On May 2, 2024, New Street Research Policy Advisor and Brookings Nonresident Senior Fellow Blair Levin testified before the Senate Subcommittee on Communications, Media, and Broadband at a hearing entitled The Future of Broadband Affordability. In addition to his testimony and answers delivered during a Q&A with senators on the panel, Levin recently submitted written responses to a number of questions from the subcommittee. Below and in the forthcoming series of articles, we share both the questions from Senator Ted Cruz (R-TX), the Ranking Member of the full Senate Commerce Committee, and Levin's answers. 

1. In your opening statement, you write: “But we do know 53% rural survey respondents and 47% of all respondents reported having either zero internet connectivity or relying solely on mobile internet service prior to receiving their ACP benefit.”

a. What is your reason for counting households with only mobile service in the same bucket as households with no service at all? Do you consider these types of households to be similarly situated?

The key points to Levin's answer are briefly summarized immediately below, with a more complete answer provided thereafter.

• As the Federal Communications Commission (FCC) and Congress have correctly found, mobile services and in-home broadband are not perfect substitutes, with each serving functions that should be universally accessible.
• Part of the difference relates to the functionalities inherent in different screen and key board sizes, while other differences relate to market-based realities such as data caps.
• A key strength of the current ACP program is its flexibility in giving customers choice over the selected service they opt into
• The program in the future should maintain that strength so that the recipients can choose the best service or services for their needs as technologies and markets evolve.

Thank you for the opportunity to clarify my thinking behind that statement.  It is a good question, though the answer is complicated, requiring both a look back at history but also an understanding of potential changes in the market in the future.

My basic answer is that today, there is an important distinction between mobile services on a smart phone and broadband services provided in the home to a computing device with a larger screen.  In that sense, the homes in the question are not similarly situated.

The history here is important.  In 1985, during the Reagan Administration, the FCC created the Lifeline program, designed to assure that all Americans had access to a minimum level of voice services to communicate with emergency services, jobs, and family.  During the George W. Bush Administration, the FCC allowed the Lifeline subsidy to be used for mobile services. 

Both decisions by Republican FCCs stand up well in the light of history.  The Reagan era Lifeline program served its purposes well.  But so did the adjustment to market changes done under the George W. Bush FCC.  Today, more than 90% of the Lifeline funds go to mobile services. This makes sense, particularly as to emergency services, where emergencies often happen outside the home, and voice services, which are now largely done on mobile devices.

But just as the George W. Bush FCC recognized, the world does not stay static.  After the 2010 National Broadband plan, the FCC, under both Democrats and Republicans, recognized that universal service funds should no longer be allocated to voice only networks but should be restructured to reflect that communications are now dependent on broadband networks, and that we should analyze and acknowledge how different networks serve different purposes.  Under both the Obama and Trump administration, changes were made to the universal service program generally and further changes were made to the Lifeline program.¹

Further, in 2021 Congress, on a bipartisan basis, came to a similar and important conclusion, finding that “Access to affordable, reliable, high-speed broadband is essential to full participation in modern life in the United States;” and that “(t)he persistent ‘digital divide’ in the United States is a barrier to the economic competitiveness of the United States and equitable distribution of essential public services, including health care and education.” 

Congress was right to do so.  And we should recognize that there are many uses of broadband services that we want people to be able to do that require a larger screen, different functionalities, and different kinds of keyboards than mobile phones offer.  These include performing jobs that require document production, job training, job placement activities, doing homework and associated research, many (though not all) telehealth services, and interactions with government social services, among others.

The difference between mobile and fixed is not just a function of screen sizes.  There is also a market difference in that low-end mobile services often include a data cap that makes certain uses, such as homework, job training, and telehealth, problematic from the point of view of the user.  My point is not that such data caps should be regulated; after all, such data caps reflect the reality that spectrum through the air is a scarcer resource than spectrum in a wire.  My point is that that policy makers should understand that while mobile services for low-income users carries with it restrictions on how much they can use the service, fixed services for low-income households generally do not have those restrictions. 

An example of how these factors demonstrate the difference between the common mobile plan and in-home broadband can be seen in a study by the Quello Center which noted that “contrary to some expectations that students can get by through the use of a cell phone as a substitute for high-speed home Internet access, those who rely on a cell phone only for Internet access outside of school experience as large, or larger, gaps in performance than those with no home Internet. Unlike their peers, students who are dependent on a cell phone for Internet access outside of school rely on smaller screens with slower devices, have access to content with fewer features, and need to monitor data caps and recharge pre-paid phone plans.”

Considering that history and the practical consumer realities, I see mobile and fixed broadband as related but not perfect substitutes.  That is, while there are functions that can be done on both, there are other functions, critical to public policy goals, that as a practical matter can only be done on one or the other.

