The FCC Office of the Inspector General (OIG) said late last week that it made “a startling and troubling discovery” recently: Dozens of mobile providers do not appear to be complying with rules for the low-income Affordable Connectivity Program (ACP). The commission responded with a public notice announcing additional measures to ensure that providers follow the rules.
One unnamed mobile operator already repaid the FCC about $50 million, representing about one third of the ACP subsidies the operator received over a one-year period, according to the FCC OIG.
The ACP program, administered by the FCC, pays $30 a month toward the cost of broadband service for low-income households. If an ACP customer does not use the service for a month, the provider receiving the subsidy for that household is required to de-enroll the customer.
But according to an FCC OIG analysis, some providers do not appear to be complying with that requirement.
The OIG analysis compared five “broadly representative” mobile operators serving 10,000 or more ACP subscribers and found de-enrollment rates between 28.8% and 39.4%. According to OIG, de-enrollments for non-usage typically comprise nearly half of the representative ACP providers’ de-enrollments.
A similar comparison with five suspect mobile operators showed de-enrollment rates of between .9% and 2.6% of their subscribers. As the OIG noted, that’s “a tiny fraction” of the de-enrollments for the representative group of providers.
The OIG said it suspects that providers in the outlier group “are not complying with program usage and related de-enrollment rules, because… those providers have barely de-enrolled any subscribers at all.”
Noncompliance with non-usage rules may be just part of the problem, the OIG suggested.
“Stakeholders should be concerned [that] these data patterns also signal these providers’ failure to comply with other program rules and requirements,” OIG said.
One of the providers in the suspect group has over a million customers enrolled in the program. None of the five had fewer than about 18,000 ACP customers.
The OIG reminded providers participating in the ACP that they are required to comply with all program rules and urged them to examine their usage monitoring procedures, fully disclose any noncompliance, and promptly repay any subsidies that were improperly received. Providers are liable for violations of ACP rules even when they rely on third parties to monitor usage compliance, the OIG said.
The OIG also urged the commission to require providers to regularly report information to demonstrate that ACP subscribers are indeed using their service.
“While the commission asserts that usage reporting may implicate privacy concerns, it should [work with Congress] to eliminate obstacles that preclude the agency from confirming the subsidized service is truly benefitting low-income households,” the OIG advised.
The FCC public notice issued in response to the OIG’s document states that the commission has referred the matter to the Enforcement Bureau for further investigation. In addition, the commission directed the Universal Service Administrative Company (USAC) to revise its methodology for monitoring de-enrollment data using OIG’s methodology as a framework.
The commission also directed USAC to expand its program reviews to help ensure compliance with non-usage rules.
The FCC Lifeline program, which also covers some of the costs of broadband service for low-income households, has a similar non-usage de-enrollment requirement. In 2020, T-Mobile paid the FCC $200 million to settle charges that Sprint, which T-Mobile acquired that year, had failed to de-enroll customers who did not use the service.
The news about potential noncompliance with ACP rules comes at a time when the program is poised to run out of funding in less than a year. A wide range of stakeholders have urged federal legislators to appropriate additional funding for the program, which they see as critical to the success of the $42.5 billion BEAD rural broadband deployment program.