With Affordable Connectivity Funds Running Out, ISPs May Choose Partial Reimbursement

If providers opt to provide ACP benefits in May they may need to absorb some unexpected costs themselves.

With Affordable Connectivity Funds Running Out, ISPs May Choose Partial Reimbursement
Photo of FCC's front door by Rob Pegoraro used with permission.

WASHINGTON, March 20, 2024 – As the looming deadline of the Affordable Connectivity Program draws nearer, providers now face a decision of whether to continue offering ACP-supported services through May by taking partial reimbursement funding, or dropping consumers.

In a public notice released Monday, the Federal Communications Commission alerted internet service providers that without additional funding from Congress, the Affordable Connectivity Program won't reimburse them fully for the service and device benefits applied to ACP-recipient internet bills beginning in May.

This marks the first instance of such a reimbursement shortage. Up to this point, providers have consistently received full reimbursement for the benefits they've extended to recipients through the ACP. If providers opt to participate in May, they may need to absorb this unexpected cost themselves, rather than passing it on to consumers.

To allow providers to plan for the upcoming May service month and to ensure ACP households are well-informed, the agency has disclosed an estimated reimbursement range for each benefit type. The agency has indicated that the partial reimbursement amount is subject to change or be reduced.

Providers are not obligated to pass on any benefits to ACP recipients beyond April 2024.

Screenshot via the FCC's public notice.

No higher charges allowed

Providers have the option to decide whether to pass on and claim partial reimbursement for the May service. Providers may offer a discount greater than the estimated reimbursement rate provided by the FCC’s Wireline Competition Bureau.

But they are not allowed to charge ACP households more than they would pay if the full ACP benefit had been applied to the bill, unless the household has opted into paying a higher amount.

The notice directs participating ISPs to notify the Universal Service Administrative Company of their intent to participate during the May 2024 service month by filling out the survey that USAC will distribute to providers within one week of the release of this public notice.

Providers will have two weeks from the distribution of the survey to submit their responses.

The ACP provides monthly $30 discounts on internet service for low-income households and up to $75 monthly discounts for eligible households on tribal lands and in high-cost areas. Additionally, it offers a one-time discount of up to $100 off the price of an electronic device.

The federal government has allocated $6 billion in the proposed fiscal year 2025 budget to extend the ACP, and bipartisan legislation to extend the ACP until the end of 2024 has stalled since being referred to the Senate Appropriations Committee on January 10.

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