The offer will start next summer and is part of an initiative the Federal Communications Commission cobbled together to get more U.S. homes connected to broadband.
One third, or about 35 million homes, don't have broadband. That affects people's ability to educate themselves and find and apply for jobs, FCC Chairman Julius Genachowski said.
"The broadband adoption gap in the U.S. is very large, and the costs of digital exclusion are high and getting higher," Genachowski said.
The initiative, called Connect-to-Compete, also includes Microsoft Corp., which pledges to sell PCs with its Office software suite for $250 to low-income families. A firm called Redemtech is offering to sell refurbished computers for $150, including shipping.
For those who can't afford those prices, Morgan Stanley is pledging to develop a microfinance lending program for community-based financial institutions.
People are still signing up for broadband, but growth has slowed in recent years. For those who still haven't signed up, cost is a minor factor. Most say they're simply not interested or don't need it, according to a report by the Commerce Department based on Census Bureau data from last year.
To help address the lack of interest and computer skills, Best Buy Co., Microsoft and nonprofits such as America's Promise Alliance and United Way are promising to support the initiative with training.
All major cable companies are standing behind the $9.95 offer, which will be valid for two years. The price doesn't include taxes, but the companies are pledging to charge nothing for installation or modem rental.
The minimum download speed will be 1 megabit per second, less than one tenth of average cable speeds. Brian Dietz, a spokesman for the National Cable & Telecommunications Association, said it will be up to the individual cable companies to decide what speeds they provide.
The NCTA estimates that about 5.5 million homes that don't have broadband will be eligible for the offer. According to the Commerce Department study, 78 percent of households with school-age children already have broadband, making them far more likely to be connected than the average household.
The big broadband gap is between younger and older households: Only 45 percent of people older than 64 have broadband. Black and Hispanic households were less likely to have broadband, even when adjusting for income, according to the study.
Comcast Corp., the largest cable company and the country's largest Internet service provider, is already offering broadband to $9.95 to low-income families, with a 1.5 megabit per second download speed. It offered to do that to get regulators to approve its acquisition of NBC Universal approved.
