The uncertainty surrounding the re-funding of the Affordable Connectivity Program, which is expected to run out of funds in 2024, has implications for internet service providers, American households, and local governments, said experts at a recent Broadband Breakfast Live Online event.
Uncertainty surrounding the ACP funds has turned private investment into a risky bidding game, said Blair Levin, senior fellow at think tank Brookings Institution’s Metropolitan Policy Program. The ACP increases the amount of private capital that providers are willing to invest in new developments in low-income communities because it increases the estimated take rate, he said.
The ACP is currently subsidizing broadband access for more than 17 million Americans with a discount of up to $30 and $75 a month for low-income and tribal households.
Moreover, ISPs are hesitant to market the program to consumers in a way that would suggest sustainability, as they would face a public relations nightmare if the program were to end abruptly, leaving millions of Americans without internet access, said Levin.
The lack of assurance regarding the ACP funding discourages states, local governments and providers from investing time and resources into training staff, added Adeyinka Ogunlegan, vice president of government affairs and policy at advocacy nonprofit EducationSuperHighway.
“Households need assurance now that the money will not disappear,” she continued. There is an urgent need to apply pressure to Congress to ensure communities get the certainty they need, she said.
The ACP is the lynchpin that connects all other federal funds, added Director of the Capital Projects Fund at the U.S. Treasury, Joseph Wender. If the fund is not replenished by the end of the year, the cascading effect could compromise the effectiveness of other federal broadband infrastructure programs such as the $42.5 billion Broadband Equity Access and Deployment program and the $10 billion Capital Projects Fund by harming affordability and program take rate.
Wender added that it is crucial to avoid reaching a critical point where providers need to notify subscribers about the program’s impending end before renewing the project funds. Consequently, relying on the Universal Service Fund reform to fund the program is not feasible within the limited timeframe.
The USF, funded through a tax on voice service providers, supports four programs that make telephone and broadband services affordable for low-income households, health care providers, and schools and libraries. The fund’s sustainability has been under pressure with voice service revenues declining as more Americans use broadband services.
The urgency for ACP renewal cannot be overshadowed by conversations about USF reform, said Ogunlegan.
The ACP program is the “single most important policy issue in telecommunications in terms of impact on the largest number of Americans,” said Levin.
This piece was originally published by Broadband Breakfast on June 7, 2023 and is republished with permission.
