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Allowing the Affordable Connectivity Program to Lapse Helps Nobody

Allowing the Affordable Connectivity Program to Lapse Helps Nobody

March 29, 2023

When it comes to congressional priorities for funding, extending the Affordable Connectivity Program (ACP) should be a no-brainer.

Households unable to afford broadband during the COVID-19 pandemic were cut off from society in a way that the rest of us weren’t. For many of those households, the debut of the then-Emergency Broadband Benefit (EBB) program provided a critical—and frequently lifesaving—resource. With the passage of the Infrastructure Investment and Jobs Act (IIJA) in 2021, the EBB became the Affordable Connectivity Program (ACP), a Federal Communications Commission (FCC) benefit program that discounts eligible households’ Internet service by up to $30 monthly (or $75 on eligible Tribal lands) and provides up to $100 for purchase of a connected device.

Despite largely unvarnished success—with over 16.8 million U.S. households enrolled—the ACP is expected to become insolvent as early as 2024 without a permanent wellspring of funding. Though extending its funding has strong support among registered voters of all political parties and demographic groups, its financial future is still undetermined, and with that, the future of those 17 million connected households remains up in the air.

Price is a major reason (though not the major reason) that many households don’t subscribe to the Internet. And for those on the lower end of the income scale, a $30 monthly discount can be the difference between being able to afford broadband or not—especially since many major ISPs now offer $30 plans specifically targeted to ACP participants.

For all its success, the ACP is plagued by an outreach problem—half of eligible households remain unaware of the program. More targeted outreach, digital literacy efforts, and investment in trusted anchor institutions like libraries will be necessary to reap the total benefits of the program. But overall, a recent GAO analysis found that, despite areas for improvement, ACP has started off strong as a vehicle for closing the divide. Notably absent among GAO’s recommendations was letting ACP’s funding run dry—and the more consumers subscribe, the less money there will be to go around.

ACP’s benefits extend beyond those it subsidizes directly. Increasing broadband affordability for low-income households creates subscribers and incentivizes investment where lack of income would have been a barrier otherwise. A recent study concludes that enrollment in ACP vastly reduces the subsidy necessary to incentivize ISP investment. More to the point, ACP funding is contingent on signing up eligible consumers, and thus provides a direct incentive to increase adoption rather than broadly dispensing money for extraneous deployment where lack of infrastructure may not have been the issue to begin with.

We have glaring examples of the former approach: The Universal Service High Cost fund puts over $4 billion annually into broadband infrastructure build-out in high-cost locations—and it’s funded by a fee assessed on consumers’ phone bills, which means that lower-income urban consumers may be effectively subsidizing higher-income rural landowners. The USF contribution factor has climbed dramatically in recent years and hit 33 percent in 2023. And even as the ACP’s deadline nears, the idea is percolating that the USF’s contribution base should expand to include taxes on broadband service and online content.

Here we see two impending changes that could raise costs for low-income consumers. If the ACP is allowed to lapse, even temporarily, the losses incurred will be tremendous—consumers will lose access to critical resources, and loss of trust in government will be incalculable. Nor should we muscle funding renewal through at the eleventh hour: Providers will start rolling back their discount offerings in anticipation of the ACP’s lapse, and many subscribers will be permanently lost in the ensuing churn. And expanding the pool from which High-Cost funds are drawn will just rope more consumers into subsidizing higher and higher-cost locations for larger amounts of money when more effective means of accomplishing the same thing exist.

In a world where near-universal connectivity is not optional, the ACP is one of the best methods for achieving that goal, and funding it should not be a question. The High-Cost fund should ultimately be scaled back and the money that frees up should be put towards the ACP.

In the short term, preemptively extending funding for the ACP should be non-negotiable, perhaps with a revision in the eligibility requirements if necessary. We have finally arrived at a broadband subsidy program that addresses the majority of Americans’ needs. The next step will be preserving it and expanding its benefits, rather than letting it lapse for no good reason at all.

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