The Sunsetting Affordable Connectivity Program Casts Shadows on Rural America’s Digital Landscape
Closing the Digital Divide Necessitates Funding the ACP
In today’s digital age, staying connected has never been easier. With access to the internet, you can not only keep in touch with friends and family, but also take online classes, apply for jobs, work remotely, and attend telehealth appointments. For over 23 million Americans, however, that access is in jeopardy.
The Affordable Connectivity Program (ACP) provides up to $30 per month to eligible households and up to $75 per month to households on Tribal lands for broadband services, connecting millions of households across the country. Funded under the Bipartisan Infrastructure Law — the largest investment in broadband in America’s history — the ACP authorization was a bipartisan acknowledgement of the vital role internet connectivity plays in today’s digitally-dominated world.
Today, there is not yet such a bipartisan agreement in Congress to keep the ACP funded. In February, the ACP stopped accepting new applications. At the end of the month, the program will shut down.
Cost is a contributor to the urban-rural digital divide. Due to large geographic distances between remote communities, broadband deployment in rural regions is much more expensive. And rural Americans on average have lower median incomes than their urban counterparts. The ACP has helped to lower this barrier and did it with great success. For every dollar spent on ACP, American households receive nearly two dollars in household benefits, generating $16.2 billion in employment and convenience benefits annually.
Facing the ACP’s uncertain future, some have suggested that broadband customers could pay into the Universal Service Fund (USF) to permanently fund ACP. Yet there is broad recognition that the current USF contribution system is no longer sustainable. In the Senate, the Universal Service Working Group is in place to find ways to reform and modernize the USF.
Adding ACP to USF would double the size of the fund, necessitating contribution reform. Doubling the size of the fund without contribution reform would push the contribution factor to unmanageable levels. To account for an increase of billions per year, USF fees, which are assessed and collected in advance, would have to be increased to meet projected outlays.
Taxing broadband would shift the burden from enterprise customers today to disproportionately assess residential customers (including low- and middle-income households), who, as FCC Chairwoman Jessica Rosenworcel noted to Senator Lujan in January 2024, would “both see an increase in their broadband bills and also be responsible for a greater percentage of USF contributions.” Customers’ internet bills would increase by $5.28 to $17.96 per month during a time of persistently high inflation. Such a financial burden would violate the Biden administration’s pledge not to impose new taxes on households making less than $400k per year. For rural Americans, this is not a viable solution.
That is why the Senate USF Working Group, in contrast to this proposal, has suggested that any changes to the contribution methodology take into account the economic burden of contributions to ensure it is not borne by low-income and middle-income households.
Folding the ACP into USF would also take too long. Americans have mere days before the ACP begins to wind down. The regulatory notice-and-comment process needed to accomplish this would likely take close to a year. The FCC would likely need to set up the assessment before it can re-establish the ACP subsidy, meaning that for some period, consumers will face the deficit created by ACP expiring plus the expense of new broadband tax. Making internet service more expensive would hurt rural Americans who are already struggling to get and stay connected.
Further complicating matters, the viability of this whole proposal currently rests on the FCC’s classification of broadband, which has ping-ponged back and forth for more than a decade — leaving this solution on shaky legal ground. Assessing broadband for USF purposes rests on the FCC’s reclassification of broadband as a Title II service, which will take time to go into effect once adopted as anticipated at the end of April and is likely to be challenged in court.
With time and money in short supply, Congress must act now. While work is done to identify a long-term funding mechanism that will ensure rural America is well-connected and enhances the affordability of broadband, taking immediate action to continue funding ACP is critical to closing the digital divide and unlocking rural America’s economic future.
