Digital Beat

The Future of Affordable Broadband:
Life after the Affordable Connectivity Program

(Remarks as prepared for the Broadband Communities Summit in Houston, Texas, on May 7, 2024)

Good morning—thank you, Brad for inviting me to speak. It’s great to be back at the Broadband Communities Summit. There are so many broadband-themed conferences these days, it’s hard to keep track. But ever since I first spoke here in 2015, this conference has been special to me. It feels less like work and more like family.

I don’t know many folks who are nostalgic for the summer of 2020. We were in the midst of an intense and nasty Presidential campaign (ready for another one?) and of course, we were in the throes of the COVID-19 pandemic, before vaccines and just when people were starting to wear masks.

But for people like us, who work daily to connect every US household to robust and affordable broadband, there was something memorable – and in a good way—about the summer of 2020. And it all started with this picture: Connectivity during COVID

As many of you know, this is a picture of two girls doing their schoolwork in front of a Taco Bell in Southern California, using the restaurant’s Wi-Fi because they had no Internet connection at home, and their school, like so many others, was closed. The picture, which was shared millions of times on social media, was the first realization for many that tens of millions of people in the US lacked broadband Internet access and that broadband was not a luxury, but an absolute necessity for full participation in society.

I believe that this picture, along with other stories of people unable to work, go to school, visit with doctors or otherwise communicate, helped to jumpstart the federal government’s greatest-ever investment in broadband. It started with the last COVID-19 relief bill, passed in December 2020, which included the $3.2 billion Emergency Broadband Benefit. The EBB was a $ 50-a-month broadband subsidy for low-income households ($75 for tribal lands) and those who had suffered recent job losses as a result of the pandemic.

The investment continued with the American Rescue Plan Act, which included the $10 billion Capital Projects Fund, which my friend Joey Wender has so ably implemented, and culminated in the broadband provisions of the 2021 bipartisan infrastructure law, formally known as the Infrastructure Investment and Jobs Act. As we well know, the IIJA included $42.5 billion for deployment, $3 billion for digital equity, and $14.2 billion for the Affordable Connectivity Program or ACP.

The ACP was the successor to the EBB, and while the subsidy was reduced for non-tribal households to $30 a month, it became wildly successful. As of April 30, over 23 million U.S. households had enrolled in the program. Never in my 35 years of communications policy advocacy have I seen a program supported by virtually everyone in the ecosystem—industry and advocates, Republicans and Democrats all like it. A bill to extend funding for the program has six bipartisan co-sponsors in the Senate and 230 bipartisan co-sponsors in the House. Yet as I’m sure all of you know, ACP recipients are no longer receiving the entire subsidy, and the program will run out of money at the end of this month.

I’m not going to spend much time dissecting why a program so popular and successful isn’t being made a permanent entitlement or even extended until other options for affordable broadband can be implemented. Let’s just chalk it up to general Congressional dysfunction and a lack of real buy-in from Congressional leaders of both parties. One would think that in an election year, preserving a program like this would be a priority, but despite nearly a year of sustained and intense grassroots pressure, it hasn’t been. It’s possible that Congress will save the day at the eleventh hour, but even if they do so, the funding that has been discussed recently would only sustain the program until the end of the year.

Rather than get into all that, I’d like to focus instead on what can be done for the 23 million households that currently rely on the ACP. And also, the additional 25 million that are eligible but have not yet enrolled.

The option that I and many others believe is the most logical is for the Federal Communications Commission to simply use its own existing authority to fund the subsidy. Let me explain:

The FCC controls something called the Universal Service Fund, or USF. If you’re not familiar, the USF is basically a giant pool of money that is generated through a fee on phone service. The FCC uses this money to address our country’s most pressing connectivity needs, like bringing internet service to schools, libraries, health care centers, and rural areas. It also uses the USF to fund a program called Lifeline, which is like the ACP but smaller—just $9.25 a month—and is largely used for mobile phone service.

The FCC could start a proceeding to increase the amount of money in the USF so that it can fund an ACP-like subsidy. It has the power under the Communications Act, it has a consistent funding source, and it has a reason with the ACP’s expiration—an event former FCC Chief of Staff Blair Levin describes as the “biggest step any country has ever taken to widen, rather than close, its digital divide.” Given all this, why doesn’t the FCC act?

Two words: contribution reform. You see, the USF has one fundamental flaw: it’s funded solely through that fee on phone service. This is a problem because people are shifting from phone-based communications to broadband-based communications, and as they do, phone-based revenue for USF is drying up. Thus, the USF is barely able to support its existing programs, much less take on an ambitious project like funding a $30-a-month broadband subsidy.

The FCC could fix this problem by applying the USF fee to broadband services. Doing this would increase the USF’s revenue base and allow it to address the looming ACP emergency. But it is also controversial—particularly to cable companies who pay very little into the fund.

Unfortunately, the FCC largely shut down this option a few weeks ago when it chose to forbear from applying USF fees to broadband providers. This misstep was part of an otherwise welcome decision to reclassify broadband as a telecommunications service under Title II of the Communications Act. The FCC didn’t want to immediately apply the fee to broadband providers—that was understandable—but it had other ways of postponing that decision short of forbearance. I’m going to guess that some stakeholders will ask the agency to reconsider the forbearance decision, but it is quite clear that the current FCC leadership has no appetite for Universal Service contribution reform and likely would let such a petition languish.

