Those in need to get help with internet bills
WASHINGTON — The Federal Communications Commission late Thursday finalized a $3.2 billion program that will provide a monthly discount to millions of cash-starved Americans struggling to pay their internet bills — the country’s most ambitious effort yet to close the digital divide amid the coronavirus pandemic.
The first-of-its-kind emergency program aims to support families who are at or near the poverty line, workers who have recently lost their jobs, and students who receive some federal assistance to subsidize their higher-education costs. Many of these Americans will see their internet bills reduced by as much as $50 a month in credits paid to their internet service providers, and residents of tribal areas are eligible for even larger discounts.
The FCC under its acting Democratic chairwoman, Jessica Rosenworcel, raced to stand up the program after Congress authorized it as part of a sweeping $2 trillion coronavirus aid package lawmakers approved in December. It may take up to two months before Americans can take advantage of it; the government must still fine-tune its systems so that families can apply for, and providers can receive, the emergency benefits. That task is likely to be a tall one for Washington, which historically has struggled to deploy complicated technology under tight time constraints.
Once it is up and running, though, federal policymakers, internet service providers, educators and consumer advocates anticipate it will provide an immense financial boost to Americans who need the help at a time of high unemployment and economic dislocation. The broad support for the measure has generated political momentum for crafting a more permanent replacement that would help Americans obtain and pay for broadband services once the $3.2 billion fund runs dry.
“This is a program that will help those at risk of digital disconnection,” Rosenworcel said in a statement, citing the fact some students have had to sit in parking lots just to obtain wireless Internet to do their homework. “In short, this program can make a meaningful difference in the lives of people across the country.”
The new broadband program highlights Washington’s new, urgent campaign to close the country’s gap between those who can access the internet and those who cannot, laid bare by the coronavirus pandemic that forced families to work, learn and communicate primarily online. At least 18 million Americans still lack speedy, reliable Web connections, the FCC found in a report released last June. Government officials said the number probably is much higher.
The U.S. government spends about $9 billion annually to help fund the buildout of broadband infrastructure nationwide, subsidize low-income Americans’ phone bills and help schools equip their classrooms with speedy access to the web. But the aid at times has been riddled by mismanagement and neglect, undermining Washington’s efforts to address long-standing digital inequalities that disproportionately affect low-income families, people of color and students.
The FCC’S new emergency broadband benefit is intended to provide at least a short-term boost for these Americans while expanding the number of families who are eligible for some federal support. More than 33 million may be able to obtain the monthly aid, according to Free Press, a public-interest advocacy group, which said the number probably will be higher.
The discounts are limited to one per household. Some families also may be eligible for a onetime credit of $100 to help them purchase a device to access broadband service. They will have to apply to receive the aid, which will be paid directly to internet providers that register with the U.S. government and obtain permission to participate. Companies are not required to accept the benefits under the program.
AT&T, Centurylink, Charter, Comcast, Frontier, T-mobile and Verizon did not immediately commit to accepting the emergency benefits, although many companies and their trade groups have said in recent days they support the FCC’S work and intend to review its new implementing rules. The FCC voted unanimously late Thursday to start the program.
“Closing the affordability gap is vital to ensuring everyone has a chance to get ahead and participate in society,” said Ron Wyden (D-ore.), the Senate architect of the program. He said he hopes to either extend the benefit or revise other government programs to provide families with a more lasting digital safety net.
“Nearly every aspect of education, health care, work and communication require reliable broadband,” Wyden continued, “so it’s high time to stop treating it like a luxury.”
The entire benefit system may take weeks to set up, meaning families aren’t yet able to apply and may not start to see any aid until April, experts predict. But some public-interest groups — mindful of the federal government’s past missteps — have expressed fears in recent weeks that early hiccups could delay the emergency credits even further. They have aired particular concern with the technology the FCC plans to use to accept most applications and verify that Americans are eligible to receive the aid.
The technology in question is called the National Verifier, an online application tool that the government has used in the past to enroll people in another low-income subsidy program. The verification system is supposed to draw on state and federal data sources to help Americans determine easily whether they qualify to participate in Lifeline, which subsidizes millions of Americans’ monthly phone bills. But fewer than half of states as of last summer had actually integrated their data properly with the National Verifier, a government watchdog found in January. The digital deficiencies meant that people in these states are more likely to be declared ineligible for federal help even when they qualify for it, the report said.
The troubles with the National Verifier first surfaced during the Trump administration, when the Republican-led FCC under thenchairman Ajit Pai sought to implement massive cuts to the Lifeline program, a Washington Post investigation found. The shortcomings threaten to create fresh technological headaches in delivering new emergency broadband benefits, warned the New America Foundation’s Open Technology Institute, which asked the commission this month to double down on technical upgrades before payments begin.
“The emergency nature of this program will likely demand lessthan-perfect procedures in the interest of getting relief to people as quickly as possible,” the OTI said, “but the Commission must adopt sound verification procedures.”
The new broadband benefits are expected to be available for only a few months, until the total $3.2 billion authorized by Congress runs out. But the unprecedented size of the fund — and the expected early demand for the dollars — has left Democratic policymakers and telecom giants in rare accord over the need for a more permanent expansion of the government’s digital safety net.
Without congressional action, millions of Americans in a matter of months may see increases in their bills — or find themselves owing monthly sums they cannot pay. The sudden drop-off could send some families right back into the digital darkness.
“There’s no sense in wasting a crisis,” John Stankey, the chief executive of AT&T, said at a company event Wednesday.
Speaking at a news conference last week, Rosenworcel similarly stressed the government needed to seize the “opportunity for helping those people stay in that service, even after the program might end.”
“When the funds run out,” she said, “we’ll have to turn to Congress again.”
