Affordable Connectivity Program (ACP)

Broadband access, equity and deployment program funding is flowing more slowly than expected and likely won’t start in mid-2025 as originally expected, Diana Eisner, USTelecom vice president-policy and advocacy, said during a Georgetown University Center for Business and Public Policy webcast Wednesday. Most of the money will start to flow in mid-2026 or later, she predicted. It could even be the second half of 2026, she said.

It wouldn’t be an “unfunded mandate” to require ISPs to have $15 affordable broadband plans as a condition of getting support from the California Public Utilities Commission’s federal funding account (FFA), The Utility Reform Network said Tuesday. TURN replied in docket R.20-09-001 to industry objections to the group’s petition asking the CPUC to pause FFA grants until it modifies rules to account for the federal affordable connectivity program (ACP) winding down (see 2405160055). "The courts have previously held that funding conditions for voluntary programs are permissible; funding conditions are not unfunded mandates or rate regulations,” said TURN. "Providers are free to decline FFA participation and instead charge customers whatever they wish.” Existing ISP-designed affordable plans are no substitute for ACP, added the consumer group: Such industry plans "tend to have significantly more restrictive eligibility requirements than the ACP and therefore will not be available to all ACP recipients.” TURN has two other petitions related to ACP's end (see 2405240060).

Despite expectations that the affordable connectivity program (ACP) will run dry in days, telecom companies continued arguing in comments last week that the California Public Utilities Commission should take its time forming its response. However, while larger ISPs slammed consumer advocates' proposal, small local exchange carriers said they would work with the advocates on a compromise that quickly expands California LifeLine support to broadband.

T-Mobile views the loss of the affordable connectivity program as a larger concern for cable than for the wireless industry, CEO Mike Sievert said Tuesday during a J.P. Morgan financial conference. “Our operating assumption is that it goes away,” though there could be a “Hail Mary” to restore the program, he said (see 2405210056). “I do not believe [ACP's ending] will result in people disconnecting their mobile service,” Sievert added. He stressed the importance of Congress reauthorizing the FCC’s auction authority, which, like ACP, lawmakers are considering. “Our nation's competitiveness depends upon our networks being the best in the world, and we can't afford to sit and watch while other countries ... deploy spectrum in a smarter way,” he said. T-Mobile has the spectrum it needs short term and has yet to deploy “in a material way” the licenses it bought in the C-band auction, he said. “We have lots of room to run” and “we’re really well positioned.” Sievert said that while T-Mobile is investing in fiber (see 2404250047) the carrier is happy with its current business model and loves being “the nation's leading mostly wireless pure play company.” In addition, Sievert said he’s not worried about a potential downturn in the consumer wireless market. “Doesn't matter whether the market is rapidly growing or not because most of our business comes from share taking,” he said: “If the market is rapidly growing … we'll partake in that. If it's growing more slowly, we won't be harmed.”

Verizon CEO Hans Vestberg offered more clarity Tuesday about the carrier’s view of its spectrum needs. The wireless industry eventually will need more licensed spectrum for the U.S. to remain “competitive” with other markets, particularly Asia, Vestberg said during a J.P. Morgan financial conference. “You need predictability, you need ownership, you need spectrum” to justify investments, he said. Like Sowmyanarayan Sampath, Verizon Consumer Group CEO, who mentioned the issue last week (see 2405140055), Vestberg said the company doesn’t face short-term needs, with an average of 161 MHz of C-band in markets nationwide, about half of which is now in use. “I sit really good on the 161 MHz of C-band that we bought,” he said. On another issue, Vestberg said the end of the affordable connectivity program is bad news. The program “is very important for the U.S. economy,” he added. Verizon has about 1.1 million customers receiving ACP funding, he said. Low-income families “should have a possibility to have broadband wireless,” he said, noting other Verizon programs can serve them. Vestberg also said the wireless industry's importance is “sort of underestimated.” Wireless and broadband “are two of the most essential and critical services for people, for organizations, for companies,” he said. People need broadband to work, for education, to access healthcare and to “have some joy in life,” he said. Vestberg said network slicing will be critical to the launch of private networks. Slicing will allow the setup of a private network “probably 10 times faster than … today, because today I need to break out part of the radio network and part of the core network,” he said: “In the future, I can just do a slice and I can probably do it in hours.”

