AT&T, Comcast, Verizon Challenge: Subsidy Slash Threatens Internet for 23M Households

AT&T Inc T, Charter Communications, Inc CHTR, Comcast Corp CMCSA, Verizon Communications Inc VZ, and other companies are facing a significant challenge as a federal program that has been instrumental in providing free or heavily discounted high-speed internet to approximately 23 million American households will likely undergo substantial cuts in May. 

The reduction in funding could leave numerous low-income families with increased costs or without internet service entirely. 

The Federal Communications Commission (FCC) announced that due to Congress’s lack of new funding approval for this digital initiative, they would reduce the maximum subsidy to $14 per month, less than half of what some recipients receive towards their broadband bills, the Washington Post reports.

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The future impact on low-income families participating in the Affordable Connectivity Program (ACP) is uncertain and will largely depend on internet providers’ decisions. These providers can extend their discounts or choose not to accept federal subsidies after the cuts take effect. 

The FCC has urged providers to keep consumers connected during this critical time. 

Meanwhile, the White House has called on Congress to allocate emergency funding for the Affordable Connectivity Program, originally established as part of a 2021 bipartisan infrastructure law. 

In December 2023, Republican senators John Thune and Ted Cruz, along with representatives Cathy McMorris Rodgers and Bob Latta, criticized the FCC for misleading promotions of the ACP, which aimed to subsidize internet access for low-income households. The lawmakers questioned the value of continuing the ACP, suggesting its outcomes do not justify its costs.

Previously, SpaceX CEO Elon Musk criticized the FCC’s decision to reject SpaceX’s Starlink $885.5 million in rural broadband subsidies, calling it ‘extremely unethical and politically partisan.’

Price Actions: T shares traded lower by 1.45% at $16.66 on the last check Wednesday. CHTR shares traded lower by 3.39% at $262.27, CMCSA shares traded lower by 1.23% at $39.65, and VZ shares traded lower by 1.15% at $40.37.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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