NEW YORK — Yes, it’s possible to have too much of a good thing, and that’s exactly why stock markets around the world are getting so unsettled.
Optimism for an economic revival is surging following a year of coronavirus-induced misery. But expectations for stronger growth — plus the higher inflation that could accompany it — are pushing interest rates higher, which is forcing investors to re-examine how they value stocks, bonds and every other investment.
When it tries to figure out the value for anything from Apple’s stock to a junk bond, the financial world starts by comparing it against a U.S. Treasury bond, which is what the government uses to borrow money. For years, yields have been ultralow for Treasurys, meaning investors earned very little in interest for owning them. That in turn helped make stocks and other investments more attractive, driving up their prices. But when Treasury yields rise, so does the downward pressure on prices for other investments.
All eyes have been on the yield of the 10-year Treasury note, which climbed above 1.50 percent this week after starting the year around 0.90 percent. Here’s a look at why that move shook up the financial world, including the worst week for the Nasdaq composite since October:
Why are treasury yields rising?
Part of it is rising expectations for inflation, perhaps the worst enemy of a bond investor. Inflation
means future payments from bonds won’t buy as many bananas, minutes’ worth of college tuition or whatever else is rising in price. So bond prices tend to fall when inflation expectations are rising, which in turn pushes up their yields.
Treasury yields also often track with expectations for the economy’s strength, which are on the rise. When the economy is healthy, investors feel less need to own Treasurys, considered to be the safest possible investment.
Why do falling bond prices mean rising yields?
Say I bought a bond for $100 that pays 1 percent in interest, but I’m worried about rising inflation and don’t want to be stuck with it. I sell it to you for $90. You’re getting more than a 1 percent return on your investment, because the regular payouts coming from the bond will still be the same amount as when I owned it.
Why are inflation and growth expectations rising?
Coronavirus vaccines hopefully will get economies humming this year, as people feel comfortable returning to shops, businesses reopen and workers get jobs again. The International Monetary Fund expects the global economy to grow 5.5 percent this year following last year’s 3.5 percent plunge.
A stronger economy often coincides with higher inflation, though it’s been generally trending downward for decades. Congress also is close to pumping another $1.9 trillion into the U.S. economy, which could further boost growth and inflation.
Why do rates affect stock prices?
When trying to figure out what a stock’s price should be, investors often look at two things: how much cash the company will generate and how much to pay for each $1 of that cash. When interest rates are low and bonds are paying little, investors are willing to pay more for that second part. Consider a stock like Apple or another Big Tech company, which will likely keep generating large amounts of cash many years into the future. It’s more worthwhile to wait a long time for that if a 10-year Treasury is paying less in the meantime.
And now that rates are rising?
The recent rise in yields is forcing investors to pare back how much they’re willing to spend on each $1 of future company earnings. Stocks with the highest prices relative to earnings are getting hit hard, as are stocks that have been bid up for their expected profits far in the future. Big Tech stocks are in both those camps. Dividendpaying stocks also get hurt because investors looking for income can now turn instead to bonds, which are safer investments.
The ultimate worry is that inflation will take off at some point, sending rates much higher.
Aren’t interest rates still really low?
Yes, even at 1.50 percent, the 10-year Treasury yield is still below the 2.60 percent level it was at two years ago or the 5 percent level of two decades ago.
“The concern isn’t that the 10-year is at 1.50 percent,” said Yung-yu Ma, chief investment strategist at BMO Wealth Management. “It’s that it went from 1 percent to 1.50 percent in a handful of weeks, and what does that mean for the rest of 2021.”
Ma thinks it could keep rising above 2 percent by the end of the year, but he doesn’t see it going back to the old normal of 4 percent or 5 percent, which would force an even bigger reassessment for markets. Until that becomes more clear, though, he says he’s looking for the stock market to stay volatile.
Aren’t stocks still really high?
Yes. Despite the recent pullback in the market, the major U.S. stock indexes remain near all-time highs set earlier this month. The benchmark S&P 500 index and Nasdaq each hit all-time highs on Feb. 12. The Dow Jones Industrial Average set a record high on Wednesday. And the Russell 2000 index of smaller companies notched an all-time high on Feb. 9.
Hasn’t the Fed said it will keep interest rates low?
Yes. The Federal Reserve has direct control over short-term interest rates, and Chair Jerome Powell told Congress this week it’s in no hurry to raise them. It’s also not planning to trim its $120 billion in monthly bond purchases used to put downward pressure on longer-term rates.
Powell said the Fed won’t raise its benchmark interest rate, now at its record low of zero to 0.25 percent, until inflation runs slightly above its 2 percent target level. Powell told Congress that while price increases might accelerate in coming months, those increases are expected to be temporary and not a sign of long-run inflation threats.
Is Wall Street still optimistic?
Yes, and one reason is that many investors agree with Powell and expect inflation pressures to be only temporary. That should hopefully keep rates from spiking to dangerous levels.
Also, after a dismal 2020 for most companies, investors are banking that corporate earnings will improve in the second half of this year as the coronavirus vaccination efforts broaden and the economy gradually begins approaching something close to normal. If earnings rise, stocks can stay stable or maybe even rise.
Do some companies do well when rates are rising?
Financial companies, particularly banks, have gained recently because rising rates can mean bigger profits made on a variety of consumer loans, including mortgages. And if rates are rising on inflation worries, energy companies could benefit if prices are also rising for oil and other commodities.
Overall, though, rising interest rates are a drag on companies because they make borrowing more expensive. This is especially painful for companies like real estate investment trusts, or REITS, which require a lot of money, and often debt, to operate.
People who rely heavily on credit may also cut back, which could have a ripple effect on all kinds of companies that rely on consumer spending.