States Reckon With Lapse of the Broadband Affordable Connectivity Program

Funding for the Affordable Connectivity Program (ACP) lapsed in May 2024, ending a monthly subsidy that 23 million households nationwide had been using to afford high-speed internet connections. The change disrupted years of progress and, in many instances, future plans for states, internet service providers (ISPs), local leaders, and other stakeholders.

ACP participants received a $30 monthly subsidy ($75 if on Tribal lands) for their internet bills through their service provider. But the program’s lapse means many rural, low-income, and other vulnerable households are losing access to internet connections. A study released in July found that 13% of ACP recipients had already canceled their home internet service and another 12% planned to do so within the next three months. What’s more, 53% of previous ACP participants say they now believe it is too difficult for them to pay their current monthly internet bill and plan to downgrade their service. This level of customer turnover, also called churn, has a negative effect on ISPs, narrowing the margins for viable business cases for operating in higher-cost communities.

The end of ACP is also disrupting states’ plans for implementing several federal programs aimed at increasing the availability and usage of affordable broadband, including the Capital Projects Fund (CPF), Broadband Equity, Access, and Deployment (BEAD), and Digital Equity Act (DEA) programs. Over the past two years, states have developed and released plans for BEAD and DEA that hinged on the continuation of ACP.

Now, some state broadband offices and legislatures have begun to explore how they can step in to fill the vacuum and deal with the uncertainty created by the ACP lapse. Although no singular state action can fully replace ACP, policymakers are grappling with the uncertainty that the loss poses to their goals for universal affordable broadband access.

The post-ACP reality for what were complementary programs

The CPF and BEAD programs that will fund the construction of new internet networks were designed to work in tandem with ACP. Both required broadband providers to participate in ACP to be eligible for an award. This was a new and noteworthy step forward for federal broadband policy, which for the first time directly paired activities aimed at increasing availability with tools to increase affordability. This approach was designed to resolve one of the primary concerns of providers and customers living in high-cost communities: Even though service was available, the monthly costs were too high for many households to afford.

And these concerns are well-founded: 45% of households without broadband cite the high monthly cost as a primary reason they are unconnected. Further, ACP helped round out the business case for deploying networks to previously unserved areas. A 2022 study found that by expanding the number of customers who can afford and maintain subscriptions, ACP reduced customer turnover and ISPs’ break-even cost by 25% when building networks in new service locations.

In addition to ACP participation, BEAD’s rules require providers to offer a low-cost service option that takes into consideration the value of the ACP subsidy. For example, Kansas set its BEAD low-cost service option at $30 per month and stated that “for ACP participants, the net end-user cost would be zero dollars ($0).”

New broadband deployments funded by CPF and BEAD will continue without the ACP subsidy. While it remains unclear how the end of ACP will affect ISP participation, customers at the end of these networks will probably have to absorb the higher costs.

States were also prioritizing strategies that leveraged ACP to increase access to affordable broadband in their DEA and State Capacity Grant programs. For example, several states, including Nevada, Vermont, and Oklahoma, planned to create and fund programs that combine ACP enrollment assistance with device and digital literacy training. This combination would have ensured that an individual eligible for ACP could be signed up for a more affordable internet subscription and provided the skills to navigate it at the same time.

Without ACP, who picks up the cost?

Roughly $55 billion in federal funds is committed to internet access and digital equity initiatives, but these programs are one-time allocations, and affordability subsidies require ongoing funding.

Support for affordability programs is technically allowed under BEAD and DEA rules, but states are heavily restricted in how they use funds. For example, under the BEAD program, consumer subsidies and other “nondeployment” activities can be funded only if the state demonstrates that it can reach all of its unserved and underserved locations with deployment projects. Currently, less than half of all states anticipate having any nondeployment funding available. And under DEA, affordability subsidies are capped at 10% of a state’s allocation. That’s a drop in the bucket and not a viable alternative to ACP.

In 2024, three strategies to solve this problem emerged, with state lawmakers exploring different approaches to resolve funding gaps and define eligibility. Some lawmakers—such as those in California and Oregon—are considering modifying their state-operated Lifeline subsidy programs in ways that increase the funding available to supplement the $9.25 monthly discount already offered by the federally operated Lifeline program. Others—such as those in New York, North Carolina, and Pennsylvania—considered legislation to establish their own broadband subsidies. In addition, some states debated replicating the BEAD low-cost option provision by requiring service providers under contract with the state to offer plans at a state-determined affordable price.

New York’s Affordable Broadband Act, adopted in 2021, takes a broader regulatory approach and could be another option for states. The law, passed months before the formal creation of ACP but not yet enforced because of a lengthy legal dispute, requires ISPs operating in New York to provide a low-cost option at $15 or $20 for low-income subscribers, depending on the plan’s speed. However, some legal experts have suggested that additional legal scrutiny may be required after the Federal Communications Commission’s recent net neutrality order redefining its regulatory jurisdiction over broadband service providers and other related federal court cases.

Unaffordable uncertainty

The shutdown of ACP jeopardizes service to the 23 million households that relied on the monthly subsidy to subscribe to a more affordable internet plan. Many states were heavily invested in the continued success of ACP, crafting plans to increase enrollment and funding networks in rural areas that had built it into their business models. Although the funding for new networks will continue to be deployed, the task of providing affordable service with this publicly subsidized infrastructure is now more difficult.

Ensuring that internet access is affordable to all is a national challenge that no state can solve alone. States have begun exploring possible alternatives to lower the cost of internet bills for their residents, but without a federal solution, affordability will remain a significant barrier to reaching universal service and adoption.

Summer Boucher-Robinson is a senior associate and Jake Varn is an associate manager with The Pew Charitable Trusts’ broadband access initiative.