How long will the FCC’s Affordable Connectivity Program last without additional funding from Congress?

CYC’s best estimate is that the FCC’s existing funding for ACP will be completely spent down by mid to late 2024. Continuation of the program after that will be possible only if Congress appropriates new funding.

The Affordable Connectivity Program (ACP), created by the 2021 Infrastructure Investment and Jobs Act (IIJA) provides a $30 monthly subsidy to reduce Internet access costs for any eligible household – generally, a household whose annual income falls below 200% of the Federal poverty standard. The subsidy goes to a participating Internet provider chosen by the household. The provider passes it through as a credit on the household’s monthly Internet bill. A provider may also elect to offer a computer or tablet (but not a smartphone) to each of its ACP participant households, with up to $100 of the cost paid by the program and at least $10 paid by the household.

The ACP is operated by the Federal Communications Commission through its Universal Service Administrative Company (USAC), using $14.2 billion in one-time IIJA funding. There is no other source of funds authorized by Congress to support the program.

ACP’s enrollment growth

ACP is the successor of the Emergency Broadband Benefit program, which provided a $50 monthly Internet subsidy to a more limited group of low income households between May and December 2021. The ACP replaced the EBB on January 1, 2022, after which all new entrants were enrolled at the $30 level. Households enrolled in EBB in 2021 continued to receive the $50 EBB subsidy through February 2022, but then were required to re-enroll in ACP in order to continue receiving assistance.

Prior EBB funding paid for the two months of transitional EBB subsidies. But all costs incurred for new subscribers after January 1, and all costs incurred after March 1, 2022, must be covered by the $14.2 billion provided for ACP by the IIJA.

According to a weekly online “ACP Enrollment and Claims Tracker” on USAC’s website, about 9 million households were already participating in the EBB program at the end of 2021. By the time most of these households transitioned to ACP on March 1, another 1.4 million had already signed up for the new program.

Since then – from March 1 through January 30 – total ACP enrollment has grown from 10.4 million to 15.9 million households, or about 5.5 million net new subscribers in eleven months. Enrollment growth during the most recent five months has totaled about 2.4 million, or 400,000 to 500,000 new enrollees each month.

ACP in Cleveland

At the end of November 2022, according to the most recent ZIP code data released by USAC, there were 74,343 households enrolled in the Affordable Connectivity Program in the twenty-one ZIP codes that include significant areas of the city of Cleveland (44102, -03, -04, -05, -06, -08, 09, -10, -11, -12, -13, -14, -15, -19, -20, -21, -22, -27, -28, -35, and -44).

Connect Your Community estimates that at least 62,000 of these ACP-enrolled households were city residents. This would mean that more than one-third of Cleveland households were using ACP to support their access to broadband.

AT&T and Spectrum currently offer “free” 100 Mbps broadband plans for ACP households only. (Spectrum’s is a two year promotional offer for new customers only.) These are actually $30/month plans combined with the ACP credit. The two providers’ willingness to offer affordable versions of high-speed service to ACP participants is clearly based on receiving those $30 payments in the form of reliable checks from USAC, rather than small payments from lower-income consumers themselves.

So whether, and for how long, Cleveland can count on ACP’s continued availability is a critical issue for digital equity efforts here.

So… how long can the FCC continue to pay for ACP without additional funding?

CYC’s best estimate is that the FCC’s existing funding for ACP will be completely spent down by mid to late 2024. Continuation of the program after that will be possible only if Congress appropriates new funding.

This chart shows our projections of ACP’s monthly unobligated balances under two conservative enrollment growth scenarios, using USAC-reported actual data through January 2023.

• CYC calculates that continued net growth in ACP subscribers at the current rate (rounded downward) of 400,000 per month will exhaust the program’s existing IIJA funding by May, 2024.

• CYC calculates that even ACP’s current subscriber load, with no further growth at all, will exhaust the program’s existing funding by September, 2024.

Here are the details of CYC’s projections.

A separate analysis by the Institute for Local Self-Reliance asks “When Will Funding Run Out?” under six future enrollment scenarios. Its answer is essentially identical to CYC’s – some time between the second and fourth quarters of 2024. Here’s ILSR’s summary chart.

Both CYC’s and ILSR’s projections of monthly ACP obligations err to the low side, because they do not take into account either: a) ACP’s device subsidy reimbursements, which totalled about $300 million from March through November 2022, suggesting a continuing cost of at least $20 to $30 million a month; or b) higher ACP service subsidies (up to $75 per month per household) allowed for tribal area residents, which may currently be adding as much as $10 million a month to ACP’s obligations.

Of course all these projections and estimates rely on assumptions about ACP subscriber growth and retention that are inherently speculative.  In theory, enrollment in ACP over the coming year could respond to the FCC’s current marketing push by growing even faster than any of the scenarios above, exhausting its funds even sooner. Conversely, ACP enrollment could shrink from its current level, extending ACP’s availability into 2025.

As Neils Bohr (or was it Yogi Berra?) told us: “Prediction is very difficult, especially if it’s about the future!”

But within a reasonable range of assumptions, based on the data now available, it seems pretty likely that the Affordable Connectivity Program’s current one-time funding will run out during the second or third quarter of 2024.