With only three weeks to go, lawmakers weigh ways to save federal internet subsidy

The start of what could be the final month of a popular federal internet subsidy has set off a scramble as legislators weigh a possible extension amid warnings of dire consequences should the program be allowed to expire.

Beginning May 1, the subsidy dropped from $30 to $14 a month for some households. The Federal Communications Commission has been in the process of winding down the Affordable Connectivity Program, or ACP, funded by the 2021 infrastructure law, for several months. In February, it stopped accepting applications to join the estimated 23 million people across the country that benefit from the subsidy.

A $7 billion bipartisan, bicameral bill to extend the ACP to the end of this year is pending in Congress. Meanwhile, separate legislation was introduced last week that would fund the ACP differently. The prospects of passage for either bill are uncertain, as some lawmakers question the program’s effectiveness and whether it has inflated broadband prices for all users. And with just weeks remaining before funding for the ACP lapses, elected officials are left to cast about for a way forward.

“Ambitious goals—such as connecting every American to high-speed, affordable internet—require a combination of public and private sector partners working together,” Kathryn de Wit, project director for the Pew Charitable Trust’s Broadband Access Initiative, said in written testimony submitted ahead of a Senate subcommittee hearing last week. “The central responsibility in the public sector is the providing of secure and reliable funding. With millions of people lacking access to a service that has become essential for quality of life and economic well-being, there is no time to waste.”

Congress has already weighed several options to replenish the ACP. Republican Sen. J.D. Vance of Ohio reportedly wanted to add the Affordable Connectivity Program Extension Act, which he is a cosponsor, as an amendment to legislation reauthorizing the Federal Aviation Administration. That effort is unlikely to succeed, as lawmakers are looking to pass a clean FAA reauthorization with no unrelated bills attached to it.

Democratic Sen. John Fetterman of Pennsylvania introduced a bill last week to make the ACP permanent by removing it from the regular appropriations process and instead incorporating it into distribution of the Universal Service Fund, which is a federal subsidy pool supported by monthly contributions from telecommunications companies that are passed on to consumers. USF is designed to encourage widespread, quality access at reasonable rates. Previously it helped fund phone service, but now primarily is focused on building out internet service.

Fetterman’s bill would restructure USF to have broadband and edge computing service providers pay for the ACP, and officials said the bill is written in a way to ensure consumers do not have the costs passed on to them. “It’s simple: When a program works, keep it,” Fetterman said in a statement.

Tying the ACP to the USF has received plenty of support, including from former FCC nominee Gigi Sohn, who said in a recent joint opinion piece with broadband advocate Greg Guice, chief policy officer for Vernonburg Group, a broadband consulting firm, that it must be “reenvisioned to address today’s needs.”

Others have called for the FCC’s Lifeline program, which provides discounts on internet and phone service to low-income customers, to be modified to assist ACP recipients. And others still have suggested funding the ACP with proceeds raised at upcoming spectrum auctions.

Whatever the solution, advocates want action. De Wit said in her testimony that Congress must “prioritize long-term policies that promote access to high-speed affordable internet for all Americans.”

Opponents remain unconvinced of the ACP’s benefits, however. In his opening statement before a Senate subcommittee last week, Republican Sen. Ted Cruz, the Senate Commerce Committee’s ranking member, criticized the FCC’s recent survey, which found that only 22% of households who have benefited from ACP did not have broadband. He argued, alongside witness Paul Winfree, the president and CEO of the Economic Policy Innovation Center, that the ACP has had an inflationary effect on internet prices.

“History has shown that when the federal government starts subsidizing demand in higher education and agriculture, the subsidy gets capitalized, and prices go up,” Cruz said. “After all, why would corporations ever leave free money on the table? Well, those who received the subsidy may realize that immediate cost reduction, the market prices rise for everybody else. This rising price creates a call for more subsidies and higher taxes to fund those additional higher subsidies and eventually a government takeover of the internet to provide it for free.”

But the program continues to receive bipartisan support.

Earlier last month, a group of 20 House Republicans—including several whose seats are vulnerable heading into November’s election—wrote a letter to Speaker Mike Johnson imploring him not to let the ACP’s funding lapse.

“In light of the pivotal role broadband services have assumed in our daily lives post-pandemic, immediate action must be taken to secure short-term funding for this essential infrastructure—safeguarding our constituents and Americans nationwide from potential disconnection to vital services,” the letter read.

New research shows the stark effects of the ACP expiring. The Chamber of Progress, a progressive technology organization, estimated last week that low-income Americans and other vulnerable communities will lose over $20 billion annually in economic benefits. This is due to a loss of internet service removing access to jobs, education and telehealth, the chamber said.

Similarly, de Wit pointed to in her written testimony a recent survey by the Benenson Strategy Group, which found that 49% of ACP’s participating households are military families; 19% of participating households are aged 65 and older; 26% live in rural areas; and demographically 47% are white, 23% are Black, 23% are Latino and 8% are Asian American Pacific Islander.

“With families facing hard decisions about what to cut, finding an affordable alternative is not easy, especially in rural areas where there may only be one provider, where costs can be much higher and where low-cost options may be unreliable or inadequate for families working or learning from home,” said Jennifer Case Nevarez, a member of the Broadband and Digital Equity Support Team for New Mexico and the Office of Broadband Access and Expansion, in her written testimony before the Senate subcommittee.