NECA Revises Tariff No. 5 To Allow Rural Broadband Providers To Offer Discounted Service To Low-Income Subscriber Households With K-12 School Children

October 5, 2020 – The FCC’s Wireline Competition Bureau has approved several tariff revisions made by the National Exchange Carrier Association (NECA) to help low-income households with children in school access higher broadband speeds or acquire broadband service if they do not have it. [1]

The revisions to NECA Tariff No. 5 provide two temporary discount programs available for subscriber households with a student in grades K-12 who is eligible for reduced cost or free lunch through the National School Lunch Program.[2] The two temporary discount programs, available from October 1, 2020 until June 30, 2021, provide the following:

A one speed level upgrade on existing broadband service at no additional charge

A 25% discount on new broadband service ordered after Oct. 1, 2020, where there was no service for 90 days prior

Each rural broadband provider that participates in the NECA Tariff No. 5 discount programs will be required to verify that the subscriber household contains a qualifying student by obtaining documentation regarding reduced cost or free lunch eligibility. The two new temporary discount programs are for Asymmetric Digital Subscriber Line (ADSL) and Symmetric Digital Subscriber Line (SDSL) Voice-Data Access Service options. They do not apply to speeds lower than 1 Mbps downstream, nor for speeds higher than 100 Mbps downstream. Both discount programs will be offered to wholesale customers (e.g. an ILEC’s wholly owned subsidiary ISP) and ILEC subscribers if the ILEC offers a retail broadband service.[3] Access order and non-recurring installation charges are waived for the two promotional offerings. No minimum service periods or term commitment penalties apply.

When creating the two discounts, NECA reviewed data published by the U.S. Department of Education-National Center For Education Statistics. NECA’s calculations assumed that 31% of households have K-12 students, and among those with K-12 students, 52% of households have students participating in the National School Lunch Program.[4] This information was used to help estimate the number of lines (subscriber households) that may be eligible for each discount program.

Free Broadband Service Upgrade (One Speed Level)

Eligible subscriber households that currently subscribe to broadband service may request and receive a free upgrade to the next higher speed level. Here are the full details from the revised NECA tariff:

Upon request from an existing ADSL or SDSL Voice-Data Access Service customer or a customer’s subscriber household with a qualifying student, and where technically feasible, the Telephone Company will provide an upgrade of one speed level, except for current 1/6 Mbps subscribers where the upgrade is two speed levels, from the customer’s speed in effect on September 15, 2020, at no additional charge until June 30, 2021 or until the service is discontinued or downgraded to the previous level, whichever comes first.

Existing ADSL Voice-Data Access Service customers can be upgraded to the next highest asymmetric speed level not to exceed 50/100 Mbps. Existing SDSL Voice-Data Access Service customers can be upgraded to the next highest symmetric speed level not to exceed 100/100 Mbps.[5]

Here are the available upgrades listed in the revised NECA tariff:

Current ADSL Voice-Data Speed – Promotional Upgrade

1/6 Mbps                                 3/15 Mbps

1/10 Mbps                               3/15 Mbps

3/15 Mbps                               3/25 Mbps

3/25 Mbps                               25/50 Mbps

25/50 Mbps                             50/100 Mbps

Current SDSL Voice-Data Speed – Promotional Upgrade

10/10 Mbps                             50/50 Mbps

50/50 Mbps                             100/100 Mbps

For the speed level upgrade promotion, NECA estimates about 17,500 voice-data lines are eligible. The upgrade will not impact revenue because the promotion only affects the broadband speed available to the subscriber, but as subscribers move to a higher speed, NECA expects additional transport costs will be reported to the traffic sensitive pool.[6]

25% Discount On Monthly Bill For New Broadband Service Subscribers

Eligible subscriber households may receive a 25% discount on new broadband service ordered after Oct. 1, 2020, where there was no service for 90 days prior. These new subscribers are not eligible for the free speed level upgrade. Here are the full details on the 25% discount from the revised NECA tariff:

Upon request from the customer, the Telephone Company will provide a temporary twenty-five percent discount on new ADSL or SDSL Voice-Data Access Service ordered on or after October 1, 2020 by a customer or a customer’s subscriber household with a qualifying student where there was no ADSL or SDSL Voice-Data Access Service for 90 days prior. The discount will be applied to the monthly recurring charges in effect at the time of the subscription and will continue until the promotion expires on June 30, 2021 or until the service is discontinued, whichever comes first.[7]

