The Affordable Connectivity Program (ACP) provided subsidies to internet service providers (ISPs) to cover broadband internet for low-income households. On May 31, 2024, ACP funding was exhausted. Federal Communications Commission (FCC) Chairwoman Rosenworcel notified Congress that ACP benefits have ended although new enrollment was already frozen in February 2024 pending additional funding.
The Biden Administration has called ACP “
a key component” of Bidenomics. But like other Bidenomics programs, ACP raised costs for high-speed internet and locked consumers into plans by killing other, more competitive options.
At the time of the enrollment freeze, around 23 million households were enrolled in the benefit, costing taxpayers about $8.6 billion per year. However, the Biden Administration’s stated goal for the program was to cover 40 percent of households. That would have cost taxpayers up to $21 billion.
The end of ACP is great news for all broadband consumers (including former ACP beneficiaries). Today, they are already saving money – both as internet customers and as taxpayers – because the inflationary effects of ACP have been reversed.
Companies Are Lowering Prices as ACP Funding Expired
EPIC analysis concluded that there is a positive relationship between the percentage of households receiving ACP subsidies and the increase in the average total monthly price for broadband since 2022. Nationwide, ACP enrollment is associated with a 7 percent increase in the cost of a monthly broadband subscription. Now, there is direct evidence of this.
EPIC analysis also concluded that the average cost of broadband is about $5.48 higher because of ACP and that ISPs are capturing about 18 percent of the total subsidy.
That suggests that when ACP ended, prices for services would fall as companies would be forced to compete on cost and quality to attract consumers.
This is exactly what we see in the market for high-speed internet today.
Several major ISPs have offered plans with lower prices, higher quality, or more services to attract consumers who had received an ACP benefit.
In just the last few weeks, ISPs have announced:
Communications Daily reported that most public ISPs had been communicating to investors when ACP ended that they did not expect to lose any revenue. Some ISPs reported that they intended to make new offers to consumers coming off subsidized coverage from their competitors. These changes began exactly when the exhaustion of ACP funding became imminent – confirming ACP’s inflationary effects.
FCC Misrepresents Survey Saying People Will Lose Internet Access
Before ACP funding was exhausted, the FCC said that people would lose coverage when ACP ended. Not only did this not open, but the marketplace also became more consumer friendly. The FCC intentionally misrepresented a survey the agency conducted earlier this year.
Perhaps this explains why Congress did not immediately re-fund ACP.
One of ACP’s goals was to close the digital divide for low-income consumers. However, FCC
surveys found that around 80 percent of ACP beneficiaries already had broadband before the subsidy.
The FCC has reported that “more than three-quarters (77%) of survey respondents say losing their ACP benefit would disrupt their service by making them change their plans or drop internet service entirely.” However, this is an intentionally inaccurate reading of the
survey that misleadingly includes the 29.3% of respondents who answered that they would choose a different service and 47.6% who answered they would select a lower-cost service.
Furthermore, we now have better data showing that ISPs are interested in ensuring former ACP beneficiaries will still be internet consumers. Therefore, as long as Congress does not re-start ACP, it is very likely that the outcome of allowing ACP’s funding to expire will be no significant reduction in high-speed internet coverage, lower prices, and higher quality.
Along with lower debt and inflation, allowing ACP to expire is a win-win for the American people.
