Title: AT&T Cancels Internet Service in NY Rather Than Offering Discounted Plans for Low-Income Residences
On a Wednesday in New York, the Affordable Broadband Act, a law requiring large ISPs to offer budget-friendly broadband plans to low-income households, officially began enforcement. On the same day, AT&T announced its decision to abandon its 5G home internet service within the state altogether, preferring not to sell it rather than comply with the discount requirements.
For over four years, New York's legislation, a target of persistent legal challenges from pro-AT&T lobbying groups, faced fierce opposition. The law stipulates that ISPs with over 20,000 customers must provide two discounted plans – a $15-per-month service with at least 25Mbps download speeds and a $20-per-month option with up to 200Mbps. Eligible beneficiaries of social programs such as the National School Lunch Program, Supplemental Nutrition Assistance Program, and Medicaid are entitled to these affordable deals.
Approximately 1.7 million New York households currently receive SNAP benefits, making them ideal candidates for this legislative intervention. The state's move comes at a time when the Federal Communications Commission's Affordable Connectivity Program, which helped numerous households afford internet services, had recently expired due to Congress' inability to renew the funding.
AT&T, with reported Q3 2024 revenue of $30.2 billion, argued that New York's broadband law imposed onerous rate regulations that hindered its ability to invest and expand broadband infrastructure within the state. However, the idea that the legislation would significantly impact AT&T's financials seems questionable. The company is withdrawing its smaller-scale AT&T Internet Air service, primarily used in rural areas with no intention for fiber installation and reliant on a 5G network for speed delivery.
It remains unclear how offering discounted plans to low-income households would significantly impact AT&T's operations, given the service itself is a minor component of their broader client base focused primarily on cellular users. Past criticisms of digital redlining – strategically withholding infrastructure and services from low-income areas – have tarnished the company's reputation.
In response, AT&T promises free 45-day subscription extensions for existing Internet Air subscribers in New York, allowing them to seek alternative providers. While AT&T will maintain its 5G cellular packages and fiber services, its scarcity in New York limits their availability. Withdrawal of the service provides competitors like Verizon and T-Mobile with a potential opportunity to capture more of the New York market.
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- AT&T's decision to withdraw its 5G home internet service from New York is mainly due to the state's Affordable Broadband Act (ABA) that requires internet service providers to offer affordable plans to low-income households.
- The primary reasons for AT&T's withdrawal include rate regulations imposed by the ABA, making it economically unfeasible for the company to expand its broadband infrastructure in the state.
- The ABA mandates internet service providers to offer low-income households plans priced at $15 per month for 25 Mbps download speeds and $20 per month for 200 Mbps download speeds with specific rate constraints and annual price increase capping.
- The withdrawal creates an opportunity for competitors like Verizon and T-Mobile to capture more of the broadband market in New York, especially as Verizon already provides affordable options for low-income households, and T-Mobile can leverage this situation to expand its 5G services.
In the future, the absence of AT&T's 5G home internet service might encourage technology companies like Verizon and T-Mobile to leverage this opportunity and expand their broadband services in New York. With the Affordable Broadband Act continuing to shape the tech landscape, advancements in future technology could potentially provide more affordable and high-speed internet options for low-income households.
