Cable companies to offer discounted Internet service for low-income users

The cable industry today will announce an initiative to bring discounted Internet connectivity to low-income consumers throughout a large part of the U.S. Participating in the initiative are the nation’s largest cable operators—including Cablevision, Comcast, Cox, Charter, Time Warner and nine other companies—which together serve 86% of U.S. households.

Participating cable companies have agreed to provide cable modem connectivity at speeds of 1 Mb/s or higher at $9.95 per month to households that have at least one child who is eligible for the school lunch program for up to two years. Qualifying households will not pay an installation fee and the cable modem will either be leased free of charge for the program period or sold to the customer for a “nominal fee.”

The initiative builds on a similar one called Internet Essentials that Comcast already has undertaken as a condition of the approval of its merger with NBC/Universal (CP: The 8 most provocative things heard at The Cable Show). But unlike that program, this one does not appear to include a plan to enable participants to purchase computers at discounted rates.

Part of Connect to Compete program
The cable industry program to be announced today will be part of the Connect to Compete program announced last month and will be administered by the non-profit organization One Economy. Last month’s announcement focused on broadband adoption and literacy programs from Microsoft, Best Buy and other organizations.

Participating in today’s announcement, scheduled for 12:30 eastern in Washington, will be Michael Powell, CEO of the National Cable & Telecommunications Association, Cox Communications President Pat Esser and FCC Chairman Julius Genachowski.

With a minimum speed as low as 1 Mb/s the service that the cable companies will be offering may not qualify as “broadband” according to the FCC’s latest definition, which requires a minimum download speed of 4 Mb/s. That reality suggests there might be an opportunity for cable companies to earn a bit more revenue on the offering by offering participants to upgrade to a higher speed for an additional charge. But a press release issued this morning by the NCTA does not indicate whether that option will be part of the plan.

Low-income residents in areas served by a participating cable company and by CenturyLink actually may have more than one discounted Internet program from which to choose, as CenturyLink agreed to provide a similar offering as a condition of its merger with Qwest (unfiltered: CenturyLink to offer discounted Internet service to low-income consumers).