More than 825 broadband providers are taking part in the FCC’s new Emergency Broadband Benefit (EBB) program. One of the participants is TruConnect, an MVNO that uses T-Mobile’s network.
The FCC kicked off the EBB program on Thursday, and even though it’s coming some 15 months into the Covid-19 pandemic, it’s welcomed with open arms by a lot of sectors. The program will make up to $3.2 billion worth of consumer discounts available for people in need of broadband services, as well as equipment like phones and tablets.
“Lifeline has been a terrific solution,” for getting communications into the hands of those who need it but can’t afford it, said Matthew Johnson, co-CEO of TruConnect, who runs the company with his brother Nathan Johnson.
But it was frustrating during Covid-19. Los Angeles-based TruConnect has been in the business for over 10 years, and “we kept telling anyone who would listen, Lifeline is a solution to these connectivity problems. Add more funding to the Lifeline program,” and companies could provide a better solution, he said.
TruConnect bills itself as the fourth largest Lifeline company and fastest growing in the U.S., with more than 600,000 customers nationwide. The brothers built the company through a combination of internal growth and acquisitions, including Telscape Communications, Sage Telecom and TruConnect Mobile.
Currently, TruConnect provides most customers with a free mobile handset that includes a hotspot so that they can connect to the internet, make phone calls and send texts. Most of that is free to the consumer, but it wasn’t until the EBB program came along this year that the government modernized the way it reimburses providers.
Those who qualify for the EBB program include people enrolled in or eligible for the federal Lifeline program; those who are approved for free or reduced-price school breakfast/lunch program or the federal Pell Grant; and those affected by Covid-related loss of income.
TruConnect is offering up to 14 GB of free monthly LTE data to Lifeline participants across all 50 states for the duration of the EBB program. TruConnect is also providing either a free Wi-Fi hotspot or a free 5-inch or larger Android handset with Wi-Fi hotspot support. Eligible subscribers also have the chance to get a discounted 8-inch Google Play-certified Android tablet with LTE.
One of the things that has dogged Lifeline is a reputation for fraud. T-Mobile was on the hook last year to pay $200 million in penalties related to Sprint’s misuse of the Lifeline program.
But Matthew Johnson said many of the problems have been addressed. “That’s been fixed, like 10 times over.” In fact, the pendulum has swung so far in the other direction, that as a company, “we are constantly audited by FCC and state regulators. We have all kinds of new regulations,” he told Fierce.
Companies in Lifeline are reimbursed $9.25 per month for providing services to a consumer; California adds an additional $14.85 to that $9.25, so it’s much more generous and allows service providers to offer more to consumers.
The EBB is a separate program from Lifeline that adds more money to provision services.
“I think the EBB program should have been part of Lifeline. I’m not sure why it was a totally separate program,” he said, adding that he hopes they eventually merge the two together.
EBB offers eligible participants up to $50 a month for service and up to $100 for a tablet or other device. TruConnect, which lost its MVNO deal with Sprint when it merged with T-Mobile, also has made a point to offer 4G LTE, at a time when other MVNOs are still offering 3G.
TruConnect competes against the likes of TracFone’s SafeLink Wireless brand. Johnson said he has mixed feelings about Verizon’s planned acquisition of TracFone Wireless. Many groups that have spoken out about the acquisition have said they’re concerned Verizon will drop support for the Lifeline segment, an assertion the carrier disputes.
Independently owned, TruConnect invested a lot in the design of its own handsets, which he described as a nice lower-end smartphone with a built-in hotspot. The company makes its money based on customers’ usage patterns; it’s a matter of managing the usage. Most of its Lifeline focus has been on California, however, EBB makes the economics more equal across all 50 states.
What others say
Johnson said his company has not been in direct contact with FCC Acting Chairwoman Jessica Rosenworcel, but he hopes that will change. Rosenworcel has been particularly outspoken about the need to equip all students with the means to do their homework, something she was already talking about a lot before Covid-19 hit.
“High-speed internet service is vital for families to take advantage of today’s health, education, and workplace opportunities,” she said in a statement last week. “And the discount for laptops and desktop computers will continue to have positive impact even after this temporary discount program wraps up.”
CTIA gave high praise for the EBB program. “CTIA and its members are proud to support the launch of the Emergency Broadband Benefit, with providers serving 99% of Americans participating in this historic program,” CTIA President and CEO Meredith Attwell Baker said in statement. “We applaud Congress for establishing the EBB and Acting Chairwoman Rosenworcel and the FCC for their work to ensure its swift launch.”
The minimum speeds at which most Americans can access the internet has been the subject of debate for years. U.S. regulators and lawmakers have been trying to ease the digital divide, recognizing that without access to the internet and service that delivers minimal broadband speeds, working from home and remote schooling are largely impossible, said Tammy Parker, senior analyst at GlobalData, via a news release.
“EBB discounts are the same regardless of service provider, but carriers can differentiate how they promote them, such as touting how EBB can be used to make their lowest cost plans free. The EBB aids carriers in that it will keep cash-strapped customers on the broadband rolls and should also attract users who may or may not have had broadband subscriptions in the past,” she said.
She warned that carriers likely have something to fear from President Joe Biden’s Broadband for All vision, in that it would prioritize funding for government-run or non-profit networks rather than incentivizing private investments through grants and subsidies to encourage infrastructure buildouts.