Tax season is an annual event for the U.S. prepaid industry, which usually results in an uptick in purchases of wireless devices with top prepaid carriers.
This year, it is different. As of February 8, the Affordable Connectivity Program (ACP) is no longer taking new enrollments, and funding for the more than 23 million households connected via the ACP is slated to run out by May. Carriers face a painful spike in churn as funding potentially runs out.
As seen here, the FCC is no longer accepting applications for ACP. The program provides a discount of $30 on broadband or wireless access to people who have low incomes or are on public assistance.
But carriers are adapting.
“Transferring is easy,” Cricket states on its page about transferring the benefit to Cricket. “You must have active Cricket service, access to your online account, and your ACP application ID.” Metro by T-Mobile has FAQs, as seen here. And Boost states on its ACP page: “February 7, 2024 at 11:59pm ET, was the last day for eligible households to apply and enroll in the ACP.”
Fierce Telecom recently reported about efforts to keep ACP funding going through the end of 2024. The ACP Extension Act is a $7 billion bill before Congress. The Biden Administration has proposed $6 billion in funding for the ACP as part of a large $56 billion “critical domestic priorities” bill.
Excellent chance of extension
I have heard from a source close to the situation in Congress that there is an excellent chance of extended funding for the rest of this year. New Street Research analyst Blair Levin recently wrote that chances are “creeping up” for continued funding, counting 15 House Republicans who support the funding. He added that other Republicans are close to endorsing the legislation.
Per Census data, there are nearly 126 million households in the U.S. With more that 23 million households using ACP credits, 18% of households are getting the credit. Some 54.9% of these customers are served by mobile carriers, while 44.3% are served by wireline carriers, so there could be an impact to both kinds of carriers.
Interest in the ACP is intense. At the All Wireless & Prepaid Expo in Las Vegas last summer, the session on the ACP was well-attended, and there were so many questions that I kept the session going well into the lunch hour. Assuming there is more funding, I’m confident it will also be high at the next edition of the Expo, which is planned for August 27-28 in Las Vegas.
Sayonara to free internet via street events and $20/month internet service
Prepaid carriers were aggressively pitching the ACP credit, but that is over, at least for now. For the holidays, Metro by T-Mobile ran a major ad campaign pitching internet at $20 per month for qualifying households. The campaign involved TV and radio ads and strong outdoor advertising. And Boost Mobile was doing events outside of its stores, pitching free internet.
But tax season 2024 is off to a soft start.
It is ironic that tax season was kicked off with the end of ACP enrollments. That was a sour note for the carriers, for sure.
Tax season is less of an event than it used to be. For 23 million households, a $30 benefit has been available year-round.
Carrier efforts are starting later than before. Only on February 26 did Cricket Wireless make its announcement about its tax season iPhone offers. In the past, such announcements happened much earlier. Forbes has reported an 11% decrease in tax returns received, compared to early 2023. The IRS has said that child tax credits would not be available before February 27, CNET has reported.
There are some tax season fireworks
A special Straight Talk display pops up at Walmart every tax season. It is a seasonal event, like the arrival of tulips and daffodils. The display is loaded with units of the Moto G Play at $39.88 on Rollback. Straight Talk has reverted to more of a smartphone focus, also heavily advertising the new Galaxy A15 at $99. A new Straight Talk ad is pitching the Galaxy A15 offer. “Turn your tax refund into a youfund,” the carrier is pitching. In 2023, the ad focus of Straight Talk was to build awareness for its new family plan pricing and for the inclusion of Walmart+ with plans.
Metro by T-Mobile has kept most of its offers in place, as they were during the holidays. But the $20 per month internet signage is no more. Quietly, Metro by T-Mobile has halted activation fees in an effort to close more tax season deals.
We are seeing initiatives from other carriers. Cricket Wireless has new switcher offers, with the iPhone 11 at $49.99 and the iPhone 12 at $99.99. Boost Mobile has a new switcher offer with the iPhone 11 now at $19.99. The carrier at Walmart also has a bundle of a flip phone and 12 months of service for $129. The plan provides 3GB of monthly data.
But in summary, tax season is very different this year. Unlike past years, there is drama over whether the ACP will continue and unlike last year, new enrollments are not an option. Tax season is starting later, and it is not as impactful as it used to be. However, prepaid device discounts are popping up, just like tulips and daffodils.
Jeff Moore is Principal of Wave7 Research, a wireless research firm that covers U.S. postpaid, prepaid, and smartphone competition. Moore has 25 years of telecom industry experience, including 13 years of competitive intelligence work for Sprint. Follow him on Twitter @wave7jeff.
Industry Voices are opinion columns written by outside contributors — often industry experts or analysts — who are invited to the conversation by Fierce Wireless staff. They do not necessarily represent the opinions of Fierce Wireless.