Closing the Digital Divide With the Affordable Connectivity Program

Failure to fund threatens efforts to expand high-speed internet to unserved Americans

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Closing the Digital Divide With the Affordable Connectivity Program
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Editor’s note: This article was revised on June 7, 2023, to clarify that the issue being explored is a lack of funding.

The federal government is in the process of deploying billions in broadband funding – including more than $80 billion in infrastructure bill and American Rescue Plan dollars – to ensure that every American has access to reliable, high-speed internet. But even when infrastructure investments deliver network access to unserved and underserved communities, families won’t benefit unless they can afford internet service. In fact, a 2021 survey of unconnected households found that the mean price respondents said they could pay was $10, but a majority said zero.

Moreover, given the influence of cost on customer demand and the high capital costs of deploying broadband, internet service providers have little reason to upgrade existing networks or build new ones in low-income areas. Although public funds such as loans or grants can help offset the cost of capital expenses, internet service providers (ISPs) require additional funding to keep these high-cost communities online.

In 2021, Congress took action on these supply and demand issues by establishing the Affordable Connectivity Program (ACP). Part of the Infrastructure Investment and Jobs Act (IIJA), the ACP offers subsidies for low-income households and providers in high-cost areas.

This program has become a vital tool in securing broadband access, with more than 18 million households enrolled in the program. Enrollment has been high in both rural and urban areas, polling shows strong, bipartisan support for ACP among voters, and the program plays a critical role in meeting the Congressional mandate that every American household have access to high-speed, affordable internet. But despite this success, ACP is projected to run out of funds by March 2024 unless Congress acts.

Those 18 million households represent more than 30% of the households eligible for ACP, which eclipses similar subsidies, including Lifeline. This take up rate may not be indicative of demand, as awareness efforts to encourage signups are still ongoing and the FCC announced $66 million in grants for its pilot ACP outreach program in March 2023.

ACP provides families at or below 200% of the Federal Poverty Guidelines – as well as other groups, such as Pell Grant scholars and veterans – up to $30 per month ($75 per month on Tribal lands) to apply toward broadband service. It also offers a one-time discount up to $100 toward a device, such as a laptop, from certain providers after a family pays between $10 and $50 depending on their income. The subsidy goes directly to participating ISPs, creating a stable source of revenue and mitigating risks to investment in building networks in high-cost areas.

Failure to fund ACP could also jeopardize the success of other federal broadband access initiatives. The Broadband, Equity, Access, and Deployment (BEAD) program, which is providing $42 billion to states, requires that ISPs participate in the ACP. And the Treasury Department’s Capital Projects Fund program also requires that ISPs participate in the ACP.

Efforts by states using those programs to meet Congress’ mandate to expand access could be undermined by the loss of ACP. It would instill uncertainty for ISPs and the costs the providers need to manage as they expand networks. ACP is projected to run out of money at a time when many states will be working closely with communities and ISPs to determine connectivity needs and make funding decisions.

Given the importance of ACP and other programs, The Pew Charitable Trusts has sought, to better understand how to improve connectivity subsidies to low-income households and ensure the benefits are reaching the intended communities. In 2021, Pew partnered with the University of Southern California’s Annenberg Research Network on International Communications and the California Emerging Technology Fund to research the subject. That study found that absent policy intervention directed by federal and state governments, low-income households will continue to struggle to get internet access and maintain it. In a review of affordable internet plans across California, researchers found that the availability of a low-cost plan alone did not increase broadband adoption. But state-level policies that combined these plans with additional outreach, speed, and service area requirements resulted in a 9.4% increase in adoption rates, or roughly 102,000 additional low-income households in the state.

An analysis of the Housing Authority of the City of Los Angeles (HACLA) found that 80% of unconnected residents reported cost as a primary barrier to obtaining home broadband, citing limited provider competition and greater maintenance costs in high-poverty regions of Los Angeles as reasons. But a pilot project with local ISPs that promoted affordable plans increased average adoption rates to more than 53%. The analysis found that 90% of HACLA subscribers to ISP low-cost service plans were also enrolled in ACP by October of 2022.

That success, the analysis found, was because ISPs made enrolling in ACP part of their sign-up process for consumers. The study also showed that programs such as ACP help partnerships between ISPs and other corporations and nonprofits to expand programs on technology and digital literacy programs that include device distribution, technical support, and online services training for people.

Ambitious goals – such as connecting every American to high-speed, affordable internet – requires a combination of public and private sector partners working together. The central responsibility in the public sector is the providing of secure and reliable funding. With millions of people lacking access to a service that has become essential for quality of life and economic well-being, there is no time to waste and no need for the risk that comes from a loss of a successful program such as ACP. Congress must act soon to ensure its future—and the future of the Americans who will benefit from it.

Kathryn de Wit directs The Pew Charitable Trusts’ broadband access initiative.

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