Of course, Congress could require the FCC to expand the contribution base, and at least two bills have already been introduced that would do so. Early in the Congress, Senators Klobuchar and Thune introduced a simple bill that would require the FCC to start a proceeding using its existing authority to apply the fee to broadband providers. And just last week, Senator Fetterman introduced a bill that would require the FCC to expand the contribution base to include both broadband providers and online platforms. Finally, there is the bipartisan, bi-cameral Universal Service Fund Working Group, led by Senators Lujan and Thune and Representatives Latta and Matsui that started its work almost exactly a year ago. I’m familiar with some of the ideas the working group has bandied about, and while I’m not at liberty to discuss them, I will say that the ultimate goal is to expand the contribution base significantly so that the ACP’s broadband subsidy can be paid fully by the USF. I’ve heard that the working group will reveal its proposal either late this month or in early June, but of course whatever that group comes up with will have to go through the legislative process, which could take many months or longer.

Another option would be for the FCC to simply increase the $9.25 Lifeline benefit without expanding the USF contribution base. Indeed, two petitions have already been filed with the FCC to do so, one by Conexon, which designs, builds, and operates broadband networks for electric co-ops, and the other by Smith Bagley, Inc., which builds networks on tribal lands.

Increasing the Lifeline subsidy without also increasing the contribution base would require the FCC to reallocate the $8 billion annually it currently provides for all four of its USF programs. Which programs would get scaled back? E-Rate? The Rural Health Care Program? In light of the $42.5 billion the states will receive under the BEAD program and the $10 billion they have already received under the CPF program, it would seem that the high-cost fund would be the most logical candidate. However, the most remote rural networks will still need funding for operating expenses, while others may need funding to maintain or expand their networks in the future. Figuring out how to redistribute this money would involve hard choices that it is unclear that the current FCC leadership is willing to make. Regardless, with just $8 billion in annual funding for all the USF programs, even an enhanced Lifeline benefit could not replace the entire $30 a month subsidy, although it could be combined with a state subsidy, which I’ll talk about next.

The lack of leadership and sense of urgency at the federal level means, that much like during the pandemic, the burden of ensuring that US households are connected will likely fall to the states and local communities. A number of states have their own universal service funds, while others have started looking at ways to create their own ACP-like support programs. Local and regional philanthropies, along with small local ISPs and community broadband networks are also considering how they can help.

The bipartisan infrastructure law requires states to adopt, and ISPs that receive BEAD funding to provide, a “low-cost broadband service option.” With the ACP’s demise, however, the nation’s largest ISPs are starting to push back, in many cases successfully, on states’ efforts to recommend and implement that mandate. They are even objecting to states favoring BEAD projects that provide lower-cost options. This really makes my blood boil—big ISPs have in many cases already received billions of taxpayer dollars from the ACP and CFP programs and will seek many billions more from the BEAD program, yet they are unwilling to provide a low-cost option in return. It’s axiomatic that when government provides a financial benefit to private parties, it can require a public benefit in return.

One of the more innovative state efforts that I’ve seen to connect households to broadband was introduced by Representative Daniel Linville of West Virginia, with an assist by Charlie Dennie. The Remote Patient Outcome Improvement Act allows health care providers and insurers to partner with ISPs to provide broadband service to a patient’s home to facilitate the review of vital signs and other medical data. While the bill stalled in the last legislative session, I expect that it will be re-introduced next year. This effort mirrors proposals like that from the National Urban League, to have Medicaid subsidize broadband connectivity to improve health care outcomes. Tying broadband subsidies to other entitlement programs and essential services like health care, education, and veterans’ benefits could be a smart avenue for providing connectivity to low-income households. It also has the added benefit of getting the FCC out of the low-income subsidy business, shielding the subsidy, and the agency, from the politicization that has followed Lifeline, the EBB, and the ACP.

Finally, there is the state option that ISPs most fear—a legal mandate that they provide a specific affordable broadband offering. This kind of mandate in New York State was just upheld by the US Court of Appeals for the 2^nd Circuit. Among other things, the New York State law requires all ISPs operating in the state to offer low-income residents a $15 25 Mbps service and a $20 200 Mbps service, although there are limited exceptions. The fate of the New York law could be determined by the FCC’s Title II decision—the text of which we have not yet seen. The FCC could choose to preempt the law, it could find a rationale for not doing so, or it could leave it for the courts to decide. No matter what the agency decides, there is certain to be an uproar and more litigation. Should the law ultimately stand, it could become a model for other states.

The good news in all of this is that there are several ways to preserve broadband affordability even in the absence of the ACP. But it will take the kind of leadership and political will that has so far been lacking at the federal level. My money, and that of tens of millions of households, will be on the states and local communities. While I don’t expect digital equity advocates like many of you to give up on the feds, I urge you to spend more resources supporting state and local efforts to close the digital divide. Because we can’t afford to go back to this [point to Taco Bell picture].

Thank you.

Gigi Sohn is Executive Director of the American Association for Public Broadband and 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.

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