The press is suddenly full of articles talking about how some ISPs are offering affordable rates to low-income homes now that the ACP monthly subsidy has died. I discussed some of these plans in a recent blog. Some ISPs are extending the $30 discount for a limited time, while others are offering more affordable broadband plans than in the past. Other ISPs are only making a nod towards affordable broadband and some aren’t giving any discounts to low-income households.

Today’s blog ponders the wide response we’re seeing to the end of the ACP. I’ve talked to some ISPs that didn’t put any effort into ACP because they recognized that the plan was temporary. ACP was funded by Covid funding, and ISPS foresaw correctly that the fund wouldn’t be renewed when it ran dry. I think many of these ISPs would have been more enthusiastic about ACP if it had been established from the start as a permanent program with a guaranteed source of funding. A lot of folks in the industry have been lobbying to make ACP permanent by rolling it into the FCC’s Universal Service Fund. There are other ways that ACP funding could be guaranteed. One idea that has gotten recent traction is to divert proceeds from FCC spectrum auctions to fund ACP.

Some ISPs were put off by the paperwork, the cost, and the downside risks. The paperwork needed to enroll in the plan was hard to navigate and not friendly for smaller ISPs. ACP also requires ISPs to make costly efforts to enroll people, with no compensation other than a reimbursement of the customer discount. ISPs would like ACP more if there was a small additive each month to cover the cost of operating the plan. ACP also came with periodic audits, and ISPs feared doing their best and still failing these audits. To some ISPs, ACP felt like a program with more potential public downsides than upsides.

Some ISPs did the math and saw it was too expensive to enroll and connect ACP customers. Cable companies have a relatively easy path to connect an ACP household. Their coaxial networks have been in communities since the 70s or 80s, and that means a large percentage of homes already have a coaxial drop. If a home had cable service at some point over the last forty or fifty years, there is a good chance that the drop cable is still in place. That means a low cost to add most ACP households.

Fiber ISPs have a more expensive effort and had to install a fiber drop for most new ACP customers. Most fiber providers claim an overall cost of $1,000 or more to add a new home to the network. No ISP wants to make that kind of capital investment without a reasonable expectation that new customers will stay long enough to pay back the initial investment. Many fiber ISPs were leery about making the investment for an ACP home because of the high cost, slow payback, and lack of guarantee that ACP would last.

Some ISPs like Charter embraced ACP, and New Street Research says that Charter enrolled more than 4 million households in the program. This is likely the primary reasons over the last year why Charter was still showing customer growth while other big cable companies were losing customers each quarter. There are also ISPs working in low-income neighborhoods and tribal areas that fully embraced ACP and built a business plan based on the ACP discount. One has to think that Charter will pay a price for having embraced ACP – a lesson that other big ISPs will notice and learn from. Smaller ISPs that built a business plan based on the ACP discount are now in shambles.

A lot of ISPs only paid lip service to ACP. They only enrolled customers who asked for the discount, but didn’t advertise ACP or aggressively seek ACP customers. Some of the ISPs getting praise for having an affordable ACP replacement product didn’t pursue ACP customers and likely won’t push the new low-price plans.

There is still a chance that ACP will be funded sometime this year. The folks in Congress looking at restarting ACP should realize that many ISPs are going to shun ACP if the funding mechanism has to be reauthorized by Congress every few years.  If Congress brings back ACP, then bring it with a permanent funding source – or don’t bother.