Michigan Broadband Summit

November 2, 2023

(remarks as prepared for delivery)

Good morning!  I am delighted to be here. I want to thank Charlotte Bewersdorff and everyone at the Merit Network for inviting me to speak. The timing couldn’t be better—there are so many exciting things happening in the digital equity space. However, as the title of my talk foreshadows—the road to digital equity is not always straight and it’s often bumpy. Over the past 3 and a half years especially, we have made great gains, only to suffer setbacks. And while I’m optimistic about the future, we are now in a critical moment in the effort to get everyone connected to affordable and robust broadband. I’m referring to the potential and fairly imminent demise of the Affordable Connectivity Program, or ACP, the $30 a month broadband subsidy for low-income households; $75 for tribal lands and high-cost areas.

Before I continue, I want to put a short glossary on the screen. We communications lawyers use a lot of acronyms, and I’m going to do my best to explain each one of them as we go along.

As everyone in this room knows, the COVID-19 pandemic radically changed the perception of digital equity in this country. Friday March 13, 2020, was the day everything shut down—schools and businesses closed, and millions of families went into lockdown.

My phone started ringing off the hook because reporters wanted to know—how will children without Internet or a computer at home go to school? If offices shut down, how can workers do their jobs? And what about residents of rural areas without Internet access who might have to drive a hundred miles or more to see their doctor? How will people stay in touch with their friends and families or shop if they are too immuno-compromised to go to the grocery store?

This picture (see below) changed millions of minds—it shows two students in Southern California doing schoolwork outside a Taco Bell, using its Wi-Fi. It took an international medical emergency and stories like these to convince the public, policymakers, and the press that broadband Internet service, like electricity and water, is a necessity for everyone.

Even so, the Federal Communications Commission at the time did little more than beg large broadband providers not to cut off subscribers who could no longer afford Internet access. Congress was also slow to act. By December 2020, I had been working for months with the House Energy and Commerce Committee staff to shape the Emergency Broadband Benefit—a $ 50-a-month subsidy for a wide range of households, including those with residents who recently suffered a significant loss of income or had a Pell grant. The EBB also included a one-time device benefit of $100, and, for residents of tribal lands, the $50 subsidy was increased to $75. I had given up hope that the EBB would be included in any of the end-of-the-year funding bills that Congress was considering. Then, on December 21, I got the call from Energy and Commerce staff—the last COVID-19 relief bill passed with $3.2 billion for the EBB included. I was shocked and overjoyed.

The program was quickly embraced both by industry and by eligible households, and the question then became whether it might become more than just an “Emergency” program. Thankfully, the answer was a resounding yes.

In mid-2021, when a bipartisan group of 10 Senators started negotiating the broadband provisions of what was to become the bipartisan infrastructure law, there wasn’t much doubt that the EBB would remain in some form. And that new form came to be known as the Affordable Connectivity Program, or ACP. Most notably, the subsidy was reduced from $50 to $30 a month, reflecting the desire of some that low-income households put some “skin in the game” when purchasing Internet access.  In addition, some of the eligibility categories were removed, including one where a household had a “substantial loss of income.” 

But the changes to the program were not all negative. Eligibility was expanded in two areas—recipients of the Supplemental Nutrition Program for Women, Infants and Children (WIC) were added, and the income threshold was increased from 135% of the federal poverty level to 200%. Congress also moved to prohibit some of the business practices carriers were using to limit choice and eligibility; for example, it allowed the ACP to be used for any one of a carrier’s plans, not just those that the carrier chose, and prohibited practices like upselling, extended contracts and, credit checks.

Converting the EBB to the ACP was not easy, especially given the reduction in the subsidy.  And the program was slow to add participants at first. When the ACP first launched, the FCC largely advertised the program online—not a particularly successful strategy to attract the attention of people without Internet access. But the more targeted efforts of local digital equity advocates and broadband providers helped the program to grow. 

