Biden may ask Congress for ACP funding in the 'coming days'Biden may ask Congress for ACP funding in the 'coming days'
On Friday, the White House OMB indicated that it may soon ask Congress for additional funding for the Affordable Connectivity Program (ACP). The program is projected to run dry by April 2024.
October 20, 2023
The White House indicated on Friday it may finally put its weight behind re-funding the Affordable Connectivity Program (ACP), which is subsidizing broadband for over 21 million households and is expected to run out of funding by early next year.
The ACP nod was included in a letter from the Office of Management and Budget (OMB) requesting $105 billion in emergency supplemental funding for fiscal year 2024 for "key national security priorities," primarily related to the wars in Israel and Ukraine, as well as border security. In addition to that funding, the OMB director referred to "additional urgent needs for millions of hard-working Americans" and said other funding requests are coming soon:
"The Office of Management and Budget is refining our estimates of funding required to address recent natural disasters, avoid the risk that millions of Americans lose access to affordable high-speed internet or child care, provide additional resources for the Federal Emergency Management Agency’s Nonprofit Security Grant Program, and avert a funding cliff for wildland firefighter pay. I anticipate submitting a request for supplemental funds in these areas in the coming days," wrote OMB Director Shalanda D. Young.
The "risk that millions of Americans lose access to affordable high-speed internet" is tied to the expectation that the ACP will run out of funding by April 2024. That program was originally funded with $14.2 billion in the 2021 Infrastructure Investment and Jobs Act (IIJA), as part of a $65 billion package of broadband bills, including the $42.5 billion Broadband Equity Access and Deployment (BEAD) program. The ACP currently provides a monthly subsidy of $30 toward broadband and a one-time device discount.
The anticipated funding collapse of the ACP has led to dire warnings from regulators and industry experts alike that the US may expand its digital divide just as it embarks on spending over $40 billion to close it.
The OMB's anticipated funding request for ACP comes as Congress is in a state of paralysis and turmoil, with the House speaker's race ongoing and unraveling by the minute. Nothing can legislatively be accomplished until that race is settled without extending the powers of Speaker Pro Tempore Patrick McHenry, a plan that was squashed by House Republicans on Thursday (but could be revived by the time you finish reading this sentence, who knows).
"While the reports, if true, would be a positive step forward for ACP and the ISPs, there are still too many uncertainties about the budget process ahead to have confidence that the ACP program will be re-funded," said Blair Levin in an analyst note for New Street Research.
Further, the supplemental funding would be for a year, leaving more uncertainty as we head into the 2024 election season.
"Given the uncertainty of what will happen in the election, the high level of uncertainty about the future prospects of the ACP will make it difficult for states and bidders in the BEAD program to accurately gauge the likelihood of permanent ACP funding in their proposals," said Levin.
Still, a request from the White House for ACP funding would be a step in the right direction. Some in the industry had expected President Biden to include a request for ACP funding in his FY 2024 budget proposal in March, but the program was only mentioned in the context of the administration's progress.
If Biden makes an official request for funding, as the OMB indicated, that will officially change the conversation.
"To obtain re-funding, the ACP needs to be on the table of the issues being discussed and to have a political champion," wrote Levin for New Street Research. "Before the request, it had neither. When the request goes in it will have both."
This week also saw a push from some Democrats in Congress to fund the program. In a letter to House and Senate leaders, 31 Democratic Senators, led by Jacky Rosen (D-NV), called the ACP "crucial to increasing broadband connectivity" and requested additional funding.
"Failing to extend funding would be irresponsible," said the legislators. "We urge you to extend funding for the ACP in a government appropriations package and include a long-term solution that ensures efficient spending of taxpayer dollars."
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