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 broadband association asked Congress last week to open the Universal Service Fund to contributions from broadband and Big Tech revenues to allow the umbrella fund to absorb and support the Affordable Connectivity Program.

The industry is concerned that the $14-billion ACP program, which discounts monthly services for low-income Americans and those on tribal lands, is going to run out of money by early next year. Meanwhile, it is universally agreed that the Universal Service Fund, which includes four high-cost broadband programs, is struggling to maintain its roughly $8-billion annual pace without a diversification of its revenue sources.

Jonathan Spalter, president and CEO of USTelecom, told the Communications and Technology subcommittee studying the future of rural broadband on September 21 that Congress could both support the sustainability of the USF and the ACP by forcing contributions from broadband and Big Tech revenues.

The idea is that the extra revenue would solve the USF sustainability question by allowing the fund to continue to support the existing four programs under its purview, while also allowing it to adopt the ACP program, hence removing that program from reliance on Congress for money.

“We can have Congress give the FCC the authorities that it requires to be able to expand the contribution base, integrating the ACP within USF program, and thereby allowing the potentially out of control contribution factor that will potentially bog down the viability and longevity of the Universal Service Fund mechanisms to go down,” Spalter said.

“And in so doing it can expand the contribution base sufficiently to allow not only broadband but importantly the dominant Big Tech companies to participate so that we would effectively fuse the Affordable Connectivity Program with [high-cost program] Lifeline and do so in a way that would actually not require appropriated dollars from Congress.”

The ACP currently has around 21 million Americans signed up, but the FCC says many more are eligible. The commission has been allocating money to outreach groups to market the subsidy program.

While some have argued that the Federal Communications Commission could unilaterally expand the contribution base of the USF, the commission has elected to wait for Congress to make the requisite legislative reforms to give it that authority.

Forcing Big Tech companies, which rely on the internet to deliver their products, has been an idea tossed around by experts and promoted by Federal Communications Commissioner Brendan Carr. Meanwhile, forcing broadband revenues to contribute to the fund has also received good support.

The concern for the ACP program is that the internet service providers rely on the $14 billion to continue to offer discounts.

“With funding set to be depleted early next year, initial notices of service termination could be out during the height of the holiday season in December – that’s a present none of our constituents deserve to receive,” said Congresswoman Doris Matsui, D-Calif.  

“Poverty is everywhere, but higher in rural America, in our region the reason most people can’t adopt service is due to lack of affordability, this impacts more households than lack of infrastructure alone,” said Sara Nichols, senior planner of the Land of Sky Regional Council of Government.

“It’s a program we simply can’t afford to lose,” added Nichols.

WASHINGTON, September 26, 2023 – The survival of federal broadband subsidies will be essential for the success of the Broadband Equity, Access and Deployment program, expert panelists said at the Broadband Breakfast BEAD Implementation Summit on Friday.

Broadband providers building infrastructure with funding from the $42.5 billion BEAD program will be required to participate in the Affordable Connectivity Program. The ACP, comprised of $14 billion set aside by the 2021 Infrastructure, Investment and Jobs Act, provides monthly internet subsidies of $30 for low-income households and $75 for residents of tribal lands and in high-cost areas. 

Federal Communications Commission Chairwoman Jessica Rosenworcel testified to the Senate on September 19 that the money is set to dry up as early as April 2024.

That could prevent people from being able to access the networks built with BEAD funds, said Angie Kronenberg, president of tech trade group INCOMPAS.

“That’s before the network has even been built,” she said of the estimated end date. “We really, really must have this issue addressed.”

A coalition of 45 members of Congress signed in August a letter to House and Senate leadership urging them to find money for the ACP in the appropriations bill that will fund the government for the next year. Congress is likely to miss the October 1 deadline for that bill and trigger a government shutdown.

The Universal Service Fund, which spends roughly $8 billion annually to fund four internet subsidy programs, also has an uncertain future. Lawmakers are looking to change its funding mechanism – currently a tax on voice providers – and conservative groups are challenging the fund in court.

Panelists said the USF subsidies, which help low-income households, healthcare providers, schools, and libraries, in addition to rural providers in expensive-to-serve areas, will be essential for ensuring consistent, long-term access to broadband infrastructure built with BEAD and other federal funds.

“Getting people onto the network is the goal here, it’s not just planting a flag or ‘mission accomplished’ banner for building the network,” said Mike Romano, executive vice president of the Rural Broadband Association.

Scott Woods, president of public-private partnerships at broadband grant company Ready.net, agreed that expanding networks is only part of the goal for the BEAD program.

“We could spend $200 trillion on infrastructure,” he said, “but if the people it’s designed to impact can’t afford it, it’s stranded assets.”

The discussion was moderated by David Bronston, special counsel at Phillips Lytle, LLP.

If you missed the BEAD Implementation Summit, sign up for Broadband Breakfast’s BEAD Starter Pack for $35/month (cancel anytime). You’ll get access to all the videos and each of the three Breakfast Club reports prepared for the BEAD Implementation Summit:

• July 2023 – A Deep Dive into Allocations Under the Broadband Equity, Access and Deployment Program
• August 2023 – Precursors to BEAD Implementation: A Deep Dive Into Prior Broadband Programs
• September 2023 – A Deep Dive into the BEAD Program’s Matching Funds

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