The Infrastructure Investment and Jobs Act of 2021 provided $42.45 billion for the Broadband Equity Access and Deployment (BEAD) program, administered by the National Telecommunications and Information Administration (NTIA).  The legislation provided at least $100 million to each state, Puerto Rico, and Washington, D.C., and $50 million to each outlying territory, and funding proposals have been submitted to the NTIA. 

One of the issues raised by the proposals is the impact of failing to reauthorize the Federal Communications Commission (FCC)’s Affordable Connectivity Program (ACP), which will run out of money in April 2024.  The program provides vouchers to help one out of every six U.S. households pay for broadband access.  Without the ACP, broadband rate setting could become more difficult as income eligibility qualifications diverge from the nationwide standard set by ACP and states lower their monthly rate caps to keep low-income plans “affordable” in the absence of this monthly benefit.

Households earning up to 200 percent of the Federal Poverty Limit (FPL) qualified for ACP benefits in 2023-24 and those earning up to 135 percent of FPL qualified for benefits through the federal Lifeline program.  The BEAD funding proposals submitted by Alabama, Maryland, and Oklahoma define eligibility for their low-cost broadband service options (LCBSO)s to match ACP or Lifeline qualifications.

Alabama, for example, “proposes to require all BEAD subgrantees to offer a broadband service option … available to all households that meet the eligibility requirements of the ACP” (p. 146).  Oklahoma’s proposal likewise states, “No additional eligibility restrictions beyond those applicable to the ACP should be imposed” (p. 57), while Maryland’s broadband office “proposes to require all subgrantees to offer a service option that … will be available to all households that meet the eligibility requirements of the federal Lifeline program” (p. 116).

The three states may have chosen to shift the burden of defining their own state’s low-cost plan eligibility standard to a federal agency to maintain consistency or predictability across states so that providers can easily identify eligible households in the event Congress changes the eligibility standard for one of these programs.  But if Congress allows ACP to expire, replaces the Lifeline program with ACP, or makes changes in Lifeline eligibility, the state would need to come up with new eligibility standards for their low-income option.  

To avoid this problem, California, Delaware, Georgia, Maine, Maryland, Nebraska, New Mexico, New York, and Oregon set the income threshold for LCBSO eligibility at 200 percent of FPL regardless of any potential federal changes to ACP’s eligibility threshold or its continued availability.  Connecticut and Delaware set eligibility at the current Lifeline threshold of 130 percent of FPL. 

Arizona, Georgia, Michigan, Missouri, Rhode Island, and Utah include contingency plans in their proposals for defining low-income plan eligibility if ACP funding expires.  But Ohio’s proposal, on pp. 197-8, says, “In the event that ACP is not renewed, the Broadband Expansion Program Authority will make a determination as to who is eligible for the low-cost option in Ohio and the low-cost option will apply to those residents.  BroadbandOhio and Department of Development will work to ensure there is a mechanism to verify eligibility.”  Rhode Island sets its LCBSO at the ACP level as long as funding continues, but should it expire without replacement, the state’s low-income plan eligibility would automatically fall to 150 percent of the FPL.

CAGW conducted a 50-State Review of proposed BEAD policies, and found that 26 states have agreed to follow NTIA’s non-binding guidance to the letter and set their monthly low-cost option rate caps at $30, equal to the amount ACP currently provides to qualifying households, so that these customers would receive service for a net cost of $0 per month, after receiving their benefit.  Arizona’s proposal, for example, makes this policy goal explicit on p. 106, stating, “the price of the low-cost broadband service option pricing was designed to result in a net zero cost to ACP eligible subscribers after the subsidy is applied. Pricing on the low-cost broadband service option shall be $30 per month or less.”

While 25 other states copy NTIA’s non-binding guidance to the letter by mandating a $30 rate cap, Hawaii goes further by requiring providers to deliver service to qualifying low-income households for $0 net cost per month, on the presumption that ACP will continue to cover the monthly cost.  Hawaii’s proposal states, on p. 74, that “the proposed service option: Costs $30 per month or less, inclusive of all taxes, fees, and charges … with no additional non-recurring costs or fees to the consumer [and] Allows the end user to apply the Affordable Connectivity Benefit or successor program similar subsidy to the service price to achieve ‘net free’ access.”  However, if ACP expires, a net free access requirement would effectively demand providers deliver high-speed internet to thousands of households free of charge, including many in remote and difficult-to-reach locations.

Michigan’s policymakers took steps to address this issue in its proposal by explaining on p. 67, “Currently, the ACP provides a subsidy of $30, permitting low-cost plans to be priced at $30 per month or less … In the event the ACP is not renewed and there is no successor or subsequent broadband subsidy program, the low-cost plan will utilize the most recent ACP subsidy amount as the benchmark price point.”  Utah’s proposal (p. 90) states that, “If ACP is defunded, the state of Utah does not have any other options to fund a program similar to the ACP.  The low-cost options requirements for BEAD recipients would remain as required in the current program.”

Missouri’s proposal caps low-cost plan rates at $50 for providers that accept the ACP device subsidy and $30 for those that do not accept the ACP device subsidy (pp. 88-89).  Thus, if ACP expires, Missouri’s low-cost rate would fall for all providers from $50 to $30.  Similarly, Wyoming (p. 108) would reduce its rate cap for locations on the federally recognized Tribal lands from $75 to $70 if ACP expires.

Due to the need to establish new state eligibility standards or rate caps, the expiration of ACP will make deployment more burdensome for all broadband providers, slowing down the expansion of broadband access to bridge the digital divide.