USF Reforms Should Include Replacing Lifeline with ACP | Citizens Against Government Waste

USF Reforms Should Include Replacing Lifeline with ACP

The WasteWatcher

In response to a request from the Senate Universal Service Working Group for input on reforming the Universal Service Fund (USF) program, the Council for Citizens Against Government Waste (CCAGW) filed comments on August 24, 2023, including the need to replace the Lifeline program with the Affordable Connectivity Program (ACP).

The comments noted that with hundreds of billions of dollars now available for broadband deployment across the country, it is difficult to continue to justify keeping the USF program at its current level.  However, the USF is not the only program Congress should be reviewing to ensure broadband is available universally to everyone who desires access. A May 31, 2022, Government Accountability Office (GAO) report unveiled 133 programs across 15 federal agencies for broadband deployment, including the USF.  GAO noted that despite the federal government’s expenditure of $44 billion between 2015 and 2020, millions of Americans continued to lack broadband access.  The GAO report noted that the fragmentation of these programs has had the most negative effect on “communities with limited resources.”  This lack of a unified effort to provision broadband access demonstrates why Congress should review all federal broadband programs, including the USF, and then consolidate and eliminate duplicative programs while supporting those that are operating effectively and efficiently. 

Proposals for USF reform include expanding the contribution base to include revenue from internet service providers, which would not address the rising contribution factor costs being passed on to consumers or funding the USF through the appropriations process.  The contribution factor has increased from an average of 5 percent in 2000 to a record high of 33.4 percent in the second quarter of 2021 and is set at 29.2 percent for the third quarter of 2023.

CCAGW’s comments also discussed the ACP was funded by an appropriation of $14.2 billion in the Infrastructure Investment and Jobs Act of 2021.  It allows qualified low-income households to obtain a voucher of up to $30 monthly ($75 monthly for households on Tribal lands) for internet service, or up to $100 for the purchase of a computer or tablet if they pay between $10 and $50.  The voucher is limited to one device and service per household, but the choice of internet provider or type of device is up to the consumer, not the government.

An April 3, 2023, American Action Forum study found, “To date, ACP has proved largely effective at connecting Americans to broadband.  If Congress allows the program to expire, Americans will likely be left with only Lifeline, an outdated and comparatively ineffective program, as an alternative to connect them to broadband.  Further, if Lifeline is the only federal option for affordability support, regulators may look to things such as rate controls or other utility-style regulations to address the perceived need for affordable programs, which would negatively affect broadband deployment and affordability.”  

An August 14, 2023 Information Technology & Innovation Foundation study compared the Lifeline program, which is the low-income support program funded through the USF, to the ACP, and found that Lifeline, “prior to the ACP, spent about $100 per subscription it generated.”  The study also noted that the ACP is “currently operating at the minimum capacity necessary to actually close all affordability gaps.  Estimates put the number of households eligible for the ACP at 4.8 million, and 2021 NTIA data finds that 4.4 million offline households cited price as the major reason for nonadoption.” 

As of August 21, 2023, there were 20,351,962 enrolled households in the ACP program.  However, unless Congress acts, the ACP program will run out of funding in 2024, and those who are currently being served could lose their ability to pay for broadband access. 

CCAGW encouraged Congress to move forward with USF reform to both increase the opportunity for unserved households to connect to the internet and to reduce unnecessary costs in achieving that objective.


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