Efforts to reform federal broadband subsidy gain traction

As lawmakers debate funding for a popular federal broadband subsidy, a bipartisan group of senators introduced legislation that would change the program in an effort to win more support for it and possibly improve its long-term viability.

Funding for the Affordable Connectivity Program, or ACP, is set to dry up at the end of the month, with some recipients already cut off and others receiving only about half the benefit—$14 a month, down from $30. The $14.2 billion program’s end, after it began as an offshoot of COVID-era assistance funded through the bipartisan infrastructure law, has lawmakers and advocates scrambling to identify a sustainable funding solution.

Last week, a group of senators introduced legislation that would revise eligibility criteria, among other things. The compromise is seen as necessary to win over skeptics of the program. It was added as an amendment to a larger bill to reauthorize the Federal Aviation Administration.

The amendment, which ultimately did not get tacked on to FAA reauthorization, would have significantly cut the cost of the ACP by tweaking its eligibility criteria. The legislation would lower the income threshold to 135% of the federal poverty line, down from the current threshold of 200%. Nationwide about 8 million households out of the 23 million that currently qualify to receive ACP benefits would become ineligible. By comparison, households that receive free school meals through the U.S. Department of Agriculture would no longer qualify for the ACP.

The legislation would also eliminate the ACP’s one-time $100 discount on a device, and mandate that the Federal Communications Commission implement anti-fraud and performance measures for the program. Participants would need to undergo verification through the FCC’s eligibility database. It would add $3 billion to the nationwide rip and replace program to fortify U.S. networks against vulnerable equipment from companies headquartered in hostile countries and require the FCC to auction certain spectrum bands within two years.

“[The ACP] gives families access to better-paying jobs, to training and education to create economic mobility, to better deals on groceries and household goods. The time is now to save this program,” said New Mexico Sen. Ben Ray Lujan, a Democrat who chairs the Senate Commerce Committee’s Subcommittee on Communications, Media and Broadband.

Other supporters acknowledged that such reforms are not ideal, but necessary to sustain the ACP long-term. Ohio Sen. J.D. Vance, a Republican who has supported separate ACP extension efforts, said in a statement the bill “reflects a bipartisan consensus.” Vermont Democratic Sen. Peter Welch, a supporter of the subsidy and who cosponsored a bipartisan bicameral bill in January to fund the program, said it “contains compromises,” but pledged to “keep fighting” to ensure the program’s survival.

The idea of reforms to the ACP has been swirling for some time. In a January audit, the FCC’s then-Acting Inspector General Sharon Diskin said “improvements were needed,” including better performance measures and targets. One of the issues cited with the program was a lack of effective controls to ensure that manual eligibility reviews resulted in correct eligibility decisions. 

Diskin also said the FCC did not report on providers’ compliance or have documents on a complaints procedure, and said it lacked an “effective process” for determining if providers have the right paperwork to support claims for reimbursement.

Witnesses at a recent hearing of the Senate subcommittee also expressed an openness to reforming ACP to varying degrees in a bid to keep it from sunsetting.

Kathryn de Wit, project director for the Pew Charitable Trust’s Broadband Access Initiative, said in written testimony that the ACP could “benefit from several changes,” including setting specific targets, publishing reports on provider compliance and “enhancing quality controls” to verify consumers’ eligibility.

“Pew agrees that the ACP would benefit from such changes, adding needed transparency to this program,” de Wit said. “Additionally, it would enable policymakers, researchers and other stakeholders to understand ACP’s effect on consumer behavior and [provider] market dynamics.”

Republican Sen. Shelley Moore Capito of West Virginia said during the hearing that the ACP is an “overexpansive program that is going towards some people that don’t need it,” and so needs to be more targeted in its eligibility requirements. 

Welch agreed, saying that “those of us who advocate for a program have an obligation to kick the tires, check it out, make reforms so that the intended purpose is what’s being served and that it’s not being gamed.”

Others are not so sure. In a blog post last year for the University of Southern California’s Annenberg Research Network on International Communication, professors Hernan Galperin and Francois Bar found that changing the eligibility threshold to 135% of the federal poverty line would make 7.4 million households that currently benefit from the ACP ineligible.

The pair found that the impact would vary across states. In Kansas, North Dakota and Utah, more than 20% of eligible households would be excluded, while that number is much lower in states like California, Massachusetts and New York.

“It is worth noting that the relative impact of lowering the income threshold would be larger in states with Republican senators, even though the ACP program is benefitting red and blue states almost equally,” they wrote.

The proposed change in ACP eligibility would be “unevenly distributed across populations,” too. Galperin and Bar found that veterans and older adults would be affected more significantly than other groups that are historically disadvantaged.