Imagine coming home from work and realizing that your phone no longer works because your internet service has gone down. Most people would not be overly concerned because every Internet Service Provider (ISP) has temporary outages.
Sometimes bad weather or malfunctioning equipment leads to short-term outages, and on rare occasions, systems crash or experience hacks that result in longer downtime.
In all those cases, however, service eventually comes back. That’s not what’s happening for customers of RadioLink Internet (RLI). The small ISP serving rural customers filed for Chapter 7 bankruptcy on June 1, according to KTTC.
The company notified customers in an email about the abrupt shutdown, which has sparked legal action. RLI’s closure, however, highlights the pressures facing smaller broadband providers amid industry consolidation and the loss of federal broadband subsidies.
A quick look at RadioLink Internet’s Chapter 7 bankruptcy
RadioLink customers were told about the closure via email, according to ABC 6 News, but that was the only communication from the company.
“The website was down. All phone numbers gone. So there was no warning, no nothing,” Kayla Sikel told the local news station.
Sikel said she first thought it was a routine outage when her internet stopped working. She later learned by email that the company she had used for more than a decade had shut down.
“I’m sorry, and thanks for being a loyal customer, more or less is all that it really says,” said Sikel.
Minnesota Attorney General Keith Ellison has issued a consumer alert over the shutdown and has begun investigating it.
“The Minnesota Attorney General’s Office is currently investigating what caused the abrupt closure of RadioLink Internet and why consumers were not provided advance warning of any impending closure or bankruptcy. The Office will continue to monitor the bankruptcy proceedings and will make consumers aware of their rights, including any future claim deadlines,” according to a press release.
Ellison warned customers to do three things in case of future legal action.
- Preserve your records: Keep copies of all receipts, invoices, and correspondence related to your purchase for any services Radio Link Internet failed to deliver.
- Contact your payment source as soon as possible: If you paid for services with a credit or debit card, contact your credit card company or bank directly to request a “chargeback.”
- File a complaint with the AG: Ellison urges anyone with concerns or information about Radio Link Internet’s abrupt closure to contact his office by calling (651) 296-3353 (Metro area), (800) 657-3787 (Greater Minnesota), or (800) 627-3529 (Minnesota Relay), or by filing a complaint online.
RadioLink Internet filed for bankruptcy (case #26-31830) in the federal District of Minnesota Bankruptcy Court.
ISPs are under pressure
While RLI is a small player in the space, the entire broadband industry faces growing pressure. Customer cord-cutting has led many players to lose significant revenue on the cable side of their businesses.
Comcast and Charter, the two biggest providers, face dim growth prospects, but not a true survival challenge.
“The conclusion for the two [Comcast and Charter] is about the same: even a near worst-case scenario yields roughly flat subscribership over the next five years or so,” MoffettNathanson analyst Craig Moffett wrote. “That’s a far cry from the doomsday scenarios we typically hear for the bear case.”
The top-tier companies, which also includes AT&T, Verizon, and T-Mobile, however, may benefit from their relative strength as smaller players falter.
“These operators can pay cash or raise debt for assets, absorb distressed footprints at attractive prices per location, and lean on wireless, cable, or enterprise cash flows to carry fiber through its slow ramp-up. They’re not immune to macro risk, but they set the terms of consolidation,” according to PwC’s “Is the US consumer fiber boom heading for a shakeout or a step change?“
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Mid-tier and smaller ISPs are at risk
Industry research from PwC and policy analysis from the FCC shows the U.S. broadband market is increasingly consolidating, with smaller regional providers facing rising capital costs, limited scale advantages, and growing pressure to merge or exit the market entirely.
Mid-tier operators face significant risk.
“These are the operators that matter locally. Many face the same underlying pressures as bigger players — slowing growth in legacy footprints, rising capex, and investors focused on utilization rather than expansion — and they’re responding by clustering, going private, or repositioning themselves as attractive acquisition targets,” PwC wrote.
The smallest players are at the most risk.
“In good scenarios, they get acquired for adjacency value by regional consolidators or roll into co-op/municipal umbrellas. In bad scenarios, they stall half-built, lose grant eligibility, and see assets sold as ‘duct and strand’ for a fraction of invested capital,” PwC added.
ISPs provide crucial services
Smaller players are reliant on government funds, and the federal government has ended the Affordable Connectivity Program (ACP).
“The program, which was funded with a one-time appropriation of $14.2 billion, provided a subsidy to households with income at or below 200% of the federal poverty guidelines for monthly internet access: $30 per household or $75 per household on tribal lands. The ACP also provided a one-time subsidy of up to $100 toward the purchase of a connected device (e.g., mobile phone, laptop),” according to the U.S. Congress website.
Efforts to provide additional ACP funding in the 118th Congress were unsuccessful, and the ACP ended on June 1, 2024.
A National Lifeline Association survey found that after the expiration of the Affordable Connectivity Program, many households reported making difficult tradeoffs, including reducing other essential spending in order to maintain internet access.
Brookings Institution warned that the end of the ACP will have broad implications.
“Without the ACP or a consumer-driven subsidy to support the broadband marketplace, existing and new broadband providers, cash-strapped customers, and surrounding businesses depending on the connectivity for economic gain all lose in one or many ways,” according to the policy research hub.
Any closures could put some Americans into a position where they don’t have a traditional internet option.
The FCC Communications Marketplace Report finds that a significant share of U.S. households, roughly one-third, have access to only one provider capable of delivering broadband at 100/20 Mbps speeds, according to the FCC Communications Marketplace Report.
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