Today, I submitted written testimony to the House Committee on Appropriations Subcommittee on Commerce, Justice, Science and Related Agencies. Click here to download a full PDF of the testimony.
Chairman Rogers, Ranking Member Cartright, and Members of the Subcommittee:
We are writing on behalf of Lincoln Network, a think tank working with policymakers and tech innovators to promote market-oriented ideas that strengthen American innovation. We write to encourage the Subcommittee to provide appropriations sufficient for a short-term continuation of the Federal Communication Commission’s (FCC) Affordable Connectivity Program (ACP). We also write to encourage the Subcommittee to include a recommendation in the report accompanying its appropriations bill requesting the Department of Commerce conduct a comprehensive comparative analysis of the various programs aimed at closing the digital divide.
Established by the Infrastructure Jobs and Investment Act (IIJA), the ACP is a program that provides a subsidy of up to $30 per month toward internet service for eligible households and up to $75 per month for households on certain Tribal lands. The program also provides one-time discounts for households to purchase certain electronic devices.
The program has had significant success in getting low-income Americans connected to internet services, currently assisting nearly 17 million Americans across the country. What’s more, Internet Service Providers (ISPs) covering more than 80 percent of the U.S. population have committed to offering high-speed plans to eligible households at $30 per month, making internet service virtually free for the vast majority of low-income Americans.
Unfortunately, the ACP is estimated to run out of money early next year unless Congress provides additional funding. If the ACP lapses, millions of Americans would immediately lose this benefit, hampering bipartisan efforts to close the adoption gap of the digital divide, particularly in rural communities. Congress should continue to fund the ACP to ensure that the program does not lapse.
Furthermore, the ACP is just one of numerous federal government-run programs seeking to close the digital divide. To ensure that the federal government is maximizing the return on investment (ROI) of taxpayer dollars, we also ask that the Subcommittee include a recommendation in the report accompanying its appropriations bill requesting that the Department of Commerce conduct a comprehensive comparative analysis of the various programs aimed at closing the digital divide.
The cost of internet service is one of several factors that cause millions of households not to adopt broadband service where it is available. According to Pew Research Center, financial constraints are one of the most important reasons that Americans choose to forgo broadband services. As our research shows, a variety of other factors contribute to the adoption gap, including low awareness of low- or no-cost internet offerings, lack of clarity about eligibility, confusion about the application process, lack of trust in free or low-cost services, and structural limitations such as unstable housing and language barriers.
These factors help demonstrate why the ACP has been more successful than many past efforts at addressing the adoption gap. The program does not only address the cost of internet service. The FCC has awarded grants to and partnered with a wide range of organizations, including ISPs, to conduct outreach on the ACP and serve as trusted community messengers to historically underserved populations, including rural communities and Tribal lands.
When debating government-funded vouchers, policymakers should consider whether the benefits are worth the burden to taxpayers. Research by University of Maryland economist George Zuo shows that connecting a low-income household to broadband reduces the likelihood of unemployment by over four percent and increases income by nearly $1,400. A separate study from the U.S. Chamber Technology Engagement Center estimates that stronger broadband adoption and digital literacy in rural areas could increase economic activity by as much as $84 billion in sales and 360,000 new jobs.
The ACP is the most recent program that aims to close the adoption gap of the digital divide, but it is not the only program. Established by Congress in 1985, Lifeline is a government assistance program designed to help low-income households access telecommunications services. The FCC updated Lifeline in 2016 to assist consumers in adopting broadband services. Applying to consumers with an income at or below 135 percent of the federal poverty level (FPL), “Lifeline provides up to a $9.25 monthly discount on service for eligible low-income subscribers and up to $34.25 per month for those on Tribal lands.”
Plagued by fraud in its early years, Lifeline has significantly improved since implementing a national verifier through the Universal Service Administrative Company (USAC)—the non-profit that administers the program under the direction of the FCC—but remains far inferior to the ACP in getting low-income Americans connected. The requirements for participation in Lifeline are so onerous that the vast majority of major ISPs do not participate, as illustrated by the USAC’s online dashboard. In contrast, the vast majority of ISPs do participate in the ACP, no doubt in large part because of its simplicity.
Another related benefit of the ACP is that it is far more “tech-neutral” compared to Lifeline. The ACP is both technology- and vendor-neutral while Lifeline can only be used toward offerings that include voice service and are provided by an eligible telecommunications carrier (ETC), subject to numerous requirements. The diversity of options available under the ACP allows consumers more flexibility to find a service that meets their needs.
While the ACP is superior to Lifeline, instances of fraud prove that the ACP is not perfect. As it examines whether or not to appropriate new funds to the program, Congress should also take the opportunity to look critically at how to improve the ACP.
The most obvious area for Congress to reform the ACP concerns its eligibility requirements. Congress set the initial income eligibility threshold too high at 200 percent FPL. With this threshold, households that would have subscribed to broadband services without the ACP voucher have used the program. This has contributed to the program’s rapidly dwindling funds. Lowering the threshold to at or near the federal poverty level—for example, mirroring the Lifeline threshold of 135 percent FPL—would put the program on more sound footing and ensure that taxpayer funds are more narrowly targeted to households who truly need assistance.
