The U.S. Department of Education, Federal Communications Commission (FCC), non-profit group Civic Nation and operators joined hands to launch a “Week of Action” designed to boost sign ups for the Affordable Connectivity Program (ACP). But New Street Research’s Blair Levin told Fierce Telecom that the effort will be a futile one if Congress doesn’t allocate more funding for the ACP.
Born out of the pandemic, the $14 billion ACP replaced the Emergency Broadband Benefit program, offering most consumers a $30 per month subsidy to help pay for their internet service. As of June 12, nearly 18.7 million households had signed up for the benefit.
The Week of Action is designed to push that figure higher and will include sign up events hosted by operators, housing authorities and healthcare organizations in several states. Events are slated to be held in Arizona, Georgia, Illinois, Kentucky, Massachusetts, New York, Oregon and Texas, among other locations.
But a quick look at the ACP dashboard shows the program has already spent nearly half of its funding in the year and a half since it launched. Analysts have already predicted that the ACP will run out of money sometime in 2024 and more enrollees would presumably mean the program will burn through its remaining money faster. At the moment, the prospect of additional funding remains elusive.
One step forward, two steps back
Levin told Fierce the effort to sign up new households for the ACP is “great” but added that “the highest priority ought to be getting a permanent sustainable source of funding or, in the alternative, at least” a temporary extension.
“The United States of America is positioned to take the single largest step backward in terms of widening the digital divide of any country since the beginning of the internet,” he said. “If we end the ACP program and the 50 million who are enjoying its benefits – not all 50 million will drop off but millions will and that’s a huge problem.” The 50 million figure he mentioned comes from the assumption that the current number of households enrolled will go up and there are roughly 2.3 people per household.
Operators who sign new ACP subscribers up today may very well be stuck in the unenviable position of having to send out notices to customers in six or eight months telling them the subsidy has run out and prices are about to go up. In addition to the bad look associated with such a move, disconnecting customers also comes with a financial cost.
According to Levin, the fate of the ACP will not just impact customers who are already connected but also influence operator calculations about where to run new connectivity as part of the $42.5 billion Broadband Equity, Access and Deployment (BEAD) Program. The state grants from that program will likely be designed to close the gap between the cost to connect rural Americans and what operators are willing to pay to build out to those locations. The ACP will play heavily into operator calculations regarding how much revenue they can make in a given area and thus what return they can get on their investment. And with the fate of the program uncertain, there’s a major risk to operators – especially small providers – that get that calculation wrong.
Levin noted the political spread of customers benefitting from the ACP breaks down to a roughly 50-50 split between Republicans and Democrats as far as representation on Capitol Hill goes. But while the ACP should have strong bipartisan support for more funding, Levin said “as I read the tea leaves, I think it really is going to be difficult” to secure more money.
And thus, he said, the FCC’s efforts would perhaps be better focused on Congress rather than enrollment.
“What I don’t see from the FCC…is a concerted effort to explain to Congress why this needs to be refunded, both for the short-term BEAD program and the long-term goal of closing the digital divide,” he concluded.
This story has been updated to correct Levin's quote from 15 million to 50 million.