What business conclusions might be drawn from news that 20 million accounts now are active as part of the Federal Communications Commission’s Affordable Connectivity Program? Probably a quarter of the customer base will prefer to buy less-costly, lower-performance services.
That has immediate business implications for suppliers of fixed wireless services and all internet service providers able to sell lower-speed services at lower prices.
Consider that there are about 123 million to 127 million “consumer and small business” accounts included in counts of “home broadband” subscriptions.
By most estimates, small businesses represent between 10 percent and 12 percent of those “home broadband accounts.” So for purposes of evaluating the consumer portion of the home broadband market, consider that there might be at least 111 million active accounts, using the FCC’s latest figures.
If 20 million of those accounts qualify for ACP support, then about 22 percent of the home broadband buyer base is likely to opt for less-expensive service plans.
Those figures do not include customers who opt to use mobile internet access as their only form of home internet access. Keep in mind that home broadband accounts are based on service to locations, where mobile-only internet access is based on service to persons.
If the total U.S. population is about 340 million, and 88 percent of adults use mobile phones, that implies fewer than 299 million mobile phone users. Assume 15 percent of phone customers do not buy an internet access plan for their phones. Assume 10 percent of the population is too young to use a mobile subscription.
That might imply only 224 million mobile internet access accounts in service. Then further assume 12 percent of phone users rely exclusively on their mobile phones for internet access. That might represent up to 27 million accounts.
If half of those accounts might consider getting a lower-speed, lower-cost home broadband service, and if half of those live in the same household, then about 6.8 million additional accounts might, in principle, be added to the ranks of potential home broadband buyers.
So possibly 27 million home broadband accounts might be, in principle, candidates for lower-cost services, or about 24 percent of all homes. That is consistent with OpenVault findings that about 26 percent of U.S. customers buy home broadband at speeds of 200 Mbps or lower.
So one might argue that about a quarter of the home broadband market is value oriented,a third is performance oriented and the rest are in the “reasonable speed for reasonable price” middle portion of the market.
Households are eligible for the CP if the household income is at or below 200% of the Federal Poverty Guidelines, or if a member of the household meets at least one of the criteria below:
Received a Federal Pell Grant during the current award year;
Meets the eligibility criteria for a participating provider's existing low-income internet program;
Participates in one of these assistance programs:
Free and Reduced-Price School Lunch Program or School Breakfast Program, including at U.S. Department of Agriculture (USDA) Community Eligibility Provision schools.
SNAP
Medicaid
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Federal Housing Assistance, including:
Housing Choice Voucher (HCV) Program (Section 8 Vouchers)
Project-Based Rental Assistance (PBRA)/Section 202/ Section 811
Public Housing
Affordable Housing Programs for American Indians, Alaska Natives or Native Hawaiians
Supplemental Security Income (SSI)
WIC
Veterans Pension or Survivor Benefits
or Lifeline;
Participates in one of these assistance programs and lives on Qualifying Tribal lands:
Bureau of Indian Affairs General Assistance
Tribal TANF
Food Distribution Program on Indian Reservations
Tribal Head Start (income based)
All of those criteria are associated with lower income levels.
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