The “ACP” Program, vs Hold Them Accountable and Lower Rates Immediately.

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.

How is it possible that in America over 23 million households could not afford basic broadband and that there is an equal amount of low income families that could have applied for this? That is — — based on the US Census, there are 131 million households. Here, 1 in 6 American households got assistance; and an estimated (rounded) total of 1/3 of America’s households, can’t comfortably afford basic broadband.

And yet, the government decided to throw low income families under the bus. June, 2024, the FCC announced that the ACP program ended and it is clear that there has been a public policy shift. What was an emergency during the pandemic to make sure that everyone who needed broadband could get it is a fading memory. While there are many discussions to continue these subsidies, there has been no new funding.

Bottom Line: Exposed by the FCC’s ‘transparent’ accounting of ACP.

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; was paid by the low income families. This is not discussed in the FCC’s ACP information.
• I.e.; The average expense for broadband was $86, counting total charges, and therefore the $30 was only about 39% 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 (fixed-broadband) or wireless broadband service.)
• Only 25% of recipients had bills low enough to be paying $0, but this is with other subsidy programs included.
• The FCC’s ‘transparent’ information and presentation violates the FCC’s own “nutritional labels”, and obfuscates the ability to answer basic questions.

Overseas Prices for the Triple Play is about $35-$45 dollars. The US the Average is $220.00 and Rising.

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, had a basic rate of 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 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.

We highlight the details in the linked story above.

The Scandal: At the core of this ‘basic service’ is the fact that the cable companies have been able to charge ‘retail’ rates for a service, such as voice service, that has virtually no expenses as it is using the existing networks — i.e.; instead of being priced as based on the actual incremental costs, they can charge whatever they want.

Wireless Overcharging

Using the Verizon 5G offerings (2023) and comparing them to the Rewheel Research extensive examination of overseas prices and services, including the EU, when all is adjusted for dollars, overseas prices were around $15-$20 dollars and comes with hundreds of Gigs, as compared to Verizon’s prices which, with taxes and made up fees, was $90–100 for 5 to 50 GB.

But because the companies have created a made up scarcity, while overseas a Gig cost $.03 cents, in the US it is out of control and the prices vary wildly from $2.25 to almost $20 per GB. According to the ACP, the average cost to add a GB was almost $5.00. Thus, low volume users, especially seniors that have a cell phone or basic broadband, are being gouged.

As we move through the ACP ‘transparent information’, we will see that the ‘base price’ quoted has nothing to do with the actual total cost a low income family paid because it leaves out all other expenses.

IRREGULATORS’ POSITION: With ACP gone, America has a short fall to help the low income families post-government subsidies. We offer the alternative path, not based just on history but of current overcharging.

America never needed these funds had the companies — AT&T and Verizon — been held accountable for the fiber optic networks they never delivered over the last 30 years. Worse, customers have been already charged for networks most never received, including these low income families. And the amount is staggering — hundreds of billions of dollars for these upgrades. We’ve also documented how state laws were changed multiple times for this Digital Future.

Alongside the state failed deployments there has been a manipulation of the accounting that continues in 2024, where the funds to do fiber optic upgrades to homes was diverted to cross-subsidize, build out their wireless networks or use the monies to buy media companies, only to ignore their primary ‘footprint’, the state telecommunications public utilities.

ACP ended up being a gift to the same companies that failed to properly upgrade and maintain the state telecommunications infrastructure, but because there is no competition, this let the other wired company — the cable companies, to just keep adding made up fees, or worse, Comcast and Charter resell Verizon Wireless.

We respect those who care about solving the Digital Divide on all levels of the conversation, from broadband in rural and low income areas, and with the ACP being removed, the reality is — America didn’t fix the Digital Divide; we didn’t solve making prices affordable on any level and the core issues have not been addressed.

The FCC Data Shows Regulators Are Captured and Are Manipulating the Data on Multiple Levels.

The FCC claims that this presentation is ‘transparent’, but instead the data is atrocious as it covers over basic problems or leaves out critical material facts. Atrocious, in this case, is a technical term to mean, 2nd graders would do a better job and would not have a bias to protect the companies over the public interest.

Coming up: Part 2 Examines How Many Top ACP Providers Were there in America; 1,600 or 3–5? The FCC reported that approximately 1,600 internet service providers participated in the Affordable Connectivity Program (ACP) to offer discounted internet service to eligible households. However, what we uncovered is that the FCC never addresses:

• AT&T, the holding company has over 90 different providers listed, but under names such as Ohio Bell or Pacific Bell, which were the original names of the state utilities — in 1984, and all of these names had been removed 3 decades ago — but here they are again.
• Almost all of the Top ACP providers were tied to AT&T. Verizon or T-Mobile for wireless. We find that the FCC failed to mention that almost all of the top ACP providers offering wireless are MVNO’s, meaning they do not own the networks but rent them and AT&T, Verizon and T-Mobile are the actual wireless providers.

Prices: “ACP Transparency Data Collection Plan Overview”,

The FCC released the basic “ACP Transparency Data Collection Plan Overview”, and it supplies a collection of data that is not transparent; it is designed to sound reasonable but in the end makes it impossible to know the answers to basic questions.

• How much was an average broadband bill with all total expenses, per customer, per month?
• How much extra did low income families still have to pay out of pocket?

The Basics:

• The data presented gives the total number of subscribers at 19.7 million with an average cost of $56.16 paid per month for the ‘base’ monthly price.

