You’re reading the Benton Institute for Broadband & Society’s Weekly Digest, a recap of the biggest (or most overlooked) broadband stories of the week. The digest is delivered via e-mail each Friday.

Round-Up for the Week of October 14-18, 2024

In July 2024, the New Mexico Office of Broadband Access and Expansion (OBAE) released its Broadband Equity, Access, and Deployment (BEAD) Program Initial Proposal Volume II. This plan—in tandem with Volume I and OBAE's Digital Equity Plan—maps the state's progress in working towards sustainable broadband infrastructure and digital inclusion in New Mexico. Here we look at how New Mexico's plans to make broadband affordable for all in the state.

Broadband Affordability in New Mexico

According to the American Community Survey, 90 percent of New Mexico residents have a
home internet subscription of any kind. This is similar to the national rate of 90.3 percent. However, New Mexico residents do not have a similar adoption of reliable broadband when compared to the nation. Only 68.7 percent of New Mexico residents have a wireline home internet subscription. This is 6.8 percentage points less than the national rate of 75.5 percent. Additionally, 15.3 percent of New Mexico residents rely on a cellular data plan alone for the home internet service, which is insufficient to realize the many benefits of broadband. Mobile-only individuals typically cite affordability, their smartphone being good enough, and/or having access to broadband somewhere else as the reasons for not having home internet connectivity.

Of all New Mexico households that do not use internet at home, an estimated 10 percent claim that a main reason for their lack of internet use at home is an inability to afford service.

Individuals living in low-income households constitute the covered population with the largest adoption gaps. Low-income individuals are 14.5 percentage points less likely than higher-income individuals to have a home internet subscription, and they are 20.6 percentage points less likely to have a wireline internet subscription. Low-income individuals are also the covered population most likely to be mobile-only users, with a rate of 18.1 percent.

New Mexico's Low-Cost Broadband Service Option for BEAD Networks

The State of New Mexico is committed to providing residents with the opportunity to receive low-cost broadband service, while simultaneously recognizing that internet service providers (ISPs) have a variety of different plans and may be unable to alter their pricing structure on a large scale. OBAE believes ISPs are highly unlikely to implement different pricing structures for BEAD-funded areas only, while maintaining other pricing in areas that are not BEAD-funded. That said, a proposed $50 monthly service offering aligns with many current ISP low-cost offerings (in the state of New Mexico and nationwide) and represents a sensible benchmark price for a low-cost service option to be offered by subgrantees.

How OBAE Arrived at the Proposed Service Offering Price

According to the Federal Communications Commission, the current unweighted median price of 100/10 Megabits per second (Mbps) broadband service in New Mexico is $69 per month, with an overall statewide pricing range of $30 to $89 per month. When the Affordable Connectivity Program (ACP) subsidy could have been applied, the effective pricing for eligible low-income households purchasing services over BEAD-funded infrastructure would have been $40 if $70 is chosen as the low-cost price point, and $20 if a lower price point of $50 is set as the low-cost price point. [ACP ended earlier in 2024.]

This effective cost is considered reasonable in light of the generally accepted economic metric that broadband costs should not exceed 2 percent of household income. The average household income of a family of four at 200 percent of the poverty level in New Mexico is roughly $33,400, yielding a $56 per month reasonable internet cost at 2 percent of household income. At 100 percent poverty levels, the income threshold is $26,500 for a family of four, yielding a reasonable monthly internet cost of $44 (Data based on 2021 Census Current Population Study and 2021 Health and Human Services Poverty Guidelines).

This number is supported by the data from OBAE’s 2023 scientific phone survey, in which 58 percent of respondents at or below 150 percent of the federal poverty level signaled a willingness to purchase internet service priced at $40 (i.e., a price of $70 before application of the ACP subsidy). At or below 200 percent of the federal poverty level, fully 71 percent of households indicated a willingness to purchase at that price. Expressed willingness to pay is usually an underestimation of consumer behavior as survey answers capture some bias from what consumers would like to pay rather than what they would be willing to pay.

