Millions of low-income families could soon face steeper broadband internet bills

8 months ago 7

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Over the past two years, millions of low-income U.S. households have received broadband internet at a discount through two consecutive government programs.

But they could soon lose that benefit. More than 16 million U.S. households are currently enrolled in the federal government's Affordable Connectivity Program, or ACP, which offers a $30 discount on broadband services to qualifying low-income households. Funding for it is expected to run out next year.

"In 2024, or when the money runs out, the program could be completely obliterated," said Nicol Turner Lee, director of the Center for Technology Innovation at the Brookings Institution. "Millions could be left in the dark without broadband service for the very same reasons they didn't have it in the first place." 

The Emergency Broadband Benefit, or EBB, which was approved by then-President Donald Trump in late 2020 and launched in February 2021, provided a $50 subsidy. About 9 million households enrolled. In December 2021, under President Joe Biden, the ACP replaced the Trump-era program.

The program has signed up one-third of eligible households. That's considered an accomplishment, said Ken Garnett, chief strategy officer at Cal.net, a small internet service provider that serves rural inland areas of California.

To be eligible, a household must have an income of no more than 200% of federal poverty guidelines, or a person must receive other government assistance, such as a Pell Grant or food stamps.

The Biden administration pushed for expanding broadband accessibility as part of its infrastructure bill, recognizing Americans' reliance on home networks, especially earlier in the pandemic, as well as the digital divide that exists in both urban and rural areas.

At-home broadband usage skyrocketed during the earlier days of the pandemic, according to Open Vault, which tracks monthly cable broadband usage. It remains elevated compared with pre-pandemic levels as Americans return to work on a hybrid schedule.

The infrastructure law allocated $14.2 billion, along with the remaining funds that rolled over from the EBB to the ACP. As of January, about $6.1 billion of the funds had been claimed by broadband service providers as reimbursement for discounting their services and products. Analysts and industry insiders predict that at the existing pace of customer uptake, which some estimate is around 100,000 to 200,000 households a week, the rest of the money will dry up in 2024. 

Polling shared with CNBC by the Digital Progress Institute, a bipartisan policy research firm, found that voters on both sides of the aisle are largely in support of the continuation of the ACP.  Of the 1,000 voters surveyed in January, 64% of Republicans supported it, along with 95% of Democrats and 70% of independents. 

It is up to Congress to decide whether the program gets funded again. One of the deciding factors will be the efficacy of the programs over the past two years.

What's working, what's not

Terry Dean, a 67-year-old retiree in the Southeastern U.S., said the programs have made affording broadband on a fixed income more feasible.

"I could have afforded the $50, but I am on a fixed budget like a lot of older people. This helps," Dean said. He switched to a Spectrum plan for $29.99 a month, which is fully covered with the ACP.

Keaton Bishop-Marx, a 27-year-old software developer in North Carolina, started using the ACP benefit in 2022. He said that though he could manage his broadband bills, the cost was getting to be a bit "excessive," especially as the price crept up over the years. "I'm a citizen of the internet very much, so it might as well be a gas bill for me, and it's helpful to pay less," Bishop-Marx said.

Still, two-thirds of the eligible population remains unenrolled.

For some, the process of signing up, which requires submitting private information online, by mail or on the phone with an internet service provider, feels too cumbersome or invasive.

"A lot of the low-income folks from rural areas have significant reluctance to provide personal information to government agencies, which is one of the requirements of qualifying," said Garnett, of Cal.net. 

It's also likely that many eligible consumers don't know about the ACP.

Dean said he discovered both the EBB and ACP by keeping up with the news and called the providers to receive the benefits, while Bishop-Marx was alerted by an email notification from the state.

Even though the ACP is a public program aimed at consumers, private internet companies stand to benefit by investing advertising dollars to promote it and attract new members.

Cox Communications spent $25 million last year on awareness campaigns and partnering with local organizations to help educate customers about the ACP, according to Ilene Albert, who leads the company's digital equity and affordability division. Some do not realize they are eligible, said Albert, since more people qualify for the ACP than the EBB.

In a 2021 earnings call, Charter Communications' now-CEO Chris Winfrey, who was CFO at the time, said there were "a lot of people who had been on wireless substitution in the past or had affordability issues …. [T]hrough the things that we did cooperating with the federal government, we were able to get them to proper broadband. And we benefited from that last year."

Comcast has partnered with thousands of "digital navigators," community-based organizations that walk customers through their broadband options, to expand digital literacy in underserved areas. 

What happens without ACP

Although ACP has made headway in making broadband more affordable, it remains unknown whether Congress will renew it when funding runs out, especially since 2024 is an election year and Congress currently has a partisan split.

Some aren't worried.

"I've unfortunately been alive long enough to know that once the government starts paying for something they usually end up paying for it forever," Dean said. "In the scheme of things, the ACP program is a drop in the bucket. I'm sure there are senators and house representatives that will fight for it when the money is close to running out."

Others are less confident. 

"There are companies that will make investment decisions on the basis that ACP will be around forever, which really makes me nervous," said Alan Fitzpatrick, CEO of Open Broadband, a small North Carolina-based internet service provider. "I'm not going to bank on it."

Fitzpatrick said that only about 1% of Open Broadband's customer base is enrolled in ACP. 

Prior to the subsidy, many providers offered cheaper plans for low-income customers. Comcast, Cox and Charter all tout a decade of investment into initiatives to expand broadband access, suggesting that their efforts are not dependent on whether the ACP continues.  

For example, providers are often competing for funding from the Broadband, Equity, Access and Deployment, or BEAD, program and other grants that sponsor the development of broadband coverage in underserved, often rural, areas. BEAD is funded and run by the Department of Commerce and the National Telecommunications and Information Administration. 

Still, many consumers are more reliant than ever on ACP as inflation has squeezed their wallets.

A Charter executive said in early 2022 that while customers were already dealing with higher prices for groceries and other essential items, government subsidies were part of why the company believed it was still well positioned.

If the ACP disappears, eligible consumers will still have access to the FCC's Lifeline Support program. The program provides a $9.25 discount for broadband services, which is popular for mobile users.

But without the ACP, customers may miss monthly bills, trade down to lower price tiers or cut their monthly service altogether.

"What we've done, at least, has impacted a percentage of people, even if it's small, who could not make the decision between whether they were going to eat that night or have their child online for education," said Turner Lee, of Brookings. "I don't think we're going to see the full benefit until the next two or three years."

Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.

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