Drew Garner
State Broadband Policy Fellow, Common Sense
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How long would the $6 billion in emergency funding allow the ACP to keep providing high-speed connectivity to the families who need it?
What Congress Needs to Know About ACP Funding
How long would the $6 billion in emergency funding allow the ACP to keep providing high-speed connectivity to the families who need it?
Topics:
Digital Divide
Federal Legislation
Roughly one in seven Americans have come to rely on the Affordable Connectivity Program (ACP) since it was created almost exactly two years ago by the 2021 bipartisan infrastructure law (IIJA). Among them are millions of children and families for whom the ACP means stronger digital skills, improved grades, higher annual incomes, and better access to the essential services and innovative tools that are increasingly (and often exclusively) available online. The ACP has already become the most effective tool ever when it comes to closing the digital divide, one of our top priorities at Common Sense Media. Unfortunately, as successful as the ACP is, the program may soon come to an end.
As of November 1, 2023, the ACP had roughly $4.7 billion in remaining funds (official sources may show a different number because the underlying data is delayed). If the current rate of program uptake continues, April 2024 will be the last full month of funding for the ACP. Ending or limiting the ACP would be a terrible loss for vulnerable households that are just now getting to see the benefits of fast internet at home, which so many of us take for granted.
To avoid this problem, the White House recently asked Congress for an additional $6 billion for the ACP. This funding would:
- Extend the ACP, allowing the Federal Communications Commission (FCC) to continue meeting its commitments to enrollees and providers
- Give Congress and the FCC time to find a permanent source of funding for affordable connectivity in lower-income households.
The White House's request is vital, but it also raises a key question: How long would the $6 billion for ACP last?
To arrive at an estimate, we have to make assumptions about the two main variables that will determine the ACP's end date: the rate of new enrollment, and average cost per enrollee. If both variables continue moving at their 2023 pace, $6 billion will keep the ACP running through November 2024. If the pace of these variables decreases, then $6 billion could last through December. If the pace increases, then $6 billion may only last through October.
Given this range of outcomes, it's critical to understand how these two variables may change the ACP's future timeline.
Variable 1: The rate of new enrollment
The "rate of new enrollment" represents the net change in total enrollment from one month to the next. In the past, this number has moved dramatically and unpredictably. In August 2023, net new enrollment was 818,547, making it one of the highest months on record. But by October, that number had fallen to 375,356, making it the lowest month on record. Such swings, whether month to month or over seasons, are not uncommon for the ACP, and they can occur in either direction.
At some point, a slowdown in enrollment will be inevitable. The remaining pool of unenrolled households will get smaller and harder to reach, and ISPs may be less willing to promote the program if they are uncertain about the ACP's future. But there are also reasons to think enrollment could remain strong, at least for the foreseeable future: There are still more than 30 million households left to enroll; the FCC is issuing grants from IIJA-appropriated funds to support ACP advertising and enrollment campaigns; and upcoming federally funded networks (which require ACP participation) will make the ACP available to more people.
Variable 2: The average cost per enrollee
"Cost per enrollee" represents the average ACP outlays for each participating household. It is calculated by taking total expenditures for a month and dividing them by the total number of enrollees. Over the life of the ACP, this value has ranged from $26.75 to $30.46. Multiplied across millions of enrollees, small differences in this number can have a meaningful impact on the ACP's expected timeline.
Two main factors cause this number to fluctuate: inconsistencies in the rate at which enrollees use their device benefits ($100 per device per household), and inconsistencies in the rate at which ISPs seek reimbursement for providing service. Both of these rates have steadily increased over time. In May 2022, the device benefit was used 225,986 times, but a year later it was used 680,810 times, despite comparable levels of new enrollment. Similarly, in early 2022, ISPs only requested reimbursement for 85% of enrollees. More recently, that number has climbed to 94%.
What would it take for the ACP to last through 2024?
For $6 billion to sustain the ACP through December 2024, one of two things would have to occur: Either new enrollment would have to decline by over 30%, or the cost per enrollee would have to decline to about $29. (Or some combination of the two.)
Our recommendation to Congress
While $6 billion might be enough to last through the year, data indicates that it could also fall short, with a devastating impact on participating households. Therefore, we suggest Congress appropriate $7 billion in additional ACP funds. Based on our analysis, this amount would allow the ACP to continue growing at an average rate while still giving confidence to enrollees and ISPs that the program will be available for the entirety of 2024. Moreover, $7 billion is in line with what the FCC has requested, and it would give the agency more time to develop a permanent funding source for affordable high-speed internet.
If the ACP ends, even for a short period of time, millions of households that trust the program will not only lose critical internet service, they will also get hit with an unexpected bill hike that they would not be able to afford. Asking them to sign up again in the future (or to trust other government benefit programs) will become much more difficult.
When Congress passed the IIJA, it agreed with us and many other experts that high-speed internet is as essential to daily modern life as running water and electricity. The ACP was the lynchpin Congress created to ensure that everyone can have affordable high-speed internet. By providing adequate short-term funding to the ACP now, Congress can keep tens of millions of children and families connected while simultaneously providing the time needed to secure a sustainable funding mechanism.
If you are interested in understanding or discussing our analysis, or in conducting similar analyses yourself, please reach out to [email protected].