OBAE’s intention is to aid as many New Mexico residents as possible while ensuring that the scale of the low-cost obligation—and its resulting impact on the business case for ISPs’ applications to build to unserved and underserved New Mexico locations—is not too burdensome to BEAD grant applicants. The eligibility requirement for the ACP subsidy program is approximately equal to household income at or below 200 percent of the federal poverty line, suggesting a precedent for that benchmark as well as the potential to utilize the ACP National Verifier as a useful, low-cost means of verifying eligibility that does not impose additional burden on either the consumer or the ISP.

Service Option Criteria

OBAE proposes to require all BEAD subgrantees to offer a service option that meets, at a minimum, the following criteria:

• Will be available to all households that meet the eligibility requirements of the ACP program and, generally, households with income equal to or below 200 percent of the federal poverty line.
• Cost of $50 per month or less ($75 per month or less on Tribal lands), exclusive of all required federal, State, or county government taxes and fees, and inclusive of any optional, non-mandatory, and/or permissive fees (during the course of its outreach to ISPs, OBAE discussed this requirement. The ISPs agreed to plans that cost $50 per month.
• 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 the end user to apply the ACP subsidy to the service price and encourages ISPs to ensure that prospective customers are aware of their participation in the ACP.
• Meets performance requirements as established by the BEAD program, with download speeds of at least 100 Mbps and upload speeds of at least 20 Mbps, and delivers typical latency of no more than 100 milliseconds
• Allows subscribers to upgrade at no cost in the event the provider later offers a low-cost plan with higher speeds (downstream or upstream)

New Mexico BEAD and ACP

Since the Affordable Connectivity Program expired, and a successor program has not been established, OBAE’s Low-Cost Broadband Service Option requirements will remain unchanged from the above, with the exception that the cost must be $50 per month or less, including on Tribal lands, exclusive of all required federal, State, or county government taxes and fees, and inclusive of any optional, non-mandatory, and/or permissive fees.

New Mexico's Middle-Class Affordability Plan for BEAD Networks

OBAE is very cognizant of the barriers that New Mexico residents face to connectivity, and, as such, the State has committed itself to addressing these concerns in manner that aids as many residents as possible. Middle-income households are a significant demographic in New Mexico and as such, are a critical factor to be considered in support of the BEAD Program’s goal to make high-quality broadband services available to all residents.

OBAE is considering several policy options to ensure that broadband is accessible by all New Mexico residents, while simultaneously remaining cognizant of the delicate position of ISPs. As such, OBAE’s addressing of middle-class affordability aims to aid as many households as possible, while also aiming to prevent potential BEAD subgrantees from choosing not to participate in BEAD, which would lead to higher cost awards and fewer residents getting access to all-fiber broadband networks. Furthermore, OBAE’s policy-oriented approach intends to address the barrier of affordability that plagues many households with incomes that just surpass ACP eligibility.

Accordingly, New Mexico plans to address the following areas of risk:

• Small, local providers propose low requested BEAD support but set high subscription costs: OBAE will encourage ISPs participating in BEAD to offer areas they serve with grant funding their best price for analogous products they offer in other areas, in alignment with the gigabit best offered pricing requirement in the BEAD program rules. (ISPs should include current pricing through the prequalification process, and a rigorous financial proficiency test will be built into the letter of credit and prequalification process.)
• 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. OBAE expects this risk to be somewhat mitigated by expanding competition in rural areas from 5G home internet and LEO satellite options.
• Providers refuse to provide service to expensive locations: OBAE will monitor and ensure that awardees make good on their BEAD service commitments, including not assessing additional fees beyond standard installation fees.
• Differential pricing between urban and new project areas: The gigabit best pricing policy mandated in the scoring matrix sets requirements around geographic non-discrimination. New Mexico is committed to establishing policies that would ultimately lead to more widespread affordability among middle-income residents. This holistic commitment to expanding the adoption of broadband throughout the state necessitates the accommodation and partnership of BEAD subgrantees. In doing so, OBAE increases the likelihood of ISP participation and, in effect, will provide middle-income New Mexico residents a genuine opportunity to be fully engaged in the digital world.

