The North Star of communications policy should be to make services faster, better, and cheaper for all. Yet, next year, about 50 million Americans could find that their access to the core communications service of our time—broadband—has become slower, worse, and more expensive, with many even likely to be disconnected. That shift would constitute the biggest step any country has ever taken to widen, rather than close, its digital divide.
The reason for the potential debacle? The Affordable Connectivity Program (ACP), which provides a $30 per month subsidy for broadband to over 16 million households (with the number continuing to grow) will run out of funds.
Congress established the ACP in the Infrastructure Investment and Jobs Act (IIJA) of 2021. That law correctly observed that “a broadband connection and digital literacy are increasingly critical to how individuals participate in the society, economy, and civic institutions of the United States; and access health care and essential services, obtain education, and build careers.”
To assure that all were connected, the law appropriated $65 billion to broadband. Congress devoted most of the funds to network deployments in unserved and underserved areas, but there was another $14.25 billion allocated to the ACP to assure that broadband would be affordable to all. The program is projected exhaust all its funds sometime in the first half of 2024.
The end of the program would be a disaster for families who generally have little savings or discretionary income and will suddenly face monthly broadband charges of $30 or more. It would also rob the broader economy of an opportunity to grow faster due to universal connectivity. As demonstrated by a 2021 study on the employment effects of subsidized broadband for low-income Americans, such programs increase employment rates and earnings of eligible individuals due to greater labor force participation and decreased probability of unemployment, with a benefit of $2,200 annually for low-income households.
Ending the program would also limit the enormous potential for savings in critical services that broadband can deliver. For example, in health care, data from Cigna Healthcare shows that patients save an average of $93 when using non-urgent virtual care instead of an in-person visit. Similarly, patients save an average of $120 when the virtual visit involves a specialist, and $141 with a virtual urgent-care clinic over an in-person one. Given that the Medicaid-eligible population and the ACP-eligible population overlap significantly, the savings for the government in assuring all can afford telehealth likely pays for itself. In addition, as Brookings Metro has previously noted, widespread broadband access also leads to improved outcomes in education, jobs, and social services, which would be lost if the ACP elapses.
The ACP’s expiration will also create problems for the Broadband Equity, Access, and Deployment (BEAD) Program—the $42.5 billion network deployment program Congress created in the IIJA. A study reviewing the ACP’s impact on BEAD concluded that it reduces the subsidy needed to incentivize providers to build in rural areas by 25% per household, writing: “The existence of ACP, which subsidizes subscriber service fees up to $360 per year, reduces the per-household subsidy required to incentivize ISP investment by $500, generating benefit for the government and increasing the market attractiveness for new entrants and incumbent providers.” As the National Urban League has observed, that study demonstrates that “if Congress fails to reauthorize ACP, the federal government likely will end up overpaying for broadband deployments. As a result, the federal dollars will end up funding deployments to significantly fewer unserved and underserved homes and businesses.”
The obvious solution is for Congress to continue funding the program. That is possible, as it enjoys bipartisan support. For example, former Republican FCC Commissioner Michael O’Rielly penned an op-ed titled “A Conservative Case for the Affordable Connectivity Program.” EducationSuperhighway, a national nonprofit with the mission of closing the digital divide, identified 28 governors who have prioritized implementing the ACP, including those from deep-red states such as Alabama, Idaho, and Mississippi. And polling suggests the program is widely popular among the public, with a January poll showing a “strong bipartisan majority of voters (78 percent) support continuing the ACP, including 64 percent of Republicans, 70 percent of Independents, and 95 percent of Democrats.”
But despite the ACP’s importance and popularity, it is questionable whether the Republican-controlled House will continue funding it, given the party’s attacks on other social safety net programs.
Should ACP funding be discontinued, there are alternatives—but all come with their own concerns. The FCC could fund the program itself, through the mechanism by which it funds universal service programs. That framework, however, is already under stress from legal challenges to its constitutionality and a shrinking revenue base, which has declined by 63% in the last two decades. States could design their own programs, such as New York did by requiring providers to offer a $15 broadband service to low-income residents. But in 2021, a judge ruled that the program violates federal law. Moreover, it is questionable whether the country’s universal service ambitions are best served by a fragmented set of state programs.
The National Urban League proposed a promising alternative in its Lewis Latimer Plan for Digital Equity and Inclusion. (Disclosure: The author of this piece assisted the National Urban League in its development of the Latimer Plan and its analysis of the implications of the ACP on the BEAD program.) Noting the cost savings demonstrated through telehealth, the plan proposed allowing Medicaid to enable states to provide broadband vouchers, like what the ACP offers, to eligible persons. This is similar to the way health insurance providers offer non-medical benefits that, over time, reduce the cost of health coverage. Of course, such a plan would require an administrative process to determine if and how to proceed. But it offers an alternative that would provide a sustainable source of funding.
The ACP, like any new program, could use some incremental fixes. As a Government Accountability Office review of the program noted, the FCC could improve performance goals and measures, consumer outreach, and fraud risk management. The FCC is working to do so.
But those reforms should not take our eyes off the crisis close at hand. Two years ago, the government came together in an unusually bipartisan way to assure that all could afford the broadband service they need in their homes to fully participate in the economy and society. Since then, the importance of broadband for accessing essential services has only grown. We should make the years ahead be the ones when we finally close the digital divide—not allow it to grow even more.