Congress should also seek to improve ACP transparency. There are many questions about the program that, without the right data, cannot be answered.. Requiring the USAC to publish more detailed information on the program would further help policymakers tweak the ACP to maximize its efficacy.
Aside from federal discount programs, many advocates and policymakers argue that another solution to the adoption gap is dramatically increasing government regulation of broadband, including price regulation. This argument is made despite the wide availability of free broadband service for low-income households, and ample research demonstrating that cost is only one factor driving the adoption gap.
In an environment where activists and some policymakers are pushing rate regulation, the ACP offers a market-based solution. The ACP’s consumer voucher advances a real government interest— promoting internet adoption—while remaining technology-neutral and avoiding regulation and ideological preferences regarding the corporate structure of ISPs.
In conclusion, we encourage the Subcommittee to:
- Provide such sums as may be required to continue the Affordable Connectivity Program through FY2024.
- Consider revisions to the program that would reduce the cost to taxpayers, including a reduction of the eligibility requirements and requiring more transparency.
- Include a recommendation in the report accompanying the Subcommittee’s appropriations bill that requests the Department of Commerce undertake a comprehensive comparative analysis of federal programs intended to help close the digital divide. This report should have a particular focus on comparing the efficacy and ROI of Lifeline and the Affordable Connectivity Program.
 “Affordable Connectivity Program,” Federal Communications Commission, last updated March 15, 2023, https://www.fcc.gov/acp.
 “Additional ACP Data: Total Enrolled ACP Subscribers by Method of Verification,” Universal Service Administrative Co., last updated March 1, 2023,
 “FACT SHEET: President Biden and Vice President Harris Reduce High-Speed Internet Costs for Millions of Americans,” White House, May 9, 2022, https://www.whitehouse.gov/briefing-room/statements-releases/2022/05/09/fact-sheet-president-biden-and-vice-president-harris-reduce-high-speed-internet-costs-for-millions-of-americans/.
 “Poverty Rates by Metro/Nonmetro Residence, 1959-2019,” Department of Agriculture, 2019, https://www.ers.usda.gov/webdocs/charts/56286/povertyratesbyresidence2019.png?v=2402.3.
 Andrew Perrin, “Mobile Technology and Home Broadband 2021,” Pew Research Center, June 3, 2021, https://www.pewresearch.org/internet/2021/06/03/mobile-technology-and-home-broadband-2021/.
 Jonathon Hauenschild, “Federal and State Efforts to Close the Digital Divide￼,” Lincoln Network, October 27, 2022, https://lincolnpolicy.org/2022/federal-and-state-efforts-to-close-the-digital-divide/.
 Tony Romm, “Hacking a Lifeline: How a Federal Effort to Help Low-Income Americans Pay Their Phone Bills Failed Amid the Pandemic,” The Washington Post, February 9, 2021, https://www.washingtonpost.com/technology/2021/02/09/lifeline-broadband-internet-fcc-coronavirus/.
 “Affordable Connectivity Outreach Grant Program,” Federal Communications Commission, last updated April 7, 2023, https://www.fcc.gov/acp-grants.
 George W. Zuo, “Wired and Hired: Employment Effects of Subsidized Broadband Internet for Low-Income Americans,” American Economic Journal vol. 13, no. 3, (August 2021), https://www.aeaweb.org/articles?id=10.1257/pol.20190648.
 “Unlocking the Digital Potential of Rural America,” U.S. Chamber Technology Engagement Center, March 2019, https://americaninnovators.com/wp-content/uploads/2022/04/Unlocking-the-Digital-Potential-of-Rural-America.pdf.
 “Federal Lifeline Program: Frequently Asked Questions,” Congressional Research Service, October 19, 2017, https://www.everycrsreport.com/files/20171019_R44487_853992974c427e329415251f459818b09fb671d2.pdf.
 “Lifeline Support for Affordable Communications,” Federal Communications Commission, last updated January 5, 2023, https://www.fcc.gov/lifeline-consumers#:~:text=Lifeline%20also%20supports%20broadband%20Internet,territory%2C%20and%20on%20Tribal%20lands.
 Jeffrey Westling, “ACP versus Lifeline: A Comparative Analysis of Broadband Affordability Subsidies,” American Action Forum, April 3, 2023, https://www.americanactionforum.org/insight/acp-versus-lifeline-a-comparative-analysis-of-broadband-affordability-subsidies/.
 “Companies Near Me,” Universal Service Administrative Co., accessed April 13, 2023, https://cnm.universalservice.org/.
 “Lifeline: Rules and Requirements,” Universal Service Administrative Co., https://www.usac.org/lifeline/rules-and-requirements/.
 “FCC Inspector General Issues Advisory Regarding ACP Enrollment Fraud,” Federal Communications Commission, September 8, 2022, https://www.fcc.gov/document/fcc-inspector-general-issues-advisory-regarding-acp-enrollment-fraud.
 Meredith Whipple, “Public Knowledge Urges Court to Uphold New York’s Affordable Broadband Act,” Public Knowledge, December 3, 2021, https://publicknowledge.org/public-knowledge-urges-court-to-uphold-new-yorks-affordable-broadband-act/.