Rethink federal spending to save broadband subsidy, tech group argues

In the waning days of the Biden administration, the federal government approved final plans from three states — Louisiana, Delaware and Nevada — to build out broadband infrastructure and boost digital equity.

But as states navigate a potentially uncertain future for federal broadband grant funding to help them build out their infrastructure, they also must navigate an uncertain future for programs designed to help make broadband more affordable.

The Universal Service Fund will go before the Supreme Court this year amid questions over whether its funding mechanism is constitutional. And the expired Affordable Connectivity Program, a $30-a-month federal subsidy that got more than 23 million households online, looks no closer to being replenished despite bipartisan support.

But some groups have not given up hope that congressional leaders will break the impasse and find a new way to fund the ACP. And one, the Information Technology and Innovation Foundation, said there is an opportunity to reimagine it — as well as the patchwork of other programs — and close the digital divide once and for all.

An ITIF report last week called on Congress to create a “more targeted and durable” ACP as part of a broader shift in federal broadband funding priorities away from deployment and instead focused on affordability.

ITIF pointed to recent data from the National Telecommunications and Information Administration, which found that 15.4% of respondents to a survey said that affordability was one of their biggest barriers to home internet subscription and use. And it noted the findings of the Federal Communications Commission’s National Broadband Map, which found that 94% of locations in the U.S. had access to service with speeds of at least 100 Megabits per second download and 20 Mbps upload.

Other groups have found similar affordability struggles. A new survey from the National Lifeline Association found that without the ACP, 40% said they cut their food spending to afford their monthly internet bills, while 36% said they discontinued telehealth without the ACP. 

Over 60% said they could not maintain regular contact with friends and family, while 20% said they could not work remotely or pick up shift work and nearly 20% said children struggled to complete homework assignments. David Dorwart, chairman of the National Lifeline Association board, called the findings “heartbreaking.”

“For a really long time, deployment has been a vanishingly small portion of [why people aren’t online], and it's only gotten smaller as we've done better at deployment over time,” said Joe Kane, ITIF’s director of broadband and spectrum policy who authored the report. “[If] you're looking at causes of the digital divide, lack of broadband deployment really isn't one anymore.”

Deployment has been a major focus of the $42 billion Broadband Equity, Access and Deployment program, under which the federal government approved several states’ final plans. Meanwhile, grants from various federal agencies like the Agriculture and Treasury Departments have focused on getting infrastructure into underserved areas, especially rural communities.

Kane said BEAD should be the “last gasp” of the federal government’s strategy of emphasizing deployment, especially given what ITIF called the “ubiquitous” coverage offered by low earth orbit satellites from Starlink and soon the Amazon-backed Project Kuiper. There has been reluctance on the part of some in the federal government to support investing in satellite internet, but ITIF argued it can help connect people in areas that may not be conducive to more traditional infrastructure.

“I think we need to take yes for an answer and say we've succeeded,” Kane said. “We could just come up with new ways to spend $5.5 billion dollars a year on a problem that we've already solved.”

That new way would involve focusing more on availability, Kane said. The report suggested a $30 per month benefit to households at or below 135% of the federal poverty level, or in their first three months of receiving unemployment insurance. That would be more limited than the program’s initial iteration, which was available to households at or below 200% of the federal poverty level.

The report estimated that the new version of the program would cost $5.6 billion a year, down “significantly” from the $8.6 billion annual price tag that ACP had before. And it would be paid for by reprogramming federal deployment programs and having them focus on making broadband affordable or eliminating them altogether. Funding must be appropriated on a multiyear basis, Kane said.

“The longer-term appropriations would prevent political considerations from leaving the program on a knife’s edge such that consumers lose the benefits, temporarily or permanently, and thereby lose trust in the program even if it is eventually renewed,” the report says. “Likewise, ISPs will dedicate more resources to marketing and administering ACP-eligible plans if they believe the program is stable enough to keep those customers around.”

Other groups have also not given up hope on Congress renewing the ACP. In a joint statement earlier this month, Adrianne Furniss and Drew Garner, executive director and director of policy engagement, respectively, at the nonprofit Benton Institute for Broadband & Society, noted the program’s popularity and called it a “targeted, effective program.”

“Broadband is still essential, and people still need help to afford it,” the pair continued.

Various solutions have been floated to fund the ACP, including using USF money. Kane said the USF’s legal minefield, coupled with a need to revamp the ACP and other federal broadband programs, should have lawmakers and advocates “rethinking our priorities.”