Nearly two years after the ACP was launched, there are now over 21 million households enrolled. That is nearly equal to the number of households enrolled in the Supplemental Nutrition Assistance Program. In Michigan alone, there are 812,787 households enrolled in ACP, representing 20% of all households in the state.

There is little doubt that the ACP has benefitted low-income households. But it has also become a major source of revenue for broadband providers big and small. According to USASpending.gov, Charter Communications has received nearly $2 billion from the ACP, followed by Excess Telecom and T-Mobile at over half a billion dollars. I sit on the Board of Tucows, Inc., which is the parent company of Ting, an ISP that mostly builds and operates community broadband networks. In Alexandria, Virginia, Ting provides a 2GB symmetrical service for just $30 for ACP recipients—in other words, it’s free. Other ISPs provide similar no-cost services. Some on the left and the right grumble that it shouldn’t be the government’s business to subsidize big companies like Comcast and AT&T.  While that argument has some appeal to me, I am willing to forgive the companies’ enrichment in exchange for getting and keeping tens of millions of US households online.

As a significant source of revenue for broadband providers, the success of the ACP has also become integral to the success of the Broadband Equity, Access, and Deployment Program, otherwise known as BEAD. More and more states and broadband experts have concluded that with rising costs, the $42.5 billion provided by Congress for new broadband networks will not be enough to close the digital divide. But the ACP helps to incentivize broadband providers to serve rural and low-income communities and makes BEAD dollars go farther by improving the providers’ return on investment. A recent study by Common Sense and the Boston Consulting Group shows that the ACP reduces the per-household subsidy required to incentivize ISP investment by $500. This makes it much easier to build new networks.

In sum, the ACP has been extremely successful both as a tool to get low-income families online and as a source of revenue for broadband providers seeking to build new networks across the country. It has benefitted rural and urban Americans in every state, and enrollment in Republican- and Democratic-controlled states is roughly equal. Which means everything is good, right?  Well, no. Because the ACP has become so popular that the $14.2 billion Congress gave it in September 2021 is due to run out in early spring next year. 

Failure to provide more funding for the ACP would be an unmitigated disaster for everyone. Some providers have said that they would start notifying ACP recipients in early January, and no business wants to tell its customers that it will be losing service. Customers would either be disconnected entirely or return to a state of what I call Internet insecurity, where there are some months that they can afford having Internet service, and others when food, clothing or medical expenses take precedence. Even if Congress restores the ACP at some point, the government would have lost the trust of millions of households, making the program far less successful than it is now.

So, what are the possibilities for Congress to provide more funding for the ACP before it runs out of money?  What are the vehicles for the funding?  And what can you do to make sure it happens?

We did get two pieces of good news last week, but we still have quite a way to go to get the ACP extended.

First, and while this might not be good news to everybody, the US House of Representatives now has a Speaker, Mike Johnson of Louisiana. Regardless of what you might think of his politics, without a speaker, no legislation could move. Johnson is a fiscal conservative, to be sure, but he also has a large number of ACP recipients in his Congressional district—84,000 households to be exact, which represents nearly a third of his district. House Majority Leader Steve Scalise is also from Louisiana, and he also has a significant number of ACP-supported households in his district—66,000 or 22 percent of his district. 

The second piece of good news is that the White House has asked Congress for $6 Billion in funding for the ACP as part of what is called a “domestic supplemental.”  The White House has asked for two supplemental appropriations—one for foreign matters like the wars in Israel and Ukraine, and one for domestic matters like childcare, disaster relief and expanding connectivity through the ACP.  But just because the White House asks Congress for money doesn’t necessarily mean they will get it. 

Excuse me while I channel a little bit of “School House Rock” here. Each year, Congress is tasked with passing 12 separate “appropriations” bills that provide money for the government to operate. The most important of those bills for our purposes is the one that funds the FCC—Commerce, Justice, Science, and Related Agencies. At least one of the two CJS Appropriations subcommittees needs to include that $6 billion in its bill. Unfortunately, that is not a foregone conclusion either in the Senate or the House. 