The Senate Commerce Committee is at an impasse over funding the FCC’s affordable connectivity program, ranking member Ted Cruz, R-Texas, and Sen. John Thune, R-S.D., told us Tuesday. Chair Maria Cantwell, D-Wash., said Democrats haven't found enough willing Republicans and the soonest the committee could even consider a markup is the first week of June.

Even in the face of slowing subscriber additions in Q1 for telcos' fiber service and fixed wireless access (FWA), cable net additions worsened, likely due to the affordable connectivity program (ACP) ending new enrollments and reenrollments for households that had received ACP support and then moved to a new address, MoffettNathanson's Craig Moffett wrote Monday. He said home broadband penetration stalled and perhaps even declined in the quarter, especially when adjusted for rural home growth subsidized under the Rural Digital Opportunity Fund and for unsubsidized edgeouts. The FWA peak "has passed," with Q1 bringing its first year-over-year decline in subscriber net adds, he said. Fiber overbuilders are challenged as capital and labor costs are higher than when numerous projects were planned, while the most attractive areas are steadily being built out, he said. The U.S. broadband industry's total net adds in Q1 were the slowest since before the COVID-19 pandemic, he said. Broadband penetration increases during the pandemic were likely due to government subsidiary programs at the state and federal level, increasing affordability and bringing in numerous households that otherwise would have found the service outside their price range, he said.

Don’t wait to see if Congress finds funding for the affordable connectivity program (ACP), the Center for Accessible Technology (CforAT) urged the California Public Utilities Commission in comments Wednesday. The consumer group supported a petition from The Utility Reform Network (TURN) and the CPUC’s independent Public Advocates Office to modify a 2022 decision that made rules for the California commission’s federal funding account (FFA), which uses broadband funding from the U.S. government (see 2404150062). The petition “accurately highlights that the current FFA rules will become outdated shortly with the anticipated end of the ACP, and it reasonably requests that the Commission modify the FFA rules to support ongoing broadband affordability,” CforAT said in docket R.20-09-001. “The Commission should not delay based on the efforts currently underway to extend the ACP, as the fate of these efforts is uncertain, and the status quo would result in loss of service for program participants.” The CPUC can hit the brakes should ACP get money, it added. But the telecom industry said granting the petition would delay money going out the door to expand broadband. Also, the industry urged the CPUC to avoid using ACP's possible end as an excuse to relitigate settled issues, echoing comments it made days earlier on a separate TURN petition seeking changes to a different grant program (see 2405140037). Thanks to flexible FFA rules, the CPUC "received an unprecedented amount of interest with over 480 applications and at least two applications per county,” commented AT&T. Granting TURN and PAO’s petition will only further delay awards for the applications that already have been pending for eight months, said the carrier: But the CPUC must make awards by Dec. 24 or send the cash back to the U.S. Frontier Communications said the CPUC should “swiftly deny” the petition. "The Commission should not allow the state’s broadband infrastructure deployment objectives to be diverted or delayed by Petitioners’ agenda to revisit rejected policy proposals addressing affordability." AVX Networks and Cal.net piled on. “There is no reasonable basis to delay FFA awards indefinitely while the Commission considers whether to add a completely new requirement on FFA award recipients,” they said. A group of small rural local exchange carriers agreed. “This Petition would compromise the efficacy of this time-sensitive federal grant program, potentially squandering critical federal support for rural infrastructure deployment and impairing the state’s efforts to close the digital divide,” the LECs said.

The Senate Commerce Committee will try again next week to approve funding for the FCC’s affordable connectivity program (see 2405100046), Chair Maria Cantwell, D-Wash., told us Thursday after the scheduled markup was pulled amid tensions with Republicans over amendments.

House Appropriations Financial Services and General Government Subcommittee members questioned FCC Chairwoman Jessica Rosenworcel Thursday on the commission's funding request for increased staffing across the agency and the affordable connectivity program. During the hearing on the FCC's FY 2025 budget proposal (see 2403110056), some legislators raised concerns about the FCC's work on combating illegal robocalls and its spectrum authority.