The temporary discount is available on the following ADSL and SDSL Voice-Data speeds:

ADSL                     SDSL

1/6 Mbps                     10/10 Mbps

1/10 Mbps                   50/50 Mbps

3/15 Mbps                   100/100 Mbps

3/25 Mbps

25/50 Mbps

50/100 Mbps

For the 25 percent discount, NECA estimates there are currently about 56,000 residential lines without broadband service in the study areas of NECA’s DSL tariff participants. After accounting for the National Center For Education Statistics, NECA estimates there are about 9,200 voice-data lines (subscriber households) meeting the eligibility criteria. NECA expects that the 25 percent discount promotion “could help up to 4,600 households (or 50 percent of those low-income households) subscribe to a broadband service for their children.”[8]

Why Are NECA & Rural Broadband Providers Doing This?

To try to close the homework gap, duh. Here is how NECA explains it:

The new temporary discount programs are being introduced to recognize the needs of students in low-income households for broadband services during the Covid-19 pandemic. The discount programs will facilitate prolonged at-home student learning by helping existing low-income subscriber households to access much needed higher bandwidths and new low-income subscriber households without broadband access to acquire it.[9]

What Else Has NECA Said About These Tariff Revisions?

One other interesting piece of information in the tariff filing is NECA’s estimate on revenue loss incurred by offering the discounts. NECA estimates the overall revenue loss will be de minimis over the 9-month period the two discounts are available.[10] With adults and children forced to stay at home during the pandemic, access to sufficient broadband service has been crucial. You can’t work from home or attend online school without a broadband connection. Rural broadband providers have stepped up to help ensure families have service and are not cut off from service because of an inability to pay. They all took the FCC’s Keep America Connected pledge, and many of them wrote off unpaid bills and miscellaneous charges related to broadband service. NECA’s new discount programs are another way rural broadband providers are helping Americans stay connected.  

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[1] Rural Broadband Providers Work With FCC To Meet Internet Needs Of Students In Low-Income Families; Hundreds Of Rate-Of-Return Carriers Will Provide Discounts And Service Upgrades To Help Families Obtain Needed Broadband Services; FCC News (Oct. 1, 2020), https://docs.fcc.gov/public/attachments/DOC-367268A1.pdf; NECA introduces discount broadband programs to aid students in low-income households, neca.org (Oct. 1, 2020), https://www.neca.org/publications/access/access-detail/access/2020/10/01/neca-introduces-discount-broadband-programs-to-aid-students-in-low-income-households.

[2] Also eligible are subscriber households with a student in a technical high school equivalent program who is categorically eligible for a reduced cost or free lunch. National Exchange Carrier Association, Inc., Transmittal No. 1616, Tariff F.C.C. No. 5 (Sep. 16, 2020), https://www.neca.org/docs/default-source/public---tariff-5/t1616.pdf?sfvrsn=39a64b61_2.

[3] NECA Revisions To Tariff F.C.C. No. 5, Transmittal No. 1616, Description And Justification, Page 1.

[4] NECA Transmittal No. 1616, Description And Justification, Page 3, footnote 2.

[5] NECA Revisions To Tariff F.C.C. No. 5, Transmittal No. 1616, Original Page 17–42.2.1.1.

[6] NECA Transmittal No. 1616, Description And Justification, Page 3. The transport cost is approximately $.009 per Mbps per DSL subscriber. Id. NECA expects less than $40,000 of additional unit costs to be reported for the nine-month period of the promotion, a de minimis amount. Id. at Page 4.

[7] NECA Transmittal No. 1616, Original Page 17–42.2.1.2.

[8] NECA Transmittal No. 1616, Description And Justification, Page 4.

[9] NECA Transmittal No. 1616, Description And Justification, Page 1.

[10] “NECA estimated $8.81 as the net revenue loss (or $19.24 - $28.04) for each low-income household. Assuming the 50 percent subscription rate mentioned above, this amounts to a net revenue loss of $364,000 for the remaining nine months of the test period. NECA estimated this net revenue loss as -0.4% of total DSL voice-data revenue or -0.2% of total special access revenue projections for the remaining months of the test period. Overall, NECA estimated the pool impact by the proposed discount promotion for low-income households would be de minimis.” NECA Transmittal No. 1616, Description And Justification, Page 4.