As Congress stalls on allocating resources to the federal affordability programme, ISPs will shift their attention to state-level equity requirements for BEAD funding
The ACP will run out of funding this month, leaving 23m households without a monthly broadband benefit
As of May 2024, the Affordable Connectivity Program (ACP) administered by the US Federal Communications Commission (FCC) is completing its wind-down process due to a lack of funding. The programme, which provided approximately 23m low-income households with direct subsidies to support monthly broadband contracts and one-time device purchases, stopped accepting new applications in February 2024 and offered its last full discount to existing participants in April. The ACP was created originally as a COVID-19 support measure and formalised with the passage of the Infrastructure Investment and Jobs Act (IIJA) in November 2021. However, the original $14.2bn (£11.2bn) allocation for the programme, which provided most enrolled households with a benefit of $30 (£24) per month, has since been exhausted. In the absence of immediate additional funding for the programme authorised by Congress, consumers will no longer receive any ACP discount after May.
Lawmakers have proposed a number of options for further funding of the programme, including through reforming the Universal Service Fund
While a number of legislative proposals to further fund the ACP have been introduced, Congress has yet to advance any of them. Multiple bills that would provide between the $6-7bn (£4.7-5.5bn) requested by the Biden Administration and the FCC to continue the programme without modifications have been offered to date. Legislators have also proposed a range of modifications to the programme alongside additional funding, such as identifying different revenue streams and limiting eligibility standards. One such proposal recommends removing the one-time device funding component, lowering the income threshold for eligible households and removing certain other federal benefits for low-income households as thresholds for automatic qualification for the ACP. A bill has also been introduced to include the ACP as part of the programming executed through the Universal Service Fund (USF). Given the USF’s ongoing insolvency issues, such a permanent extension of the ACP would require a more immediate effort to reform how the USF is funded as well.
Without the ACP, state-determined affordable tariff levels will be central to the allocation of billions in BEAD funding
In addition to the ACP, the IIJA also introduced the $42.5bn (£33.4bn) Broadband Equity, Access, and Deployment (BEAD) Program. The funds, which are allocated through state-level grantmaking to selected ISPs, are intended to expand access to high-speed internet through quicker deployment, as well as improved mapping and wider adoption. In order to receive BEAD funds to support their network rollout, ISPs are required to offer at least one affordable tariff, or social tariff, as a consumer equity measure. In the absence of the ACP and its federal subsidies for affordable tariffs, states are now left to define their own standards for affordability, meaning the conditions to receive BEAD grants could vary greatly from state to state. During a 15 May 2024 hearing in the US House of Representatives, some lawmakers voiced their disagreement with this approach, suggesting that states are being given licence to introduce rate regulation in the absence of federal action on the matter. Given the priority the Biden Administration has placed on the advancement of digital equity through the BEAD programme, the FCC’s explicit refusal to engage in rate regulation and now the expiration of the ACP, these state-level decisions on low-income tariff levels will likely be the primary battleground for affordability policy in broadband markets moving forward.