Affordability Scoring Criteria

For All-Fiber Broadband Projects: OBAE will score affordability based on the pricing proposed for the symmetrical 1 Gbps service tier. The points received will be determined by the degree to which the applicant’s proposed price varies from a reference price for symmetrical 1 Gbps. This reference price will reflect the average price for symmetrical 1 Gbps, based on a 75 to 25 percent weight, respectively, as determined by the data in the FCC’s 2024 Urban Rates Survey. An applicant will receive 50 points if it commits to honor the reference price. The applicant will receive greater points, up to 100, based on the degree of discount relative to the reference price, with all 100 points received if the discount exceeds 50 percent. The applicant will receive fewer points based on the degree greater, with zero points offered if the premium meets or surpasses 50 percent.

For Last-Mile Broadband Deployment Projects Employing Other Technologies: OBAE will score affordability based on the pricing proposed for the 100/20 Mbps service tier. The points received will be determined by the degree to which the applicant’s proposed price varies from a reference price for 100/20 Mbps. This reference price will reflect the average price for 100/20 Mbps, based on a 75 to 25 percent weight, respectively, as determined by the data in the FCC’s 2024 Urban Rates Survey. An applicant will receive 50 points if they commit to honor the reference price. The applicant will receive greater points, up to 100, based on the degree of discount relative to the reference price, with all 100 points received if the discount exceeds 50 percent. The applicant will receive fewer points based on the degree greater, with zero points offered if the premium meets or surpasses 50 percent. OBAE will publish this scoring range for 100/20 Mbps affordability in its future program guidance.

A Vision of Affordable Broadband

In New Mexico's vision for digital equity, every household and community across New Mexico has access to affordable, high-speed broadband internet. This includes urban, rural, and underserved areas, as well as the 23 sovereign territories of the Nations, Tribes, and Pueblos, ensuring that no one is left behind due to geographical location. This aim underscores not just the state Digital Equity Plan, but the coordinated efforts undertaken by OBAE in pursuit of BEAD Program funding.

Additional Coverage on New Mexico's Broadband Priorities

• New Mexico's Plan for an Inclusive and Prosperous Society
• New Mexico's Commitment to Partnership and Progress Towards Digital Equity
• New Mexico's Five-Year Action Plan
• Connect New Mexico's Initial Proposal Volume 1 and Volume 2

See the latest New Mexico broadband news

More in this Series

• What We're Learning While Reading State Affordability Plans

Quick Bits

• FCC announces six-month waiver to provide discounted phone and broadband service support for Hurricane Milton survivors and future storms—FCC
• BEAD’s progress and variety: Some states are charging ahead but some will need more time, and BEAD mapping is complicated​—Connected Nation
• It’s not easy to keep urban areas connected to broadband—Fierce
• $8 Billion of the $10 Billion Capital Projects Fund is being spent for broadband—Fierce

Weekend Reads

• FCC Explores How Broadband Data Caps Impact Competition and Consumers—FCC
• Broadband Affordability: What Should Change?—New York University
• Willingness to pay for broadband: A case study of Wisconsin—Telecommunications Policy

ICYMI from Benton

• Milton's Four Horses Ride Through Florida
• Affordable Broadband is the Way to Improve Lives and Grow the Economy in Nebraska
• Impact of the Election on the Broadband Sector

Upcoming Events

Oct 22—The Google Search Antitrust Case—Finding a Remedy that Helps Consumers (Technology Policy Institute)

Oct 24—Broadband Data Collection Mobile Challenge Webinar (FCC)

Oct 24—The Conservative Weaponization of Government Against Tech (ITIF)

Oct 24—Digital Equity Solutions for Tribal Nations (NTIA)

Oct 24—Could a right to remote work stop declining birth rates? (Brookings)

Oct 24—Broadband Data Collection Mobile Challenge Webinar (FCC)

Oct 25—The Attention Economy: Monopolizing Kids’ Time Online (FTC)

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.

© Benton Institute for Broadband & Society 2024. Redistribution of this email publication - both internally and externally - is encouraged if it includes this copyright statement.

For subscribe/unsubscribe info, please email headlinesATbentonDOTorg

Kevin Taglang
Executive Editor, Communications-related Headlines
Benton Institute
for Broadband & Society
1041 Ridge Rd, Unit 214
Wilmette, IL 60091
847-220-4531
headlines AT benton DOT org

Share this edition:

Broadband Delivers Opportunities and Strengthens Communities