Route Fifty reports that losing Affordable Connectivity Program (ACP) may cause households to lose broadband access…

Congress and President Joe Biden may have touted that people of all incomes would be able to afford the broadband being built with $42.5 billion from the 2021 infrastructure act. But a decision by lawmakers last week is casting uncertainty on that promise.

The concerns from some state broadband officials stem from the fact that Congress did not include funding to preserve the Affordable Connectivity Program, or ACP, as part of the package of spending bills it passed to avoid a government shutdown.

The Federal Communications Commission has said the program, which provides a $30-a-month subsidy to low-income households to pay for internet access, will now end April 30.

That’s not news. They look at an added dimension of losing ACP too; states have built broadband programs based on providers have access to ACP for their customers…

According to state broadband officials in Michigan, Vermont and Pennsylvania, its termination could not only impact the 23 million households on the program, but also those who live in areas where broadband is being built out.

In Michigan, for instance, the state wants to require broadband companies receiving grants under the Broadband Equity, Access and Deployment, or BEAD, program to charge lower-income people no more than $30 a month. Had Congress not ended the program, broadband being created through the BEAD program would have essentially been free for low-income households participating in the ACP.

Minnesota has similar language in their grants – the snippet below is from the most recent Border to Border grant applications…

Grantee and any other service provider for a completed Border to Border Broadband Infrastructure project will participate in federal programs that provide low-income consumers with subsidies on broadband internet access services. Grantee agrees that it will allow eligible subscribers in the service area identified in Grantee’s application in Exhibit B to utilize the Federal Communications Commission’s Affordable Connectivity Program (ACP) for the duration of ACP or its successor until the date the Broadband Infrastructure Project funded by this award is no longer in use.

The State has been backed into offering a pig in a poke and applicants are being asked to buy into it. Both are put in a bad position by the end of ACP. We don’t know what a successor program might look like. Will it be attractive enough to allow more people sign up? of recouping costs of building broadband is “take rate” and if it’s too expensive, providers will lose customers and the take rate will be lower. Will it cost providers too much money?  And can you start a new venture without knowing the specifics of a segment of your costs and customer base?

Route Fifty concludes…

Eric Frederick, Michigan’s chief connectivity officer, noted in an interview with Route Fifty that about a third of the state’s households who now have internet access rely on that ACP. Without the subsidy, he estimated that a quarter or a third of the households in the areas where broadband service is being built out under BEAD may struggle to afford it.

“Without the subsidy, I know we’re gonna lose folks,” Frederick said. “It’s not going to be affordable.”