Blog

WASHINGTON, May 2, 2024 – Some GOP senators were skeptical about renewing the Affordable Connectivity Program at a Senate hearing on Thursday. Their Democratic colleagues and witnesses urged short-term funding to keep the program alive before instituting reforms.

April was the last month in which the ACP’s 23 million subscribers received the program’s full $30 discount on their internet bills. Recipients whose providers elected to participate in May will receive a $14 discount, and in June the program’s $14.2 billion allocation from the Infrastructure Act will be fully exhausted.

The program has the broad support of lawmakers on both sides of the aisle and broadband providers, but monthslong efforts at preventing it from running dry have failed. The remaining legislative options include the ACP Extension Act, stymied in the House by Republican opposition, and a draft bill proposed by Senate Commerce Committee Chair. Maria Cantwell, D-Washington, that would infuse the program with money to be paid back with spectrum auctions. That bill was set to be marked up on Wednesday, but the legislative items were pulled the night before.

Additionally, a spokesperson for Sen. J.D. Vance, R-Ohio, confirmed he will make an effort to get his Senate companion to the House ACP funding bill attached to an FAA reauthorization that must make its way out of the chamber next week.

Sens. Ted Cruz, R-Texas, the committee’s ranking member, and John Thune, R-South Dakota, are among the program’s detractors. As he has done before, Cruz cited on Thursday an estimate from the Federal Communications Commission, tasked with administering the ACP, that 22 percent of the program’s participants had no internet access before enrolling as evidence of waste. Thune said he wanted the program’s eligibility requirements – currently income less than 200 percent of the federal poverty line – tightened up.

“To the extent there are truly indigent people who cannot afford connectivity, there is a program already designed for them, it’s called Lifeline,” Cruz said, referencing another FCC program that provides smaller benefits and has fewer participants. “If it’s not working well, we should look to improve it, not to impose higher taxes on millions of hard working Americans to cover the internet bills of their neighbors who are already willing and able to pay for it themselves.”

Blair Levin, a policy advisor at New Street Research and longtime broadband policy analyst, pushed back on the idea that the majority of ACP recipients had consistent access to broadband before enrolling. He said the program also prevents people from dropping their subscriptions periodically in order to pay for other expenses, which would provide a more stable revenue source for providers who expand infrastructure with the Biden administration’s $42.5-billion BEAD program.

“One of the mistakes people make is they say ‘only 22 percent didn’t have broadband.’ Actually there are a lot of people who were on broadband and then off broadband, that’s the largest group,” he said. “But if you know that you’re going to have that population, you need less of a government subsidy to build out that network.”

Kathryn de Wit, director of Pew’s broadband access initiative, agreed, calling ACP the “cornerstone of BEAD.” She said that its absence would make providers large and small hesitant to participate and meet the program’s goal of nationwide broadband access.

The ACP gives providers “the surety of a guaranteed customer base, decreased churn, and long-term retention,” she said – making build outs in the low-income and rural areas targeted by the program more attractive.

Welch, Vance’s ACP Extension Act co-sponsor, said he was open to some of the reforms his Republican colleagues are pushing for, but also expressed “enormous apprehension” at the idea the fund would run dry in the meantime.

“The economic arguments that we’re having back and forth: they’re real, we’ve got to deal with them,” Welch said. “And some of those… I can accept. But we can’t let this expire.”

Welch said his hope is that Congress puts together “at least a short-term fix” while “the working group comes up with a longer-term solution.”

USF working group

Subcommittee Chair Ben Ray Luján, D-New Mexico, signaled that a bicameral working group, to which Welch was referring and which Luján has been leading for the past year, is working to fold the ACP into the FCC’s existing Universal Service Fund.

“They’re both strong proposals to temporarily fund the program and give Congress time to find a long-term solution,” he said of the ACP Extension Act and Cantwell’s proposal. “Now, the Universal Service Fund working group that I’ve been proud to be a part of and lead with Ranking Member Thune has been working on a long-term solution.”

“I’m looking forward to bringing a solution to this committee that provides a permanent funding mechanism,” he said.

The USF is funded by fees on voice services, but spends roughly $8 billion annually to subsidize broadband for low-income households, rural areas, plus healthcare centers and schools. Luján’s group has been working to modernize the fund’s contribution system to make it more sustainable as traditional telecom revenue declines. 

Commenters to that group, as well as Sen. John Fetterman, D-Pennsylvania, in his own USF bill filed yesterday, have floated tapping broadband providers and potentially tech companies for that extra funding. The FCC opted not to impose USF fees on ISPs when it reclassified them as common carriers last week, but the agency’s chairwoman has told the working group that the fund can likely handle the extra expenses of the ACP with some retooling.

De Wit agreed the USF would provide a good vehicle for sustainable ACP funding, but reiterated her calls for a short-term infusion of cash. 

“We appreciate the work of you and others on that bipartisan and bicameral working group.. Including incorporating the ACP into that program,” de Wit said of the USF. “However, universal service reform will take time.

“We don’t have the luxury of time at this moment,” she continued. “ACP is running out of money and potential BEAD participants, states, ISPs, communities – we are putting their connectivity solution at risk by delaying, which is why we ask that you provide the bridge to the ACP today and continue to work on USF in the future.”

Source