The End of ACP

As of the date that I wrote this blog, there are almost 15.6 million households using the broadband subsidy from the Affordable Connectivity Program (ACP). This program provides a $30 monthly discount for broadband to eligible households and up to a $75 monthly discount to households residing on an Indian reservation. The program started with a little over 9 million households at the start of 2022 and added over 500,000 new enrollees per month during the year. You can see the enrollment statistics on this website.

ACP was originally funded with $14.2 billion from the IIJA legislation. There was rollover funding of $2.2 billion added from the previous Emergency Broadband Benefit program that had been funded from the CARES Act. At the current level of enrollment, the ACP is paying out $477 million in a month, a number that gets bigger each month as more homes are added. Several folks who track the size of the fund say that it is going to run out of money sometime in the summer of 2024.

The obvious solution to keep ACP operating is for Congress to refill the ACP funding bucket. ACP was not created through a normal budget appropriations bill but was funded by the Infrastructure Investment and Jobs Act (IIJA). That was a one-time funding event, and that means specific legislation will be needed to keep the program running. Anybody who understands the implications of having a Congress divided between the two parties knows that this will be a major challenge in 2023 or 2024. Most DC pundits are predicting that there will be very little bipartisan legislation passed in the next two years. The chances of getting bipartisan approval of what many will consider a social program seem even lower.

That means that it’s time to think about what happens when the ACP fund runs dry. Nobody has an answer for how many households will drop broadband when the subsidy stops. Hopefully, a lot of ACP recipients will find a way to pay for more costly broadband. Almost 8.3 million, or 55% of the ACP recipients, get the subsidy for a cell phone. It’s likely that many of these folks will keep their cell phones. The remaining 6.8 million recipients use the ACP subsidy to offset home broadband prices. The entire premise of the ACP was to make it viable for low-income homes to afford home broadband, and it’s likely that many of these households won’t be able to afford broadband without the discount.

For the ISP industry, the end of ACP means seeing broadband customers drop over a few months by at least a few million subscribers. That will cause a footnote for the giant ISPs that regularly report customer counts as a success metric. Unfortunately, the biggest impact of ACP ending will be on any ISPs that most aggressively pushed the discount for customers. Some ISPs might try to counter the end of ACP by offering a lower-price product to low-income households, but few will find it feasible to discount broadband by $30.

This timing also has an interesting implication for the BEAD grant program. The grant legislation requires that grant winners participate in ACP, which will obviously be impossible if the plan ends. It’s obvious that whoever wrote that requirement into the grant rules thought that ACP would be funded into the future. It is looking unlikely that any households that get better broadband from a BEAD grant will have the opportunity to use the ACP discount.

I was uncomfortable from the day that ACP was announced that it would have staying power. From a funding perspective, the ACP program sits out on an island and is an easy target for politicians who are against spending money on social programs. Sustainable social programs like social security bring along a funding source – but ACP must periodically be funded from general funds to keep going.

What I find most distressing is the idea of bringing affordable broadband to homes, knowing that the discounts will likely disappear 18 months from now. It’s heartbreaking to think about the households who get a subsidized computer and an affordable broadband rate to support students, but who will see the rate climb higher sometime in 2024. It’s not impossible that some way will be found to continue the program, but the reality of politics in Washington DC doesn’t make that sound likely.

7 thoughts on “The End of ACP

  1. Doug – good analysis here. Part of the problem with ACP is the eligibility criteria – for example, if a school district offers free lunches to all students, every family in that school district is eligible, regardless of its income level. As an egregious example, this means that every family within the city limits of Dallas can get the ACP subsidy. So there are likely to be households that are currently receiving the subsidy that don’t really need it. With regard to the extension of funding, I agree that it’s likely to fall into the partisan divide… but that said, I’m reminded of the old adage that “there’s nothing more permanent than a temporary government aid program.” Maybe the politicians will find it unpalatable – in the election year 2024 – to deprive millions of Americans of their internet. One compromise position could be to continue the program, but narrow the eligibility criteria to reduce the cost.

    • I believe a family must have a child actively enrolled in the school to qualify. So, in Dallas, only those families with a student attending a free lunch school would be eligible.

      • Doug, to clarify, I was only responding to Alan’s point about the community eligibility provision (CEP) for free and reduced school lunch. That pathway is only open to families with a student actively enrolled at a CEP school (and with documents to prove it), not necessarily every family within the city limits of Dallas. However, the other pathways, which you linked, are available to them.
        (And thank you for the blog)

  2. My problem with this program is that it is free money for ISPs. No incentive to offer a lower priced tier. No way to look at it and say: Hey 10% of your region is on ACP, we need to work on a better way to get these folks affordable and dependable broadband.

  3. There’s a big part of the equation and analysis of the ACP program that is being left out of most if not all reporting structures and back up the data Clearing houses. If you do a quick search for “Comcast /Insert any other ACP or lifeline combo COMPANY/ keeps saying my benefit has been transferred. Every month it makes my bill quadruple because it takes me off the lower income hardship program” …
    Or something along the lines of I spent five hours on the phone with my Internet provider trying to get back to the same place I was three weeks ago. Everything is set and then I get notification that my ACP benefit has been transferred away… However when I check my ACP national identifier, it tells me that it’s not being used or applied anywhere.

    I had a combination of picking up the bills and adding children of a good friend who passed away during Covid to the household… Comcast should have put me on the 999 I’ve got a bunch of kids in school and a lot of bills plan. They didn’t they had me take over her plan. Which wouldn’t allow me to be eligible for the $9.99 a month program. The only way that I would become out of all after racking up $400 a month bills for two years, was to apply the ACP credit And program to my exploding account and then that would make me automatically eligible.
    For six months on approximately eight every two weeks schedule sometimes every week. I got notifications that the hours and hours on the phone the prior days before ended up meeting nothing because the ACP credit was transferred. Email they were also using the lifeline credit. Two separate things. The best part of all of it is make sure you write down the number of the hardship person you speak to specially with Xfinity, because if you call Xfinity and tell them you need to speak toThe hardship department who worked out some adjustments to your bill… They will tell you that department does not exist and give you a run around for sometimes up to two hours before they even consider transferring you do that department that does not exist.

    The end result. After paying and paying and paying, and not being able to pay anymore the hardship department negotiated a $22 additional payment a month with Wi-Fi and phones and one security camera. I never actually got to use these for more than 5 days Consecutively at a time-the outstanding payments due were in what seems to be five times the price quoted over that six month period.
    I would estimate the downtime of the Internet and the cell phone was minimum six weeks. I was charged for all of it and at full price to boot.
    I would like the answer to what happened with the transfer of my ACP credit benefit, where did it go? Why doesn’t the national verifier show any applying or transferring of the benefit?

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