That is why, at least for now, I would count households with only mobile service in the same bucket as households with no service at all.

Having said that, we should be conscious that technologies and functionalities evolve. It could be that mobile networks provide the necessary bandwidth—some would argue they already do--to accomplish the public policy goals, provided the recipient has the computing devices necessary for activities related to public purposed, such as education, job training and placement, and health care. 

In this regard, I think one strength of the current ACP program is its flexibility in giving customers choice over the selected service they opt into. Going forward, I would hope that the FCC and Congress evaluate current practices and continue to structure the program to optimize for flexibility and consumer choice for program recipients.

b. Given that, per the FCC’s data, the majority of ACP recipients (55.9%) choose to apply ACP to their mobile phone subscriptions, do you believe that ACP has not been successful for this cohort of recipients?

The key points to Levin's answer are briefly summarized immediately below, with a more complete answer provided thereafter.

• The ACP has largely been a successful program.
• Every new program has flaws that require study and adjustment.
• The data cited, which is likely out of date, ignores how the predecessor program, the EBB, was a mobile program and how the percentage using the funds for mobile has gone down and is likely to go further down.
• The key, as noted in the answer to 1a, is for the government to structure the program so that recipients have practical access to all the essential services that are now offered online.

As a preliminary matter, let me repeat what I said in my testimony. I am in complete agreement with the 20 House Republicans who wrote to Speaker Johnson last month asking for action on ACP, who wrote that “We believe that bipartisan solutions are within reach to ensure uninterrupted access to the ACP while concurrently pursuing long-term funding strategies.”  That is, I hope Congress would provide an ACP extension and then, as part of a larger and necessary Universal Service Fund reform effort, design a more efficient and sustainable program that moves us toward universal adoption.

So here, while I believe Congress should provide funding to extend the current ACP program, I also would support reforms to all universal service programs that achieve the goals but in more through a more efficient and sustainable framework.

Specifically, to your question, I would hope that the FCC and others would provide the information necessary for Congress to evaluate why those ACP recipients chose to apply ACP to mobile, as opposed to in-home, subscriptions.  Such an analysis should look at other barriers to adoption, such as the availability of the service and/or devices, different pricing strategies, and the role of digital literacy, among other potential reasons that might be relevant to how the program is structured in the future. 

Having said that, I want to be clear that I would not challenge the good faith of the recipients, who are in a far better position than I to evaluate what is in their best interest.  But such an analysis would be helpful in considering how to structure the program going forward.

Further, I would guess that a significant percentage of the wireless usage was driven by the history of the program in which the Emergency Broadband Benefit (EBB) that preceded the ACP was primarily a mobile program.  Based on conversations I have had in the context of my Wall Street work as well as data I have seen,² I believe that the percentage of the use of ACP for mobile has, in fact, declined from its early days.  The data therefore suggests that the FCC data you cite may be out of date and more up to date studies would show that a higher percentage of ACP recipients chose to use the subsidy for a wireline service. 

But as noted in my answer to your question 1a, I am of the view that for purposes of adequately responding to the Congressional finding noted above regarding how “access to affordable, reliable, high-speed broadband is essential to full participation in modern life in the United States” and to the “equitable distribution of essential public services, including health care and education,” we should seek to structure a permanent program that achieves universal access to both mobility and to in-home broadband services.

There are multiple ways to do so.  One could have two separate funds, one solely for mobility and one solely for in-home broadband.  However, given the current trends toward convergence—a key trend that communications investors see as one of the most important indicators of where they should be investing—in which some traditional fixed providers (cable) are offering mobile services and traditional mobile providers (such as AT&T, Verizon, T-Mobile) are offering fixed services as well, I would urge policy makers to structure the ultimate long-term program to enable the private sector to develop different options that accomplish the same goal: universal mobility and in-home broadband.  Again, the key here is the flexibility to enable the program recipients to respond to both their own needs and changes in the market, as well as driving ISPs to compete for their business.

Finally, the question implies that the results to date challenge the success of the ACP program.  I have been involved in public policy debates, as a participant or an observer for over 30 years.  It always amazes me the way inside some inside the beltway have the view that any problem in a program, particularly a new program, justifies a failing grade.  That is not the way the world works.  Every organization—private, public, or non-profit—will try things, study the results, and then adjust the program to improve its effectiveness.

The FCC’s spectrum auction program is the most successful telecommunications policy innovation of all time, both in the United States and abroad, where countries around the world followed the model established in the United States in the mid-1990’s.  Spectrum auctions succeeded, where other methods like comparative hearings and lotteries failed, in efficiently allocating and reallocating spectrum to higher and better uses. 