The majority of money went for wireless-mobile services vs fixed broadband, such as cable TV.

And the price for the wireless ACP broadband service had a Base Monthly Price of $44, while fixed-broadband, meaning a wire like Charter, had a base price of $71.

NOTE: Where’s the 23 million total subscribers we’ve been told about? Just one of the numbers that have conflicts.

• The average participant received $30, so this means that wireless base rate has $14 dollars extra to be paid while;
• The wireline service has to pay $41 extra, which still remained to be paid by the customer, right?

Wrong. “Base Monthly Price” is just a distraction; it is not the total someone paid because it is missing all of the other taxes, fees, surcharges and even the modem needed to use the actual broadband service.

A Detail States:

“Base monthly price” means the monthly price for a broadband internet service offering that would be paid by a household enrolled in the Affordable Connectivity Program, absent the affordable connectivity benefit. The base monthly price does not include the price of any recurring monthly fees (such as fees providers impose at their discretion, or equipment rental fees), government taxes or fees, or one-time charges (such as installation charges, equipment purchase fee, etc.). Base monthly prices are weighted by the number of subscribers on each plan in each state.”

• Did the FCC leave out specific data to make the analysis almost impossible. Yes.

The FCC supplies information about some of the points left out, but there is no full calculation of a ‘Total’ bill.

The FCC supplies some of the numbers for the added fees and equipment, but the FCC has left off the actual taxes paid on the services, and they have mushed together the numbers to hide basic facts, as the presentation has categories and the number of subscribers but there is no way of answering basic questions like:

• How many customers had a cable or wireless or broadband company and what was the total bill’s litany of added taxes?
• There is no breakout information by company we could find, such as a ‘model total bill’.
• How much was the total cost to a customer once the taxes are calculated and added to the Total Bill?

FCC Violates the FCC’s Own Nutritional Labels

The FCC created a “nutritional label” to supply all of the total costs to the customer in the advertisement. As we wrote in another post, AT&T and Verizon have not done a thing to fix their basic advertising even though the requirement went through in April 2024.

And the presentation of this FCC data violates every aspect of their own nutritional label requirements, and never challenges the made up fees, which were added to the bills, so the labels make these charges seem legit.

Some More Basic Data:

• Only 24% of the population receiving the money had their total costs being covered through the plan and 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.
• Thus, the actual number of customers who were covered under the $30 discount is much less and that number is not available.
• 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 telecom 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 with the modem and that 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 companies, and 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. Another “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%.

30–40+% of the Charges that a Customer Pays Are Missing from the Advertised Price.

Having examined the charges on bills for decades with our auditing experts, we know that the basic rate, while seriously inflated, leaves out 30–40% of the total bill, which we detailed in a previous post. Let’s review the details.

AT&T has a wireline service for $45.00, (which is now called “AT&T Internet” or sometimes U-Verse, or it could be DSL or even DirecTV. AT&T has been continually changing the names.)

Regardless, the advertised price leaves out 30%-40% of the actual costs, such as:

• Broadband modem, at $10/mo. is not in the advertised price.
• Made up fees being charged, including a “Cost Recovery” fee.
• Other surcharges that are not government mandated, and unidentified taxes, are also missing.
• The fine print even mentions potential other activation fees.
• And if you don’t use Autopay, there is a financial penalty.

The fine print says:

“INTERNET OFFER: Additional Fees & Taxes: AT&T one-time transactional fees, $10/mo. equipment fee, and monthly cost recovery surcharges which are not government-required may apply, as well as taxes. See att.com/fees for details. Installation: $99 installation for full tech install. Credit restrictions apply. Pricing subject to change. Subj. to Internet Terms of Service at att.com/internet-terms.”

Charging for Made Up Fees that are Not Government Sanctioned.

AT&T et al. claim that they should have special privileges, like charging customers to pay their taxes, with a separate line item on the bill. Last time we checked taxes are part of the cost of doing business.

“Monthly fees collected by AT&T from its customers to recover costs AT&T pays in taxes and required payments levied by state governments. These fees are not a taxes or surcharges which the government requires AT&T to collect from its customers.”

These made-up fees are on all services, wireline or wireless. Take the “Admin Fee”.

“The Administrative Fee is a charge assessed by AT&T that helps defray a portion of certain expenses AT&T including but not limited to: (a) charges AT&T or its agents pay to interconnect with other carriers to deliver calls from AT&T customers to their customers; and (b) charges associated with cell site rents and maintenance. It is not a tax or charge which the government requires AT&T to collect from its customers. This charge is subject to change from time to time as AT&T’s costs change.”

THEY ARE CHARGING LOW OME FAMILIES THESE MADE-UP FEES IN THEIR EMERGENCY BROADBAND BENEFIT, AND THEN IN THE ACP PROGRAM. And this, in turn, will be CHARGED TO THE FEDERAL GOVERNMENT WHO WILL BE REIMBURSING AT&T AT SUPRA-RETAIL RATES.

Next up: Part 2: How Many Top ACP Providers Were there in America? 1,600 or 3–5?

The government states that there were over 1,600 providers offering these services, but the databases presented show that AT&T, the holding company, has over 90 other entries of subsidiaries and partners. But it gets worse — Almost all of the Top ACP providers were tied to AT&T. Verizon or T-Mobile for wireless. We find that the FCC failed to mention that almost all of the top ACP providers offering wireless are MVNO’s, meaning they do not own the networks but rent them and AT&T, Verizon and T-Mobile are the actual wireless providers.