affordable connectivity program

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Low-income homes drop Internet service after Congress kills discount program

affordable connectivity program, Charter communications, Policy / /

No more broadband discounts —

Charter CEO says “customers’ ability to pay” a concern after $30 discounts end.

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A Charter Spectrum service vehicle.

Enlarge / A Charter Spectrum vehicle.

The death of the US government’s Affordable Connectivity Program (ACP) is starting to result in disconnection of Internet service for Americans with low incomes. On Friday, Charter Communications reported a net loss of 154,000 Internet subscribers that it said was mostly driven by customers canceling after losing the federal discount. About 100,000 of those subscribers were reportedly getting the discount, which in some cases made Internet service free to the consumer.

The $30 monthly broadband discounts provided by the ACP ended in May after Congress failed to allocate more funding. The Biden administration requested $6 billion to fund the ACP through December 2024, but Republicans called the program “wasteful.”

Republican lawmakers’ main complaint was that most of the ACP money went to households that already had broadband before the subsidy was created. FCC Chairwoman Jessica Rosenworcel warned that killing the discounts would reduce Internet access, saying an FCC survey found that 77 percent of participating households would change their plan or drop Internet service entirely once the discounts expired.

Charter’s Q2 2024 earnings report provides some of the first evidence of users dropping Internet service after losing the discount. “Second quarter residential Internet customers decreased by 154,000, largely driven by the end of the FCC’s Affordable Connectivity Program subsidies in the second quarter, compared to an increase of 70,000 during the second quarter of 2023,” Charter said.

Across all ISPs, there were 23 million US households enrolled in the ACP. Research released in January 2024 found that Charter was serving over 4 million ACP recipients and that up to 300,000 of those Charter customers would be “at risk” of dropping Internet service if the discounts expired. Given that ACP recipients must meet low-income eligibility requirements, losing the discounts could put a strain on their overall finances even if they choose to keep paying for Internet service.

“The real question is the customers’ ability to pay”

Charter, which offers service under the brand name Spectrum, has 28.3 million residential Internet customers in 41 states. The company’s earnings report said Charter made retention offers to customers that previously received an ACP subsidy. The customer loss apparently would have been higher if not for those offers.

Light Reading reported that Charter attributed about 100,000 of the 154,000 customer losses to the ACP shutdown. Charter said it retained most of its ACP subscribers so far, but that low-income households might not be able to continue paying for Internet service without a new subsidy for much longer:

“We’ve retained the vast majority of ACP customers so far,” Charter CEO Chris Winfrey said on [Friday’s] earnings call, pointing to low-cost Internet programs and the offer of a free mobile line designed to keep those customers in the fold. “The real question is the customers’ ability to pay—not just now, but over time.”

The ACP only lasted a couple of years. The FCC implemented the $30 monthly benefit in early 2022, replacing a previous $50 monthly subsidy from the Emergency Broadband Benefit Program that started enrolling users in May 2021.

Separately, the FCC Lifeline program that provides $9.25 monthly discounts is in jeopardy after a court ruling last week. Lifeline is paid for by the Universal Service Fund, which was the subject of a constitutional challenge.

The US Court of Appeals for the 5th Circuit found that Universal Service fees on phone bills are a “misbegotten tax” that violate the Constitution. But in similar cases, the 6th and 11th circuit appeals courts ruled that the fund is constitutional. The circuit split increases the chances that the Supreme Court will take up the case.

Disclosure: The Advance/Newhouse Partnership, which owns 12.4 percent of Charter, is part of Advance Publications, which also owns Ars Technica parent Condé Nast.

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Congress lets broadband funding run out, ending $30 low-income discounts

affordable connectivity program, FCC, Policy / /

Affordable Connectivity Program —

ACP gave out last $30 discounts in April; only partial discounts available in May.

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Illustration of fiber Internet cables

Getty Images | Yuichiro Chino

The Federal Communications Commission chair today made a final plea to Congress, asking for money to continue a broadband-affordability program that gave out its last round of $30 discounts to people with low incomes in April.

The Affordable Connectivity Program (ACP) has lowered monthly Internet bills for people who qualify for benefits, but Congress allowed funding to run out. People may receive up to $14 in May if their ISP opted into offering a partial discount during the program’s final month. After that there will be no financial help for the 23 million households enrolled in the program.

“Additional funding from Congress is the only near-term solution for keeping the ACP going,” FCC Chairwoman Jessica Rosenworcel wrote in a letter to members of Congress today. “If additional funding is not promptly appropriated, the one in six households nationwide that rely on this program will face rising bills and increasing disconnection. In fact, according to our survey of ACP beneficiaries, 77 percent of participating households report that losing this benefit would disrupt their service by making them change their plan or lead to them dropping Internet service entirely.”