But having been present at the creation, I am acutely aware of mistakes we made early on in some of the early auctions, mistakes for which I bear some responsibility.  But the important thing was that—and here the FCC staff and leadership deserve the credit—the institution learned from those mistakes and quickly pivoted to changes that made the program one that has been replicated around the world.³

I would further argue that the ACP program has been, in the grand scheme of things, very effective.  While there are legitimate criticisms, there have also been significant accomplishments.  For example, a Georgetown McDonough School of Business examination of the program in October, 2023 found that based on the data so far, “(1) the ACP has successfully transitioned from the stop-gap EBB program to a low-income assistance program that is more stable, and which in less than two years has enrolled over 20.6 million households; (2) the program has acted to provide standardized vehicles for efficient enrollment;⁴ (3) the ACP includes multiple paths to establish eligibility, which eases impediments to eligible household participation; (4) while large population states have naturally seen the largest subscriptions to the ACP, the greatest percentage changes in subscriptions have been in more rural, low-population states;⁵ the program appears to have stimulated enrollment within certain high populated Native American counties.”⁶

In short, your question raises a good point.  But the answer lies in understanding our goals and then adjusting as necessary to achieve those goals.  The key, as noted in the answer to 1a, is for the government to structure the program so that recipients have access to all the essential services that are now offered online.  I believe the FCC and Congress are up to that challenge, but the path forward to success lies in study, constructive debate, and then better solutions, not simply criticisms, followed by inaction.  

More in this Series

• Ten Things About ACP that Ted Cruz Cares About—And Ten Answers that Could Help Reshape How We Think About the Program
• #2 The Economic Benefit of ACP to the Health Care System
• #3 Net Cost Savings to Government
• #4 ACP and GDP
• #5 ACP vs Private Low-Income Plans 
• #6 ACP and Telemedicine
• #7 ACP and BEAD
• #8 ACP and Education
• #9 Broadband Adoption Research
• #10 What Companies Care About the Affordable Connectivity Program?
• Where the Puck is Going: The Close of the ACP and Coming USF Reform

Notes

1. The specific changes to Lifeline are not relevant here except to reflect that problems in the program do not justify ending them but rather should cause analysis and course corrections, as the Federal Communications Commission has done.
2. On 12/31/2021 (end of EBB) enrollment was 67% mobile, 33% fixed. https://www.usac.org/about/emergency-broadband-benefit-program/emergency-broadband-benefit-program-enrollments-and-claims-tracker/additional-ebb-program-data/   By 02/08/2024 (end of ACP), enrollment was 56% mobile, 43% fixed. https://www.usac.org/about/affordable-connectivity-program/acp-enrollment-and-claims-tracker/additional-acp-data/  Also, the data show a huge spike in Lifeline-pathway enrollment right at the beginning of EBB, which makes sense given Lifeline providers were well positioned to move fast. Presumably most of those were mobile users.
3. From a perspective of 2024, spectrum auctions may seem obvious and simple.  From the perspective of 1993, when Congress authorized the FCC to allocate spectrum through auctions, it was not. But the FCC consulted the best minds for creating the auctions and decided to use an innovative simultaneous multi-round ascending auction design.  That design worked, as indicated by, among other things, the success of nearly all the auctions, the use of theory that won the 1994 Nobel Prize for economics, and the FCC auctions being cited in awarding the 2020 Nobel prize for economics.  But there were hiccups and problems along the way. 
4. In a way that is unusual for government programs, particularly in the early days, more than 80% of enrollees were satisfied with the enrollment process. https://connectednation.org/static_assets/5a34b1a7-fb9e-4a72-98be-1524f8...
5. This is also consistent with the Dr. Horrigan’s research which has also found that, as a percentage of total households, ACP enrollment in rural areas outpaced urban areas 
   https://www.benton.org/blog/affordable-connectivity-program-and-rural-america
6. DeStefano, Tim and John W. Mayo “What do the Early Data Indicate about the Affordable Connectivity Program,” Georgetown University, McDonough School of Business, Center for Business and Public Policy, October 2023. Available here https://georgetown.app.box.com/s/dgidkcv02uo0b70asay69l65syyem39h

Blair Levin is the Policy Advisor to New Street Research and a nonresident senior fellow at Brookings Metro​. Prior to joining New Street, Blair served as Chief of Staff to FCC Chairman Reed Hundt (1993-1997), directed the writing of the United States National Broadband Plan (2009-2010), and was a policy analyst for the equity research teams at Legg Mason and Stif Nicolaus. Levin is a graduate of Yale College and Yale Law School.

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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