Even if the $6 billion does make it into the appropriations bill and it passes, estimates are that the money will only last through the end of 2024. Right now, the ACP is burning through nearly $700 million every month, and that’s without adding new households to the program. Assuming, as most do, that the current ACP appropriation will last through April 2024, an additional $6 billion might only extend the program through the end of the year. And advocates have been told not to expect another appropriation like this ever again.

What then? In the mid-term, Congress and others are considering how to make the money last longer by changing the eligibility rules. I’ve heard of four possibilities, but would warn that there needs to be a lot more research done on the impact of any of these changes on the program and the people it serves:

1. Reduce the income threshold for eligibility from 200% of the Federal poverty line to 135%. A recent USC study commissioned by the Pew Charitable Trusts found that if the threshold were lowered, 7.4 million households that currently qualify and 2.7 million households that currently receive the ACP benefit would become ineligible. The study also concludes that the impact of lowering the income threshold would affect Republican-controlled states significantly more in terms of percentage drop in eligible households; and would affect veterans and older adults significantly more than other historically disadvantaged groups.

2. Provide the subsidy only for fixed connections, not mobile. The argument is that if what we are trying to solve for is kids being able to do their homework at home, telehealth visits and remote work, only a fixed connection will do. Since 54 percent of the households receiving ACP funding are using it for a mobile connection, this would give the ACP a far longer timeline before it needs to obtain permanent funding. But it also cuts off more than half of the recipients, who have decided that it is more important for their household to have a mobile connection than a fixed one.

3. Eliminate the alternative verification option. The eligibility for many, if not most of ACP households is determined through the National Verifier, which is a database that includes state databases of individuals who receive a variety of government entitlement programs, including Supplemental Security Income, SNAP, Medicaid, and the Free and Reduced School Lunch program. It is the simplest and most accurate way to determine whether a household is eligible for the ACP. The infrastructure law did allow carriers to use other methods for determining eligibility, and unfortunately, some of those other methods have cast the net for eligible households too wide, leading to offers of ACP eligibility to non-ACP households.

4. Reduce the subsidy to $20 a month. While I might be able to make a case for the other changes, this one crosses the line. Recall that the Emergency Broadband Benefit was $50, and by reducing it to $30, Congress already cut the program by 40 percent. To their benefit, carriers have gone to great lengths to provide ACP households with fast service for just $30, and several have told me that they cannot do it for any less. And while I might be a bit skeptical if a very large provider told me that, I have less trouble believing that it would be a stretch for a smaller, competitive provider or a rural provider.

A forever home for the ACP

In the longer term, the ACP subsidy needs a forever home, and I and many others believe that the best home is in the FCC’s Universal Service Fund, or USF, which provides support for connectivity to and inside K-12 schools and libraries; to rural health care facilities; and to providers in places where the cost of providing broadband service is very high.  The Fund also supports a $9.25 per month “Lifeline” subsidy for low-income households. Started in the Reagan administration to support landline telephone service, it is now mostly used for mobile phone service.

The USF is funded by a fee on our phone bills. Each time you pay your bill, a fraction of it goes to support USF programs. The USF has its own issues, which I will not get into today, but suffice to say that the USF has the potential to fund the ACP on a permanent basis.

I believe that the FCC must do three things, without delay, to save the ACP.  First, in the proceeding it just launched to restore FCC authority over broadband Internet access under Title II of the Communications Act of 1934, it must not forbear from the section of the Act that would apply USF fees to broadband providers. The Communications Act permits the FCC to refrain from applying parts of the law that would not be in the public interest. And yes, when I was at the FCC in 2015, we did forbear from applying that provision, Section 254, when we reclassified broadband as a regulated telecommunications service under Title II. Refusing to apply universal service fees to broadband was a mistake at the time, and the FCC should not repeat it again.

