The Affordable Connectivity Program: When Government Spending is Good
In 2020, life as we knew it came to a screeching halt as we locked ourselves away during the COVID-19 pandemic. Isolated from the world we knew, we found ways to reach out and remain connected. Broadband advances in the last few years made it possible for people to live their lives, run businesses and stay connected to loved ones in real time. Recognizing the importance of broadband during the pandemic, Congress included an Emergency Broadband Benefit as part of the Consolidated Appropriations Act of 2021.
The Emergency Broadband Benefit Program provided a discount of up to $50 ($75 for tribal lands) per month for broadband services for eligible customers. It also included a one-time discount for devices up to $100 (laptops, tablets, desktops, etc). This lasted until Dec. 31, 2021, when it was replaced by the Affordable Connectivity Program (ACP)—a functionally similar program except the discount only extended to $30 per month for broadband services. It is worth highlighting that 54.1 percent of ACP subscribers receive mobile broadband with their ACP subsidy, compared to 45.1 percent receiving fixed broadband (cable, digital subscriber line or fiber). A novel aspect of the ACP is that it is tech neutral; it does not limit users to a specific means of connection and gives customers choices over what service they want.
ACP: A Model of Success
In response to this program, a number of carriers offered high-speed internet plans to customers for $30 a month or less, meaning customers would be able to receive broadband service at no cost. This program has been a tremendous success and currently has enrolled almost 17 million households—and 33 million more are eligible. If continued, the program could have a tremendous impact in bridging the adoption gap in the digital divide.
It is worth noting that more broadband deployment does not equal greater adoption rates. If a carrier builds a network to a home, it does not guarantee that a customer will subscribe to that service. One of the challenges of the digital divide is not only bringing access to rural communities, but also getting users to enroll and utilize broadband services. That’s where the ACP comes into play. Since the ACP allows customers to utilize a number of different options, including at-home broadband, fixed wireless and mobile wireless services, users can finally afford to choose a means of connectivity that works for them.
The ACP program was initially funded with $14.2 billion dollars. As of this month, there is $8.7 billion in ACP funds remaining, with approximately $531 million being spent every month. At its current pace, the ACP may run out of funding by the middle of next year. In order to ensure its longevity, additional funding from Congress is required.
Congress will continue to invest in building out broadband programs. For example, last year, Congress made the single largest investment in broadband in history by creating the Broadband Equity, Access, and Deployment Program (BEAD). This $42.5 billion investment will hopefully bring connections to areas that until now have remained disconnected. This does not include a litany of other broadband programs including the American Rescue Plan Act, which has $350 billion for broadband infrastructure; the Federal Communications Commission (FCC)’s Rural Digital Opportunity Fund, which will distribute $20 billion to connect rural homes and businesses to high-speed broadband; the Department of Treasury’s Coronavirus Capital Projects Funds; and the U.S. Department of Agriculture’s ReConnect Loan and Grant Program, which has provided over $1.5 billion in loans and grants to bring broadband to rural areas. Building these networks is futile unless subscribers are able to adopt these services.
As the administration looks to finally confirm a fifth commissioner for the FCC, there is a growing appetite among Democrats to reignite the Title II debate over reclassifying broadband as a common carrier. Under Title II of the Communications Act, the FCC would have the ability to impose rate regulations on online service providers. This would upend the entire communications industry and stifle future broadband innovations. However, one positive result of the ACP has been that carriers are dropping prices to provide broadband services to qualifying customers. The program therefore alleviates any need for regulators to impose rate caps for broadband service under Title II, as carriers have moved to ensure that users are able to connect to the internet.
While the ACP may be the preferred mechanism for addressing the digital divide, questions have been raised about its operations. On March 15, 2023, Ranking Member Ted Cruz (R-Texas) and Sen. John Thune (R-S.D.) sent a letter to FCC Chairwoman Jessica Rosenworcel raising concerns about waste fraud and abuse in the ACP. But Republicans should support efforts to preserve and improve the ACP. With or without the ACP, Congress will continue to spend money on broadband access and affordability, resulting in multiple programs that may be far less effective than the ACP. In just two years, this program has been a true success. It has connected Americans, lowered the costs of services and brought millions online. The benefit flows to consumers directly in both red and blue states.
There’s always room for improvement
This is not to suggest that the ACP is perfect. The application process can be streamlined and made more efficient to ensure it is not only easy for consumers to sign up for the program but reduce the potential for waste, fraud and abuse. For example, there are currently more than a dozen programs used to determine eligibility, which should be condensed moving forward. These are fixable problems, and unlike some of the countless other broadband programs, the ACP has made a profound difference in addressing adoption gaps and getting more Americans connected.
Broadband has become more important than ever before, and technology is constantly evolving. While prices of many goods have increased during inflation, the cost of broadband has gone down, while speeds are up. The ACP was created during the COVID-19 pandemic, but it has evolved since then to be one of the most efficient programs addressing the adoption gap in the digital divide. While the program is not without fault, absent the ACP, conversations may reignite for poor policy solutions and heavy-handed regulations that will quash the advancements made over the last few years with broadband and instead move closer to a new regime of rate regulation. A working, reliable and efficient government program is a rarity. Congress and the administration understand the importance of closing the digital divide, and therefore should prioritize smart, flexible, tech-neutral programs like the ACP to ensure that Americans are not left behind on the adoption side of the digital divide.