A key challenge to achieving universal broadband adoption in Alabama is that low-income households struggle to afford broadband services and devices with adequate technical support. Among Alabama residents who do not have internet service at home, 42.6 percent report that a primary reason they do not pay for broadband at home is an inability to afford service. Additionally, low-income individuals are 15.7 percentage points less likely than higher-income individuals to have a home internet subscription and they are 21.6 percentage points less likely to have a wireline internet subscription—further highlighting the connection between affordability and internet adoption.

During the COVID-19 pandemic, Alabama created the Alabama Broadband Connectivity (ABC) for Students program to ensure that students could continue their education via the internet during the 2020-2021 school year. The $50 million statewide initiative connected over 200,000 Alabama students in 107,000 households—with 76,000 households receiving vouchers from the Alabama Department of Economic and Community Affairs (ADECA) directly and 31,000 households receiving hotspots distributed by school districts.¹  After ABC for Students funding ended in June 2021, the call center for the program continued to aid Alabama households through August of that year, assisting households in transitioning from the program to other federal broadband subsidies.

Alabama's broadband deployment grant programs have also addressed affordability:

• The Alabama Broadband Accessibility Fund, which supports last-mile and related middle-mile deployment, awards points to providers in the rating of their applications for making a commitment to improving the adoption rate of broadband services by offering low-cost service programs to qualifying households; participating in the ACP or other federal broadband subsidy programs; or providing devices or digital skills training.
• ADECA has also incorporated scoring criteria and requirements around affordability into the Alabama Capital Projects Fund Program, which provides grants for providers to deploy last-mile service in rural, unserved areas. Subrecipients are required to participate in the ACP and applicants are scored based on their plans to offer services that are affordable to customers in the proposed service area—potentially including offerings with discounts in addition to the Federal Communications Commission's Affordable Connectivity Program (ACP) to deliver service at no cost to eligible subscribers—and their plans to promote these offerings.
• Alabama Anchor Institution/Middle-Mile (AIMM) Program subrecipients that provide service to households using AIMM-supported broadband infrastructure must, for as long as the AIMM-supported broadband infrastructure is in use, either participate in the ACP through the lifetime of the ACP or otherwise provide access to a broad-based affordability program to low-income consumers in the proposed service area of the broadband infrastructure that provides benefits to households commensurate with those provided under the ACP through the lifetime of the ACP. AIMM Program subrecipients that enter into an agreement with a last-mile provider to serve households using AIMM-supported infrastructure must hold the last-mile provider to the same requirement.

In January 2024, the ADECA outlined four strategies for addressing this challenge in the Alabama Statewide Digital Opportunity Plan. The strategies are:

1. Increasing enrollment in the Federal Communications Commission's Affordable Connectivity Program (ACP),
2. Increasing the number of low-cost service offerings available in the state,
3. Expanding access to computing devices with technical support (including through ACP), and
4. Developing data and informational resources to enable application of a digital opportunity lens to infrastructure and program decisions.

A total of 355,757 households in Alabama were enrolled in the ACP as of June 2023, a year before the program ended. That number represented less than 40 percent of all eligible households in the state. So the state's digital opportunity plan relied heavily on developing material for educational campaigns so more eligible households would know about and enroll in ACP. ADECA also planned to require broadband companies that are awarded deployment grants to provide low-cost offerings—and to encourage broadband companies that have not received awards to create or expand their low-cost offerings. 

ACP, of course, ran out of funding in June 2024 and is no longer an option for low-income households in Alabama and across the nation. While active, ACP provided a subsidy of up to $30 per month (or $75 per month for applicants residing on Tribal lands) for broadband service for qualifying households and included a one-time subsidy toward buying a laptop or tablet.

One option for ensuring additional low-cost service offerings in Alabama is through ADECA's implementation of the Broadband Equity, Access, and Deployment (BEAD) Program, an effort created and funded by the federal Infrastructure Investment and Jobs Act. While awarding BEAD grants for broadband deployment, ADECA must ensure that awardees will offer a low-cost broadband service option. In ADECA's approved implementation plan, the department outlines what those low-cost options will look like.

