New ACP extension bill would fund program with $7B

A bipartisan bill to fund the Affordable Connectivity Program (ACP) with $7 billion was introduced on Wednesday. The legislation, introduced by three Democrats and three Republicans, aims to extend the program with unallocated funds from the Treasury Department, rather than new spending.

"Over a million deserving households in Ohio receive low-cost internet access thanks to the Affordable Connectivity Program. I'm proud to co-sponsor this bipartisan effort to ensure this successful program continues to deliver results," said Sen. JD Vance (R-OH) in a press release. "This is exactly the type of program my family would have benefited from if I was growing up in Ohio today."

In addition to Vance, the bill is being introduced by Senators Kevin Cramer (R-ND), Peter Welch (D-VT) and Jacky Rosen (D-NV); as well as Democratic Rep. Yvette D. Clarke (NY-09), who spearheaded the effort, and Republican Rep. Brian Fitzpatrick (PA-01).

The legislation is notable because the ACP, which provides a monthly broadband subsidy for nearly 23 million low-income households, is months away from running dry. The FCC this week said the ACP funds will last through April 2024, "running out completely in May." To that end, the FCC on Monday said it would start the process of winding the program down this week.

Related:Davidson: Lapse in ACP funding will have negative effect on BEAD

"If Congress does not provide additional funding for the ACP in the near future, millions of households will lose the ACP benefit that they use to afford internet service. This also means that roughly 1,700 internet service providers will be affected by the termination of the ACP and may cut off service to households no longer supported by the program," wrote FCC Chairwoman Jessica Rosenworcel in a letter to members of Congress this week.

"Due to the lack of additional funding, and the fact that the projected end date is less than four months away, the Commission expects to begin taking steps this week to start orderly winddown procedures to give participating providers, households and other stakeholders sufficient time to prepare for the projected end of the ACP," she said.

Rosenworcel added that those steps include offering providers "guidance on the timing and requirements for notifying participating households about the projected end of the ACP," announcing a date to end ACP enrollment, and formally announcing an end date for the program itself.

Clean extension bill

The bill introduced today puts the onus on the Treasury Department to allocate $7 billion "out of any money in the Treasury not otherwise appropriated." The idea to use unspent COVID-19 relief funds to extend the ACP was initially floated mid-last year by a small group of Senate Republicans – including Vance and Cramer – in a letter to the White House.

Related:The Divide: Why the Affordable Connectivity Program is key to closing the digital divide

Notably, in its current form as a temporary extension, the bill does not seek to change the ACP's rules. That could be a sticking point for some Republicans who have indicated they would want to trim the program and curb its eligibility requirements in order to keep it going. 

Indeed, in a letter to FCC Chairwoman Jessica Rosenworcel in December, four Republicans, including Senators John Thune (R-SD) and Ted Cruz (R-TX), and Representatives Cathy McMorris Rodgers (R-WA) and Bob Latta (R-OH) – all of whom voted against the infrastructure law and thus the ACP to begin with – argued that the program is wasteful spending.

"As lawmakers with oversight responsibility over the ACP, we have raised concerns, shared by the FCC Inspector General, regarding the program's effectiveness in connecting non-subscribers to the internet. While you have repeatedly claimed that the ACP is necessary for connecting participating households to the internet, it appears the vast majority of tax dollars have gone to households that already had broadband prior to the subsidy," reads the letter.

Related:How ACP negotiations might shake out

The point highlights a key disagreement amongst certain Republicans who oppose the program and the ACP's supporters: While Republicans like Cruz have essentially argued that the subsidy is misdirected at people who already subscribe to the Internet, ACP advocates and digital inclusion experts note that the ACP allows millions of families to afford broadband service without cutting out other essentials.

Cheers and fears

Today's introduction of the Affordable Connectivity Program Extension Act drew cheers from industry and consumer advocates.

"The ACP Extension Act of 2024 is a critical and common-sense step towards keeping these millions of families online and fulfilling our nation's bipartisan commitment to bridging the digital divide once and for all," said USTelecom CEO Jonathan Spalter in a statement.

"We applaud Representatives Clarke and Fitzpatrick for championing digital equity by introducing legislation to keep over 22 million households connected through the Affordable Connectivity Program. We urge their colleagues in Congress to support this legislation as we work to identify solutions for the long-term sustainability of ACP," said Angela Siefer, executive director of the National Digital Inclusion Alliance (NDIA).

But others are skeptical the legislation will even make it to a vote.

"Given the thinness of the Republican House majority and the unanimity of Democratic support for an extension, and what we have heard from industry and congressional sources, if the bill were to go to the floor, it would pass," wrote Blair Levin in an analyst note for New Street Research earlier this week. "But it is unlikely the House Republican leadership will allow the bill to go to the floor."

The ACP legislation, which would need to pass soon to stave off the program's wind-down, also comes at yet another fraught time in Congress, as lawmakers are once again trying to pass legislation to keep the government open, with some now pushing for another short-term stopgap measure.

'Overwhelmingly popular'

Meanwhile, new polling released this weekend by the Digital Progress Institute (DPI) shows the ACP is supported by a majority of Americans, including 96% of Democrats, 78% of Independents and 62% of Republicans.

The DPI poll, conducted by Public Opinion Strategies and RG Strategies, surveyed 1,000 registered voters in December 2023 and contains other useful details for this election year, notably that the ACP is supported by 93% of 2020 Biden voters and 62% of 2020 Trump voters.

The ACP is also supported by majorities across regional subgroups, according to the polling, with 90% of urban voters, 80% of rural voters and 73% of suburban voters in favor of the program.

"Given the important role the ACP plays in ensuring millions of low-income American families and veterans can continue to access the internet for work, school, telemedicine, and other purposes, Congress must act now to reauthorize funding and preserve this overwhelmingly popular program," wrote DPI President Joel Thayer in a blog post.

Looming consequences

If Congress neglects to pass extension funding for the ACP, the impact will be felt by the nearly 23 million households currently enrolled.

It will also be felt by the 1,700 service providers participating in the program that will need to devote resources to unenrolling participants, plus hundreds of digital equity organizations that have received grants to boost ACP enrollment, and of course any ISP looking to participate in the $42.5 billion Broadband Equity Access and Deployment (BEAD) program, which requires participants to offer an affordable plan for low-income households.

In his analyst note for New Street Research, Levin outlined some of the service provider risk of the ACP going away, which may see ISPs lose customers and erode trust.

"While ISPs will keep many customers, it is likely that many others will drop off and others will only be retained by the ISPs charging less than the $30 a month subsidy the ACP provided," said Levin. "It is likely that the stories that emerge from the resulting chaos will cause some reputational loss for the ISPs."