The Affordable Connectivity Program, a $14.2 billion subsidy
program established by Congress in 2021 to support broadband access for
lower-income American households, may soon be ending. April was the last month
during which the over 23 million participants received the full $30 ($75 on
tribal lands) monthly subsidy. In May, customers will receive a partial ($14)
benefit if their Internet service providers (ISPs) agree to provide one.
After
that, the appropriated funds will be gone. For over a year, I’ve advocated
extension of the ACP program. But as I wrote in a recent piece in the Washington
Examiner, “only
if it is meaningfully reformed
to render it more fiscally responsible.” I said there, and previously, that
“[t]his can be accomplished by adopting a considerably more restrictive
eligibility requirement and further measures to reduce waste and fraud in the
program."
There’s
little doubt that, for most of us, access to a high-speed broadband connection
enhances the quality of our lives. Adequate broadband access is usually
required to take advantage of various educational opportunities, apply for
jobs, interact with government websites, participate in community activities,
or use social media. So, like government benefit programs that provide
subsidies to low-income persons for securing food, housing, or energy
assistance, a properly conceived and efficiently operated Affordable
Connectivity Program can be an important “safety net” worthy of support from
conservatives.
Moreover,
by providing qualifying low-income households with a voucher to choose their
broadband provider, the ACP program empowers them. Unlike the current legacy
Lifeline model that provides support for telecom services indirectly to
low-income persons by subsidizing the service providers, under ACP the consumer
participates directly in the competitive broadband marketplace. This is a more
market-oriented pro-consumer-choice approach.
So, there
is a conservative case for saving the ACP program on the condition it is
reformed.
Specifically,
I have argued
that "there is no reason why the ACP eligibility criterion should exceed
135% of the federal poverty level," the benchmark used for the FCC's
Lifeline program. In any event, Lifeline should be folded into a reformed ACP
program.
I made similar arguments in two earlier Perspectives
from FSF Scholars, "The
Affordable Connectivity Program: Time Is of the Essence for Congress to Act"
in March 2023 and "Congress
Should Extend and Revise the Affordable Connectivity Program" in
October 2022. And others have expressed related concerns. As I noted in the Washington
Examiner piece, Senator Shelley Moore Capito asserted that "we need to
have accountability to make sure that the people who are receiving this benefit
are the ones that actually cannot pay, and would not pay otherwise had they not
had the extra money to be able to afford this."
More
recently, Senator Ted Cruz leveled a more forceful critique:
[T]he
[ACP] is not working as Congress intended: to assist those for whom cost was
the barrier to gaining internet access…. [I]t turns out the vast majority of
[participants] already had high-speed internet. Here's an FCC survey showing
just 22 percent of the households receiving the taxpayer subsidy were
previously unsubscribed to broadband. This means that for every household that
didn't subscribe to premium internet, the federal government is subsidizing
four households that did. Beyond this inefficiently, reports have also found –
unsurprisingly – that ACP has had inflationary effects on the price of
internet."
As the
end date approaches, proponents have floated various legislative solutions,
some with their own flaws. On April 26, Senate Commerce Committee Chair Maria
Cantwell released an amended version of her Spectrum and National
Security Act discussion draft that would reinstate the FCC's long-lapsed spectrum
auction authority and lend the FCC $7 billion (up from $5 billion in the
original) to replenish the ACP with the
promise of future auction revenues as collateral.
As
Harold Furchtgott-Roth, an economist and former FCC Commissioner, and Kirk
Arner wrote in RealClear Markets:
This
is a bad idea that would set a dangerous precedent. Federal agencies do not
ordinarily borrow large sums from Treasury. If this were allowed to occur,
other agencies would quickly seek similar 'borrowing authority' to pay for
projects that are unaffordable today, hoping that requisite funds might be
scrounged up somewhere else tomorrow.
They
also agreed that "[i]f Congress decides to extend ACP, it should narrow
the program to only cover households that but for the program's subsidy would
not already be subscribed to Internet service."
Senator
John Fetterman, meanwhile, has introduced a bill that would replace the current
source of ACP dollars – that is, direct congressional appropriations accompanied
by the oversight inherent to the legislative process – with yet another drain
on the Universal Service Fund, a regressive "tax" on the dwindling
user base of Title II "telecommunications services" whose
contribution factor already has reached unsustainable levels. The Promoting Affordable
Connectivity Act
would require broadband and edge service providers to contribute to the USF in
order to fund the ACP, purportedly, and magically, without further raising costs
to consumers.
Direct
congressional appropriations provide our elected leaders an opportunity periodically
to reexamine the operation of federal programs, including ones like the ACP, to
assess their efficiency and effectiveness in meeting their programmatic goals
in a fiscally responsible manner. This includes, with respect to ACP, the
eligibility requirements, the size of the benefit, and the controls to prevent
waste, fraud, and abuse.
Eligibility
for a household to participate in the program should be reduced from 200% of
the federal poverty guideline (currently $62,400 in income for a household with four persons) to 135% (currently
$42,120 for a four-person household). In line with the widely reported
agreement of the bipartisan congressional Universal Service Working Group, the
current $100 device subsidy should be eliminated as unnecessary. And effective
controls to prevent fraud and abuse should be implemented.
And considering overall fiscal constraints, the
size of the current monthly benefit should be subject to reevaluation too. As
Senator Cruz said at a May 2 Senate
Commerce Committee hearing, “History has shown that when the federal
government starts subsidizing demand - in higher education, in agriculture -
the subsidy gets capitalized and prices go up.”
In my view,
if reformed to ensure it is operated on a fiscally responsible basis, including
restricting the eligibility requirement to no more than 135% of the federal
poverty guideline, the Affordable Connectivity Program is a worthwhile “safety
net” program that should be extended.
Moreover, as I said in my earlier Washington
Examiner op-ed, “if Congress does meaningfully
reform the ACP program, it will constitute an important precedent demonstrating
that ‘safety net’ programs can indeed be reformed.” In the “tax and spend”
environment that prevails in Washington, this would be no small achievement in
and of itself.
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