WASHINGTON, October 2, 2023 – Dozens of mobile broadband providers are likely not complying with federal subsidy rules, the Federal Communications Commission inspector general said in a report on Friday.

The Affordable Connectivity Program provides about 20 million low-income households a $30 monthly internet discount. That money is paid by the government to providers giving those households broadband service.

When customers receiving ACP discounts stop using a provider’s broadband service, the provider is required to report that to the FCC so money is only disbursed for active users. Typically, anywhere from a third to one half of an ACP provider’s subscribers will be de-enrolled each month, according to the report from the Office of the Inspector General.

But the OIG said that it found “dozens” of providers report few, if any, of these lost customers, making it likely the providers are taking government subsidies for broadband service they are not providing. It did not name the providers.

“We strongly suspect [the unnamed providers] are not complying with program usage and related de-enrollment rules,” the OIG wrote.

One company repaid the commission almost $50 million after being approached by the OIG. That’s one third of all ACP subsidies the provider received from June 2021 to July 2022.

The OIG released data from five of the suspect providers showing they failed to de-enroll more than three percent of their monthly subscribers, making them and similar providers outliers among ACP providers. One provider had over 1 million subscribers.

The office said in its report that it has gathered additional evidence of the same providers taking ACP money for subscribers who are not using their service. Those investigations are ongoing.

In 2021, the OIG found similar abuses in the Emergency Broadband Benefit program, a predecessor to the ACP. The office again found dozens of providers reporting more households with dependent children than existed in several school districts.

In response to the report, the FCC released a public notice directing the Universal Service Administrative Company, the arm of the agency responsible for administering the ACP and other broadband subsidy programs, to strengthen its monitoring around de-enrollment and other requirements.

The ACP, a $14 billion fund set aside by the Infrastructure, Investment and Jobs Act, is set to dry up in April 2024. There have been repeated calls for Congress to renew the program.

WASHINGTON, September 28, 2023 – A Mississippi nonprofit is setting up a fund to support connectivity and digital literacy in the state.

The Mississippi Broadband Association is looking to raise $10 million to start the fund, which MSBA Executive Director Quinn Jordan said is intended to ensure newly built broadband infrastructure stays affordable in the state.

“We can build these networks,” he said, speaking at a Fiber Broadband Association webinar on Wednesday, “But if we don’t get people connected, if they don’t have the literacy or capability to do so, what have we really done?”

The initiative, called the Connect and Literacy Fund, is planning to increase ACP adoption in Mississippi. Over 18 percent of the state lives below the poverty line, making them eligible for the $30 monthly internet discount, but less than half that number participate. The MSBA is planning to make ACP sign-up part of the registration process to participate in the fund’s programming.

That programming will focus on teaching people how to use internet services like telehealth and streaming and provide large discounts for tables and PCs. The ACP provides a $100 device subsidy, but this is rarely enough for low-income households to make a purchase, Jordan said.

Difficulty accessing affordable devices is contributing to the digital divide in Mississippi, according to Jordan. He pointed to the fact that over 40% of Mississippians do not have access to a tablet or computer.

“That is a huge number. And it’s a barrier to entry,” Jordan said. “The Connect and Literacy Fund is hopefully going to address that.”

Jordan said the $2.75 billion Digital Equity program, part of the Biden Administration’s Infrastructure, Investment and Jobs Act, will be beneficial, but MSBA’s Connect and Literacy Fund will have a role to play in ensuring the state builds on the gains it makes with the federal funds.

“That money is going to run out,” he said. “What we’re doing is ongoing.”

The ACP might also be short-lived. The $14 billion allocation from the Infrastructure Act is set to dry up in April of next year.

MSBA has spent the last two months developing its programing and is looking to start coordinating events with local anchor institutions in the coming months, Jordan said. 

WASHINGTON, September 19, 2023 – Tech company trade group INCOMPAS and consulting firm Brattle Group released on Tuesday a report arguing for adding broadband providers as contributors to the Universal Service Fund.

The USF spends roughly $8 billion each year to support four programs that provide internet subsidies to low-income households, health care providers, schools, and libraries. The money comes from a tax on voice service providers, causing lawmakers to look for alternative sources of funding as more Americans switch from phone lines to broadband services.

The Federal Communications Commission administers the fund through the Universal Service Administration Company, but has left it to Congress to make changes to the contribution pool.

The report argues that broadband providers should be one of those sources. It cites the fact that USF funds are largely used for broadband rather than voice services and that broadband adoption is increasing as phone line use decreases.

“The USF contribution base needs to change to account for the fact that connectivity implies not just voice telephone services, but predominantly broadband internet access,” the report says.

It also rebuts arguments for adding tech companies like INCOMPAS members Google and Amazon to the contribution pool, saying they represent a less stable source of income for the program and that added fees for services like streaming could affect . 

The report is the latest salvo in an ongoing dispute between tech companies and broadband providers over who should support the USF in the future, with broadband companies arguing big tech should be tapped for funding as they run businesses on the networks supported by the fund.

Sens. Ben Lujan, D-N.M., and John Thune, R-S.D. established in May a senate working group to explore potential reforms to the program. The group heard comments in August  from associations of tech and broadband companies, each outlining arguments for including the other industry in the USF contribution base.