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Don’t Let ACP Lapse Over the First-time Subscriber Fallacy

Don’t Let ACP Lapse Over the First-time Subscriber Fallacy

January 16, 2024

In a time when broadband affordability still plays a major role in the digital divide, the Affordable Connectivity Program (ACP) meets an obvious need. ACP effectively obviates affordability concerns by offering low-income consumers discounts on broadband plans that often render those plans free. Roughly two years into the program, around 23 million households are enrolled for discounted broadband and a one-time device subsidy.

We should be able to consider this case closed: We now have a strong, effective mechanism for closing the affordability gap. Indeed, ACP enjoys bipartisan support, and its virtues are extolled by industry and consumer advocates alike. But as the program’s initial funding winds down, some congressional Republicans are demanding more data before taking any action—particularly data on how many enrollees are first-time subscribers—and in doing so obstructing legislative agreement on a source of continued funding. In the absence of this permanent funding, ACP will run out in a matter of months, and the FCC is already being forced to make plans for its end.

The crux of the skeptics’ position is that absent substantive evidence that the majority of ACP recipients are first-time subscribers, the program is somehow failing and ineffective. In the view of some Republicans, high numbers of already-online ACP recipients represent “wasteful” spending that fails to “[produce] meaningful benefits to the American consumer.” Far better, they think, to let the program lapse than continue as is.

Of course, we should want more transparency and clearer information about ACP’s effects and enrollees. But it is wrong to imply or even claim that only first-time subscribers are the proper recipients, and doing so endangers efforts to close the digital divide by holding ACP hostage until we have perfect data. Exactly how many enrollees are first-time subscribers is not the make-or-break determinant of ACP’s success that lawmakers seem to think it is: Reaching only first-time subscribers was never part of ACP’s criteria for success, nor should it be.

The statute that created ACP was clear that customers who already subscribe to broadband could qualify for the benefits. It tasked participating providers with “notify[ing] the customer about the existence of the affordable connectivity program and how to enroll” precisely when that customer “subscribe[d] to, or renew[ed] a subscription to, an internet service offering of a participating provider.” So ACP wasn’t meant to help only first-time subscribers get online, and cannot be evaluated on this basis.

Moving forward, should it be? All signs point to no. Basing ACP eligibility on whether a household would get online otherwise would be prohibitively difficult and expensive and would provide no clear benefits. Like many other subsidy programs, ACP is intended to help cash-strapped households with their purchase of a necessity and to alleviate some of the tradeoffs that come with a very limited budget. For essentials that require consistency—like an Internet subscription—subsidy programs are intended to ensure stable access, not just to enable first-time use. Nobody’s denied food stamps because they’ve eaten food before or happen to have canned goods in their pantry.

Limiting eligibility to only first-time subscribers is not a serious position because households with the same budget constraints may prioritize different necessities, and it would be absurd to penalize one household for scraping together the funds to buy broadband while subsidizing another’s broadband subscription because they prioritized something else instead. Even more bafflingly, that same ineligible household might later become temporarily eligible according to the new-subscribers-only rule if it decided to prioritize something else over broadband, with no change in its economic situation.

Even if there were some reason ACP eligibility should be predicated on this type of assessment, it would be impractically expensive to administer. It defies reason that naysayers concerned with financial waste would spend significant resources trying to somehow measure households’ current and future intentions in parallel worlds without and without ACP. The administrative simplicity of ACP is a feature, not a bug.

Further, those citing budget concerns ignore the fact that broadband subsidy programs give back. Indeed, a recent economic working paper estimated that ACP alone added $55.2 billion to GDP—having spent $14.2 billion—a multiplier of 3.89. In other words, every dollar put into ACP funding that helped a household get or stay online added almost four times that to GDP. This is in line with other studies that acknowledge the immense value of the digital economy and network effects that benefit everyone as more people get online.

We do need more data on ACP. The FCC has already established the ACP transparency data collection to gather information on providers’ ACP plans, and there is also a need for a deeper understanding of the characteristics and needs of ACP recipients. In the future, it may be necessary to move funds from some Universal Service Fund programs to sustain ACP, especially since deployment costs should be eased by the consistent demand created by ACP coupled with the Broadband Equity Access and Deployment Program’s (BEAD) infrastructure funding. But holding the program hostage now until better data materializes is a misguided and harmful approach.

There’s a silver lining here: If the budget hawks have their way, they’ll get the numbers they’re clamoring for—exactly how many households would be offline without ACP—for free. The FCC has already started the process of winding down the program. Of course, this wind-down comes at the expense of every American relying on ACP and of consumers’ trust in government agencies, digital inclusion groups, and Internet service providers. It’ll ensure any future broadband affordability initiative fights a potentially losing battle to regain that trust.

With the window of opportunity almost closed, holdouts should recognize that this is all much too steep a price to pay.

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