Whether or not the US closes its digital divide may come down to the fate of the Affordable Connectivity Program (ACP): the $14.25 billion program currently subsidizing broadband by $30/month for over 15.7 million households (up to $75 on tribal lands).

That's the view of the National Urban League (NUL), according to the group's response to an inquiry from Senator John Thune (R-SD) about the Biden administration's $42.5 billion Broadband, Equity, Access and Deployment program (BEAD) and other federal broadband matters.

While Thune's inquiry focused largely on how the NTIA has written rules for the BEAD program – and whether legislation is needed to roll some rules back – the National Urban League zeroed in on uncertainty about the future of the ACP as the "greatest challenge before us."

At present, the ACP – which was passed and funded in a package of $65 billion for broadband through the 2021 Infrastructure Investments and Jobs Act (IIJA) – is projected by some estimates to run out of money as soon as 2024.

Figure 1: (Source: Pixabay)

"Failure to extend ACP will devastate the 15 million households and counting that already benefit from or are seeking to enroll in this program and will threaten their ability to thrive in the digital age," said the National Urban League in a letter to Thune. "That, in and of itself, is a disaster for our country economically and socially, but the potential discontinuation of ACP will also cause a great inefficiency in the BEAD program."

For instance, the group said the impacts of the ACP going away could be "ruinous" in the rural US where the program has the highest number of eligible and enrolled households.

As an example, the NUL pointed to a recent study showing that the ACP reduces the subsidy needed to incentivize providers to build in rural areas by 25% per household.

If rural providers assume the ACP is permanent, they'll need "less funding to incentivize investment," said the NUL. That will matter when it comes to bidding for grants. But if the program then runs dry and isn't replaced, "the potential grantees will receive too little funding and suffer adverse financial consequences," the group added.

If the ACP isn't reauthorized, there is also risk of the federal government "overpaying for broadband deployments," resulting in federal dollars "funding deployments to significantly fewer unserved and underserved homes and businesses," according to the letter.

If that happens, it will be because Congress hasn't clarified its plans for the ACP, added the National Urban League.

"That reduction in the states' ability to meet the Congressional goal of closing the digital divide will not be due to the misconduct of any grantee or state but because Congress had not made its intention clear about a critical financial input to the models that the private sector uses to apply for BEAD funding," the group said.

The National Urban League is not the only group raising the alarm about the impending end of the ACP.

In December, during the final Senate hearing on broadband for 2022, Angela Siefer, executive director of the National Digital Inclusion Alliance (NDIA) urged senators to pass "sustained funding" for the ACP, calling the program "vital" and noting that while low-cost programs offered by ISPs are helpful "they all have participation limitations."

And in a blog this week, Doug Dawson, president of CCG Consulting, wrote that if the program goes away ISPs will see "broadband customers drop over a few months by at least a few million subscribers" with the biggest impact falling on "any ISPs that most aggressively pushed the discount for customers."

Dawson also points out that this has an "interesting implication" for the BEAD program, since grant winners are required to offer the affordable connectivity benefit to customers.

Relitigating BEAD

How this gets resolved remains to be seen. Casual observers of Congress don't see much chance of passing legislation with Republicans in control of the House and Democrats in control of the Senate.

But if the Senate decides to hold hearings on some of the matters Thune raised in his inquiry, that's likely to happen in the first half of the year before BEAD allocations are set by NTIA on its projected date of June 30, 2023.

That may offer an opportunity for Congress to hear arguments and ideas for extending or replacing the ACP.

But other industry players are pushing for Congress to enforce different changes to the BEAD program.

One of those is the Wireless Internet Service Providers Association (WISPA), which has argued for much of the last year that NTIA's fiber-focused funding rules are out of step with the "tech neutral" spirit of the infrastructure law.

To that end, in its reply comments to Sen. Thune, WISPA asked Congress to "amend the IIJA to make it clear that all technologies are allowed to compete for BEAD funding."

That includes passing legislation to prevent the NTIA from enforcing certain program rules that have been worrisome to the wireless industry, including a restriction on using unlicensed spectrum.

Further, WISPA asked that Congress amend the IIJA "so as to not allow NTIA to require State Broadband Offices to set their extremely high cost per location threshold so high as to favor deployment of one type of broadband technology over another."

Currently, NTIA's funding rules say it expects states to set that threshold "as high as possible to help ensure that end-to-end fiber projects are deployed wherever feasible."

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— Nicole Ferraro, editor, Light Reading, and host of "​​The Divide" podcast.