Congress Should Prioritize the Affordable Connectivity Program for Broadband Funding

The recent dramatic sea change in broadband funding must come with a shift in priorities as policymakers continue efforts to close the digital divide. But the new reality has come with growing pains that have resulted in a distorted status quo: Currently, we are maintaining some of the least efficient programs while a far better one runs dry.

The Infrastructure Investment and Jobs Act dropped $65 billion on broadband. This money is enough to overcome any reasonable upfront hurdles to infrastructure deployment in virtually all parts of America where it makes economic sense to deploy fixed, non-satellite broadband. In light of this reality, policymakers need to reevaluate all broadband funding efforts. In particular, future funding for the High Cost fund is now either duplicative or futile. Yet reforms along these lines do not appear forthcoming, and there is no end in sight for the fees levied on consumers’ phone bills to fund this $4.5 billion per year behemoth. Indeed, the Federal Communications Commission (FCC) is now asking Congress for authority to expand the reach of these taxes. If the $65 billion did not solve broadband deployment, nothing will. Time to declare victory and let new high-speed satellite broadband serve the remaining small percentage of households that will be lacking fixed deployment.

On the other hand, Congress set aside $14.2 billion in 2021 for an Affordable Connectivity Program (ACP). The ACP provides up to $30 per month to low-income households, defined by enrollment in other low-income programs or having an income at or below 200 percent of the federal poverty line. It also provides a one-time payment of $100 to spend on broadband devices. This program is a move in the right direction: allocating money to individuals and including funding for devices is more likely to address the remaining barriers to universal connectivity.

But the funding for the ACP was a one-time sum that is dwindling rapidly. At the present rate, the program will be exhausted by March of 2025, but that is with only about 38 percent of eligible households enrolled. As the FCC and broadband providers spread the word about ACP opportunities, enrollment will likely increase. If enrollment expands to 50 percent, funds will be gone in July of 2024.

Congress should, therefore, get started now on reforms that would put the ACP on a stronger financial footing. This should start by rejecting efforts to expand Universal Service Fund spending. Instead, Congress should authorize using a portion of USF funding to fund the ACP. By one estimate, the ACP needs $6 billion per year to continue to function once the money runs out. By that time, current High Cost fund commitments should be out the door, and its $4.5 billion budget should be fully transferred to the ACP.

There may also be a good reason to revise the ACP eligibility requirements. Changing the maximum income for eligibility from 200 percent to 150 percent of the federal poverty line ($41,625 for a family of four) would still give a larger benefit to more people than the FCC’s other low-income program, Lifeline, while also stretching the money to meet the ACP’s primary goals.

Any remaining shortfall should be met by new appropriations. Funding programs through general appropriations, rather than a parallel FCC quasi-tax, would prevent a spiraling contribution factor from threatening the viability of the program in the future and lowering the after-tax price of broadband for all Americans.

Congress has taken positive steps to close the digital divide and modernize future subsidy programs. The ACP is the most efficient program available right now, and now is the time to make it sustainable.