The ACP started with $14.2 billion allocated by Congress in late 2021. The $30 monthly ACP benefit replaced the previous $50 monthly subsidy from the Emergency Broadband Benefit Program.

Biden urges Republicans to support funding

Some Republican members of Congress have called the program “wasteful” and complained that most people using the discounts had broadband access before the subsidy was available. Rosenworcel’s letter today said the FCC survey found that “68 percent of ACP households stated they had inconsistent or zero connectivity prior to ACP.”

Senate Commerce Committee Chair Maria Cantwell (D-Wash.) included $7 billion for the program in a draft spectrum auction bill on Friday, but previous proposals from Democrats to extend funding have fizzled out. The White House today urged Congress to fund the program and blamed Republicans for not supporting funding proposals.

“President Biden is once again calling on Republicans in Congress to join their Democratic colleagues in support of extending funding for the Affordable Connectivity Program,” the White House said.

Some consumer advocates have called on the FCC to fund the ACP by increasing Universal Service Fund collections, which could involve raising fees on phone service or imposing Universal Service fees on broadband for the first time. Rosenworcel has instead looked to Congress to allocate funding for the ACP.

“Time is running out,” Rosenworcel’s letter said. “Additional funding is needed immediately to avoid the disruption millions of ACP households that rely on this program for essential connectivity are already starting to experience.”

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republicans-slam-broadband-discounts-for-poor-people,-threaten-to-kill-program

Republicans slam broadband discounts for poor people, threaten to kill program

affordable connectivity program, FCC, Policy / /
Senate Minority Whip John Thune gestures with his right hand while speaking to reporters.

Enlarge / Senate Minority Whip John Thune (R-S.D.) speaks to reporters after the weekly Senate Republican caucus lunch on November 14, 2023, in Washington, DC.

Getty Images | Anna Rose Layden

Republican members of Congress blasted a program that gives $30 monthly broadband discounts to people with low incomes, accusing the Federal Communications Commission of being “wasteful.” The lawmakers suggested in a letter to FCC Chairwoman Jessica Rosenworcel that they may try to block funding for the Affordable Connectivity Program (ACP), which is expected to run out of money in April 2024.

“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,” the lawmakers wrote. “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.”

The letter was sent Friday by Sen. John Thune (R-S.D.), Sen. Ted Cruz (R-Texas), Rep. Cathy McMorris Rodgers (R-Wash.), and Rep. Bob Latta (R-Ohio). Cruz is the top Republican on the Senate Commerce Committee, and Thune is the top Republican on the Subcommittee on Communications, Media, and Broadband. McMorris Rodgers is chair of the House Commerce Committee, and Latta is chair of the House Subcommittee on Communications and Technology.

The letter questioned Rosenworcel’s testimony at a recent House hearing in which she warned that 25 million households could lose Internet access if Congress doesn’t renew the ACP discounts. The ACP was created by congressional legislation, but Republicans are wary of continuing it. The program began with $14.2 billion a little less than two years ago.

“At a hearing before the House Energy and Commerce Committee on November 30, 2023, you asserted—without evidence and contrary to the FCC’s own data—that ’25 million households’ would be ‘unplug[ged]…from the Internet’ if Congress does not provide new funding for the ACP,” the letter said. “This is not true. As Congress considers the future of taxpayer broadband subsidies, we ask you to correct the hearing record and make public accurate information about the ACP.”

“Reckless spending spree”

The letter criticizes what it calls “the Biden administration’s reckless spending spree” and questions whether the ACP is worth paying for:

It is incumbent on lawmakers to protect taxpayers and make funding decisions based on clear evidence. Unfortunately, your testimony pushes “facts” about the ACP that are deeply misleading and have the potential to exacerbate the fiscal crisis without producing meaningful benefits to the American consumer. We therefore ask you to supplement your testimony from November 30, 2023, with the correct information about the number of Americans that will “lose” broadband if the ACP does not receive additional funds, and correct the hearing record accordingly by January 5, 2024.

During the November 30 hearing, Rep. Yvette Clarke (D-N.Y.) said she will introduce legislation to re-fund the program. The ACP has widespread support from consumer advocates and the telecom industry. Additionally, the governors of 25 US states and Puerto Rico urged Congress to extend the ACP in a November 13 letter.

The Biden administration has requested $6 billion to fund the program through December 2024. Rosenworcel’s office declined to comment on the Republicans’ letter when contacted by Ars today.

Although the FCC operates the discount program, it has to do so within parameters set by Congress. The FCC’s ACP rulemaking noted that the income-eligibility guidelines were determined by Congress.

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