Alabama's Low-Cost Broadband Service Option for BEAD Networks

ADECA’s intention is to aid as many Alabama residents as possible while ensuring that the scale of the low-cost broadband service option—and its resulting impact on the business case for broadband companies to build to unserved and underserved Alabama locations—is not too burdensome for grant applicants.

The average household income of households of four at or below 200 percent of the federal poverty level in Alabama is roughly $35,000, yielding a conservative estimated disposable income of roughly $27,000.²  Applying the two percent rate results in a reasonable monthly cost of roughly $45.

In 2023, ADECA conducted a phone survey in which 75 percent of respondents at 150 percent of the federal poverty level signaled willingness to purchase internet service priced at $40 and 60 percent of such households indicated willingness to pay more than $60 per month. These amounts far exceed the National Telecommunications and Information Administration's (NTIA), the federal administrator of BEAD, model low-cost broadband service option of $30 per month. These data were provided by households earning considerably less (135 percent of the federal poverty level) than is required by NTIA for the low-cost broadband service option (200 percent of the federal poverty level). [ADECA believes this statistical analysis suggests that the number of households at or below 200 percent of the federal poverty level willing to purchase internet at $70 per month would be higher than the data show for households at 150 percent of the federal poverty level.]

The income eligibility requirement for the ACP was set at or below 200 percent of the federal poverty line, and the NTIA requires that household eligibility for the low-cost broadband service option be set at that level. That benchmark offered the potential to utilize a federal eligibility verifier, the National Verifier, as a useful, low-cost means of verifying eligibility that would not impose additional burden on either consumers or broadband companies. However, with the expiration of the ACP, the National Verifier is no longer available to check ACP eligibility. As a result, ADECA looks forward to NTIA issuing guidance regarding the impact of the ACP’s expiration on the BEAD Program and intends to avail itself of any changes in eligibility or other guidance regarding the low-cost broadband service option as a result.

Absent NTIA guidance, ADECA is concerned about the enormous challenge and cost for broadband companies as they seek to establish eligibility for the low-cost broadband service option because there no longer exists a mechanism at the federal level that enables accurate, efficient verification of income level for purposes of establishing eligibility (as well as preventing waste, fraud, and abuse). This challenge and cost will fall particularly heavily on smaller broadband companies that do not have the scale or resources to develop and administer an efficient verification mechanism. As a result, the lack of an eligibility verifier available at the federal level will hamper, ADECA believes, Alabama’s ability to implement the low-cost broadband service option.

ADECA proposes a maximum $70 cost for monthly service to align with many current low-cost offerings from broadband companies in the state and nationwide. ADECA believes this represents a sensible benchmark for a low-cost broadband service option to be offered by BEAD subgrantees. ADECA believes that a maximum price of $70 per month should allow a large proportion of households with incomes at or below 200 percent of the federal poverty line to reasonably afford reliable broadband service.

ADECA will allow BEAD applicants to propose options that exceed $70 (up to $85) and ADECA will approve those options if an applicant demonstrates that the proposed requirement would cause challenges for the viability of the proposed project or otherwise reduce the likelihood of the funded network being sustained and utilized over time. 

ADECA will consider approving alternative commitments so long as:

• The applicant demonstrates that per-subscriber costs in an area indicate that committing to the monthly rate defined below would be financially unsustainable and/or the impact on average revenue per user (ARPU) and total project revenue of the rate defined below would be financially unsustainable given actual or projected subscriber adoption patterns.
• There are no similarly situated, qualified applications for the defined area in the application wherein the applicant is not asking for a waiver.

