Affordable Connectivity Program needs permanent funding

Even amidst bitter partisanship over federal spending and inflation, Democrats and Republicans seem to have found a rare patch of common ground in their shared support for major federal investments to expand broadband connectivity. Authorities in both red and blue states are eagerly embracing unprecedented federal funding from the Infrastructure Investment and Jobs Act, signed into law last November by President Biden, that could finally bring high-speed internet service to every corner of the country.

But universal deployment, while critical, won’t even get us halfway to our end goal of full digital inclusion. Our recent report explains why: For every American without broadband service available, up to twice as many have service available but still don’t subscribe.

This is the “broadband adoption gap,” and it has stubbornly persisted for years, even as the availability gap has narrowed. 

According to the Pew Research Center, approximately 23 percent of U.S. adults do not subscribe to home broadband. These non-subscribers are disproportionately lower income, less educated, older, persons with disabilities, living in rural areas, and/or from communities of color. For instance, while only 8 percent of adults living in households earning more than $75,000 lack a home internet connection, 43 percent of adults living in households earning less than $30,000 a year do not subscribe.

Fortunately, the infrastructure bill gives state and local governments flexibility to spend federal funding on programs combating this broadband adoption gap. The Commerce Department’s recent guidelines for the bill’s $42.5 billion broadband buildout allow state broadband offices to put remaining funds toward adoption-related programs once they have plan in place to wire their state’s unserved and underserved areas. Other federal efforts, including the American Rescue Plan’s broadband programs, give state and local governments similar flexibility.

To make broadband more affordable for the most vulnerable households, the infrastructure bill also created the Affordable Connectivity Program (ACP), which provides eligible low-income households with up to $30 monthly broadband subsidies and a one-time benefit of up to $100 to help buy a computing device. 

The ACP is working — almost 12 million U.S. households have signed up already. But this surging demand is also eating through the program’s $14.2 billion of funding.

Based on current trends, our economic model shows that funding for the ACP is likely to run out by mid-2024 — about two years from today. Extending these trends, we project that funding the ACP broadband benefit (but not devices) for an additional five years could cost $30 to $35 billion.

While that might sound like a large amount, this investment would be well worth its social and economic benefits. As the last couple of years have brought into stark focus, having a home broadband connection is necessary for online education, working from home, and attaining skills needed for meaningful participation in the digital economy and society. 

Ongoing ACP funding alone will not likely get the job done. There are other critical issues that can’t be overlooked — lack of a device, lack of digital skills, illiteracy, a lack of interest in the internet and what it has to offer, and a range of barriers tied to endemic poverty. But tackling this broader set of challenges will only become much harder without the ACP’s ongoing assistance for households that want to subscribe but need the financial support.

Policymakers have several options to extend ACP funding. Some have argued that, going forward, the Federal Communications Commission’s (FCC’s) Universal Service Fund (USF) should support the ACP. This would significantly increase the USF budget and the burden on consumers, including those we want to incentivize to adopt broadband.

Others have argued that Congress should appropriate the additional funds needed to extend the ACP for several more years. Appropriations would avoid the market distortions caused by the FCC assessing additional fees on consumers. However, a path through Congress is uncertain in the current political climate.

The most immediate path is for state broadband offices — using discretion granted to them under the infrastructure bill’s BEAD Program, as well as other federal funding programs — to extend ACP funding for eligible households in their states. Given other priorities, not every state will be able to extend the ACP’s duration or widen its eligibility. But that should not stop states that can close the ACP funding gap from doing so.

To ensure that broadband services remain affordable for low-income households, Congress and the states should act now to permanently fund the Affordable Connectivity Program. Failure to do so risks denying tens of millions of Americans access to economic opportunity.

Paul Garnett, Founder and CEO of the Vernonburg Group, has over two decades of experience in telecommunications and technology law and policy, market development, business development, strategic alliances, and technology and business model incubation.