laws were to have new infrastructure — modernizing the state telecommunications public utility — which still has franchises in 2024.
4) The Plan: Replace the existing copper with fiber to modernize for more capacity is “broadband”; it was not about “voice calling” only — a fact that is obscured by rhetoric.
5) What you don’t know; By 2010, the companies were able to pull a massive financial bait and switch and move the budgets that were to be used for these modernization plans to illegally build out their wireless mobile networks.
6) But — the fiber optic lines that have been put in are part of this state utility — because they were put in as an upgrade of the existing networks. By doing this the companies were able to continue to bill customers.
7) No state has stopped either the rate increases to customers or examined the cross-subsidies to wireless — and the construction budgets in 2024 are still being paid and not used by the utility but are the force creating more rate increases.
BUT, everyone has a cell phone. And the answer is:
8) Wireless is a separate affiliate company that was supposed to be competing with the wireline networks. Instead of fiber to the home it went for ‘mobile wireless’; but customers paid for infrastructure and replacing the aging copper.
9) Wireless Mobile toys vs dedicated fiber to the home. Wireless requires a fiber wire, and it is not “high speed broadband” in both directions. Moreover, the fiber is infrastructure; it is not dependent on cell sites or battery charging or screen size — (without the chicanery of the company controlling, limiting, filtering, slowing… etc.)
10) The fiber optic lines that were put in are part of the state utility as “backhaul’ or “special access” lines, but there is no accounting of any lines in service — there is no mention that these are part of a utility.
11) The accounting has also been manipulated and easily documented. Turns out that the companies along the way were able to have one line item, local service, be the cash machine illegally for all of the other lines of business.
12) No one state has even examined the financial books of the state utility.
13) Not one state has halted the budgets for fiber optics going to wireless.
14) Not one FCC or NTIA report has ever even mentioned these accounting issues or the state-based telecommunications public utilities cross-subsidies of all of the other services.
15) Every State 5 Year Broadband Plan has left out material facts, presenting a deceptive, analysis on how to solve the Digital Divide. Every state had multiple changes in state laws to build new fiber infrastructure in the state by the incumbent state utility.
16) Not one 5 Year Broadband Plan has mentioned that there are state telecommunications public utilities or that their failure to do the upgrades resulted in the Digital Divide.
More Documentation: We examined these 5-year state broadband plans with our AI and 2 decades of state and federal filings.
17) Telecom Analysts, Auditors and Lawyers from the IRREGULATORS, Use Cutting Edge AI Tools to Defend the Public Interest. We filed in MA, NY, PA, NJ, and CA
If this was a quiz, how many of these points would you know about or could explain?