BEAD low-cost options on BEAD networks must meet, at a minimum, the following criteria:

• Available to all households  with an income equal to or below 200 percent of the federal poverty line) and all other eligible subscribers
• Cost of a maximum of $70 per month or less (with the option for waiver), inclusive of all taxes and fees, with no additional non-recurring costs or fees (with the application of an annual inflation factor based on the Producer Price Index for the State of Alabama)
• Allows an eligible subscriber to apply the ACP subsidy (or other federally-designated subsidy) toward the low-cost broadband service option’s price and encourages ISPs to ensure that eligible subscribers are aware of their participation in the ACP (or other federally-designated subsidy)
• Download speeds of at least 100 Mbps and upload speeds of at least 20 Mbps as well as typical latency of no more than 100 milliseconds
• Is not subject to data caps, surcharges, or usage-based throttling, and is subject only to the same acceptable use policies to which subscribers to all other broadband internet access service plans offered to home subscribers by the participating subgrantee must adhere
• Allows eligible subscribers to upgrade at no cost in the event the ISP later offers a low-cost plan with higher speeds (downstream and/or upstream)

ADECA also aims to encourage broadband companies to offer a lower-cost, $30 per month offering, where economically feasible, to households with an income equal to or below 200 percent of the federal poverty line. Specifically, ADECA will award 4 points to applicants committing to offer this service for 5 years, inclusive of all taxes and fees, with an application of an annual inflation factor based on the Producer Price Index for the State of Alabama.

Because ACP has ended, ADECA will request BEAD applicants outline any alternative discount programs—along with the speed, latency, data caps, criteria of eligibility, and cost for low-income households—that they are or will be offering and request that they publicize the availability of such programs to potential low-income subscribers.

Alabama's Middle-Class Affordability Plan for BEAD Networks

ADECA says that it is committed to establishing policies that would ultimately lead to more widespread affordability among middle-class households. This commitment to expanding the adoption of broadband throughout Alabama, according to ADECA, necessitates the accommodation and partnership of BEAD grantees. In doing so, the state increases the likelihood of broadband company participation in BEAD and, in effect, will provide middle-class Alabama households a genuine opportunity to be fully engaged in the digital world.

ADECA seeks to effectively address affordability for middle-class subscribers without restricting providers’ participation in BEAD—which could lead to higher-cost awards and fewer residents that are served by all-fiber networks.

ADECA will continue to review the affordability of available service options within the state and encourage providers to offer a range of options that support broadband adoption. As part of this process, ADECA anticipates establishing a process of periodic monitoring and public reporting to ensure that high-speed internet connections are affordable for middle-class households in Alabama.

In measuring affordability, ADECA will work to monitor the impact of broadband costs on communities at the highest risk of disconnection, especially given that Infrastructure Investment and Jobs Act-defined "covered populations" in the state are 10.1 percentage points less likely than non-covered populations to subscribe to internet service.

ADECA plans to support middle-class affordability within the context of the BEAD Program by addressing the following areas of risk:

• Small, local providers propose low requested BEAD support, but set high subscription costs: ADECA will encourage broadband companies participating in the BEAD program to offer households in areas they serve with grant funding their best price for analogous products they offer in other areas.
• Providers shift drop and installation costs to the consumer to recover capital costs: Grant participation rules will make clear that drops and network equipment are eligible BEAD costs and should be built into grant proposals to avoid inflated subscriber prices. ADECA expects this risk to be somewhat mitigated by expanding competition in rural areas from 5G home internet and low earth orbit satellite options.
• Providers refuse to provide service to expensive locations: ADECA will monitor and ensure that awardees make good on their BEAD service commitments, including not assessing additional fees beyond standard installation fees. In addition, ADECA will incorporate monitoring and public reporting requirements regarding affordability into its BEAD subgrant agreements with awardees.
• Differential pricing between urban and new project areas: BEAD Program rules set requirements around geographic non-discrimination.

Alabama and Poverty

Since the Civil War, Alabama has been one of the nation's poorest states. According to 2019 estimates by the U.S. Census, Alabama was the seventh poorest state, with 15.5 percent of its residents living in poverty, as compared with a U.S. average of 11.1 percent. The state also contained five of the nation's 100 poorest counties, ranked by median household income. At that time, Alabama's per capita income was less than half that of the United States as a whole.