Second, the FCC must immediately start a proceeding to expand the number of entities that are required to contribute to the USF. It need not wait to finish the Title II proceeding to start this one, and it certainly should not wait until several constitutional challenges to the USF have been completed. That could take years that low-income households just do not have. At a minimum, the FCC should propose that broadband providers contribute to the fund, but it can look at other options as well. The Universal Service fee was originally conceptualized as a general tax, and a fee on “telecommunications services” was the compromise.  Naturally, there are limitations on the FCC’s ability to impose fees on services outside of its legal authority, but there is nothing stopping it from seeking comment on other options and making recommendations to Congress as it sees fit.

Finally, as part of the same proceeding to expand the USF contribution base, the FCC should make the ACP subsidy part of the USF program. I would like to see a tiered program that continues to provide a “Lifeline” -type phone subsidy for a lower price and an ACP-type subsidy for broadband service. 

I recognize that USF contribution reform has long been a hot potato and one that the FCC, under the leadership of both parties, has been reticent to take on. But we are at a moment of crisis for this important program, which, oddly, is supported by advocates and industry; Democrats and Republicans. It seems a no-brainer to me to save the ACP, but need I tell you that nowadays, nothing is a no-brainer in the nation’s capital.

Let me close with what you can do. Michiganders have an extremely powerful ally in Senator Gary Peters (D-MI), who just happens to sit on the CJS appropriations subcommittee. Senator Patty Murray of Washington, who is the mother of the Digital Equity Act, is the Chair of the Senate Committee on Appropriations, which oversees all 12 appropriations bills. You can ask Senator Peters to urge Senator Murray to ensure that the ACP is included in the CJS appropriations bill.  And while you’re at it, go ahead and ask Senator Stabenow to do the same.  And ask them to urge the FCC to start a proceeding to fix the Universal Service Fund and to make the broadband subsidy a part of the Fund.

You also have powerful allies in the House. While no Michigan Representative sits on the House CJS appropriations Subcommittee, Representatives Dingell and Wahlberg sit on the Energy and Commerce Committee and almost certainly speak to their appropriations colleagues. But don’t stop there—contact all of the delegation. Several organizations have tools that make it easy to contact your legislators; let me suggest one from Common Sense that’s easy to remember: SavetheACP.com. 

While talking to one’s elected representatives is critical, I’ve always found that the most powerful tool for moving policymakers is stories. Earlier, I talked about this picture, which I firmly believe led to the passage of the EBB and the ACP.  I’m guessing that there are many more such stories across the country. Gather your stories about lives changed by the ACP and people unable to reach their full potential without it. Send them not only to your Senators and Representatives but also to your local TV and radio stations and your local newspapers. Your story may be the one that gets the ACP over the finish line.

Conclusion

If you are an advocate for Internet for all, these are exciting and historic times. Tens of billions of dollars are being spent at the federal and state level to connect every US household to affordable and robust broadband. But the history of federal broadband spending demonstrates that money alone won’t close the digital divide. It will take sustained and concerted work from federal, state and local officials, as well as stakeholders like you and me. We must work to ensure that the money goes to those who can and will build fast and reliable networks. We must exercise oversight to ensure those networks are actually built.  And we must create a support system for those who need help obtaining internet service, devices, and digital skills.  Extending funding to the ACP and giving it a forever home in the Universal Service Fund would be a very good start in ensuring a future where everyone is connected.

Gigi Sohn is the Benton Senior Fellow and Public Advocate

The Benton Institute for Broadband & Society is a non-profit organization dedicated to ensuring that all people in the U.S. have access to competitive, High-Performance Broadband regardless of where they live or who they are. We believe communication policy - rooted in the values of access, equity, and diversity - has the power to deliver new opportunities and strengthen communities.

© Benton Institute for Broadband & Society 2023. Redistribution of this email publication - both internally and externally - is encouraged if it includes this copyright statement.

For subscribe/unsubscribe info, please email headlinesATbentonDOTorg

Kevin Taglang
Executive Editor, Communications-related Headlines
Benton Institute
for Broadband & Society
1041 Ridge Rd, Unit 214
Wilmette, IL 60091
847-220-4531
headlines AT benton DOT org

Share this edition:

Broadband Delivers Opportunities and Strengthens Communities