The state's long history of slavery, segregation, and racial discrimination helps explain the extremely high rate of poverty among African Americans.³ The state's economic development strategy throughout the nineteenth and most of the twentieth centuries is another source. It was rooted in desperate attempts to attract low-skill, low-wage industries, such as textiles, with tax exemptions coupled with government repression of unions that could have pushed for higher wages. The state's constitution makes it difficult—if not impossible—to raise property taxes, thus placing much of the tax burden on state sales taxes and other regressive levies that fall disproportionately on the poor.

Affordability of service is the primary reason cited by Alabama households for why they do not subscribe to broadband. The same is true for all covered populations in the state.

So the stakes for Alabama in Internet for All efforts are particularly important. A number of studies support benefits of broadband internet for employment, labor productivity, and economic resilience; expanded access to and adoption of broadband is important for reducing economic disparities. 

Additional Coverage on Alabama's Broadband Priorities

• Connect Alabama Gets Help From Capital Projects Fund
• Envisioning a Connected, Interconnected Alabama
• In the midst of pandemic, Alabama connects 100,000—and counting—low-income students to distance learning
• Six Community Broadband Networks
• ADECA BEAD Initial Proposal Volume 1 and Volume 2

See the latest Alabama broadband news

Notes

1. Erezi Ogbo, “Connecting Low-Income Families Using Broadband Vouchers,” Benton Institute for Broadband & Society (Sep. 20, 2022), https://www.benton.org/blog/connecting-low-income-families-using-broadband-vouchers
2. This analysis assumes a federal income tax at 12 percent, FICA at 6 percent, Medicare at 2 percent, and state income tax at 5 percent for a household earning $35,000 per year. This does not take into account the ways in which lower-income households may utilize tax refunds and other government assistance programs to increase their disposable income, and therefore represents a lower bound on the true disposable income for many of these households.
3. Poverty in Alabama. Encyclopedia of Alabama. https://encyclopediaofalabama.org/article/poverty-in-alabama/

More in this Series

• What We're Learning While Reading State Affordability Plans
• Louisiana's Plan for Affordable Broadband
• Pennsylvania's Plan for Affordable Broadband
• Washington State's Plan for Affordable Broadband
• The Kansas Affordability Plan
• Affordable Broadband for Nevada
• Will BEAD Networks Deliver Affordable Broadband for All in West Virginia?
• Delaware Wants to be the First State to Achieve Universal Broadband—Affordability is a Key Component
• Eliminating the Digital Divide in the District of Columbia Requires a Focus on Affordability
• A Plan to Bridge the Digital Divide in Colorado
• Ensuring All Hoosiers Have Reliable and Affordable Broadband
• Increasing Broadband Availability, Accessibility, and Affordability for the Benefit of All Utahns
• The Connection Between Affordability and Internet Adoption in Oregon
• Connecticut Working to Ensure Universal Broadband Availability, Affordability, and Accessibility
• How Maryland is Working to Make Broadband More Affordable
• Arizona Aims to Make the "6th C" More Affordable
• Illinois Committed to Changing the Broadband Affordability Picture
• Broadband Affordability is First and Foremost in Maine
• Universal Access to Affordable, Reliable Broadband in Kentucky
• Hawai'i is Working to Connect All to Affordable Broadband
• Equitable Access to Affordable Broadband in Wisconsin
• Connecting Massachusetts with Affordable Broadband
• Montana's Data-Driven Affordability Plans
• Connecting All Missourians to Affordable Broadband
• Balancing Access and Affordability in Rhode Island
• Ensuring Affordable Broadband for all Virginians
• Affordable Broadband is the Way to Improve Lives and Grow the Economy in Nebraska
• Affordable Broadband for Every Household in New Mexico
• New Hampshire Pursues Affordable Broadband With BEAD

The Benton Institute for Broadband & Society is a non-profit organization dedicated to ensuring that all people in the U.S. have access to competitive, High-Performance Broadband regardless of where they live or who they are. We believe communication policy - rooted in the values of access, equity, and diversity - has the power to deliver new opportunities and strengthen communities.

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