The data source for our analysis is the USAC ACP Enrollment and Claims Tracker. USAC provides two types of data: total enrollment and claimed enrollment. Both are necessary for this analysis, but claims data is reported on a lag, so any conclusions drawn using claims data (e.g., USAC's Remaining Appropriations Available for Disbursement) must be adjusted.
Roughly one in seven Americans have come to rely on the Affordable Connectivity Program (ACP) since it was created almost exactly two years ago by the 2021 bipartisan infrastructure law (IIJA). Among them are millions of children and families for whom the ACP means stronger digital skills, improved grades, higher annual incomes, and better access to the essential services and innovative tools that are increasingly (and often exclusively) available online. The ACP has already become the most effective tool ever when it comes to closing the digital divide, one of our top priorities at Common Sense Media. Unfortunately, as successful as the ACP is, the program may soon come to an end.
As of November 1, 2023, the ACP had roughly $4.7 billion in remaining funds (official sources may show a different number because the underlying data is delayed). If the current rate of program uptake continues, April 2024 will be the last full month of funding for the ACP. Ending or limiting the ACP would be a terrible loss for vulnerable households that are just now getting to see the benefits of fast internet at home, which so many of us take for granted.
To avoid this problem, the White House recently asked Congress for an additional $6 billion for the ACP. This funding would:
- Extend the ACP, allowing the Federal Communications Commission (FCC) to continue meeting its commitments to enrollees and providers
- Give Congress and the FCC time to find a permanent source of funding for affordable connectivity in lower-income households.
The White House's request is vital, but it also raises a key question: How long would the $6 billion for ACP last?
To arrive at an estimate, we have to make assumptions about the two main variables that will determine the ACP's end date: the rate of new enrollment, and average cost per enrollee. If both variables continue moving at their 2023 pace, $6 billion will keep the ACP running through November 2024. If the pace of these variables decreases, then $6 billion could last through December. If the pace increases, then $6 billion may only last through October.
Given this range of outcomes, it's critical to understand how these two variables may change the ACP's future timeline.
Variable 1: The rate of new enrollment
The "rate of new enrollment" represents the net change in total enrollment from one month to the next. In the past, this number has moved dramatically and unpredictably. In August 2023, net new enrollment was 818,547, making it one of the highest months on record. But by October, that number had fallen to 375,356, making it the lowest month on record. Such swings, whether month to month or over seasons, are not uncommon for the ACP, and they can occur in either direction.
At some point, a slowdown in enrollment will be inevitable. The remaining pool of unenrolled households will get smaller and harder to reach, and ISPs may be less willing to promote the program if they are uncertain about the ACP's future. But there are also reasons to think enrollment could remain strong, at least for the foreseeable future: There are still more than 30 million households left to enroll; the FCC is issuing grants from IIJA-appropriated funds to support ACP advertising and enrollment campaigns; and upcoming federally funded networks (which require ACP participation) will make the ACP available to more people.
Variable 2: The average cost per enrollee
"Cost per enrollee" represents the average ACP outlays for each participating household. It is calculated by taking total expenditures for a month and dividing them by the total number of enrollees. Over the life of the ACP, this value has ranged from $26.75 to $30.46. Multiplied across millions of enrollees, small differences in this number can have a meaningful impact on the ACP's expected timeline.
Two main factors cause this number to fluctuate: inconsistencies in the rate at which enrollees use their device benefits ($100 per device per household), and inconsistencies in the rate at which ISPs seek reimbursement for providing service. Both of these rates have steadily increased over time. In May 2022, the device benefit was used 225,986 times, but a year later it was used 680,810 times, despite comparable levels of new enrollment. Similarly, in early 2022, ISPs only requested reimbursement for 85% of enrollees. More recently, that number has climbed to 94%.
What would it take for the ACP to last through 2024?
For $6 billion to sustain the ACP through December 2024, one of two things would have to occur: Either new enrollment would have to decline by over 30%, or the cost per enrollee would have to decline to about $29. (Or some combination of the two.)
Our recommendation to Congress
While $6 billion might be enough to last through the year, data indicates that it could also fall short, with a devastating impact on participating households. Therefore, we suggest Congress appropriate $7 billion in additional ACP funds. Based on our analysis, this amount would allow the ACP to continue growing at an average rate while still giving confidence to enrollees and ISPs that the program will be available for the entirety of 2024. Moreover, $7 billion is in line with what the FCC has requested, and it would give the agency more time to develop a permanent funding source for affordable high-speed internet.
If the ACP ends, even for a short period of time, millions of households that trust the program will not only lose critical internet service, they will also get hit with an unexpected bill hike that they would not be able to afford. Asking them to sign up again in the future (or to trust other government benefit programs) will become much more difficult.
When Congress passed the IIJA, it agreed with us and many other experts that high-speed internet is as essential to daily modern life as running water and electricity. The ACP was the lynchpin Congress created to ensure that everyone can have affordable high-speed internet. By providing adequate short-term funding to the ACP now, Congress can keep tens of millions of children and families connected while simultaneously providing the time needed to secure a sustainable funding mechanism.
If you are interested in understanding or discussing our analysis, or in conducting similar analyses yourself, please reach out to [email protected].
The data source for our analysis is the USAC ACP Enrollment and Claims Tracker. USAC provides two types of data: total enrollment and claimed enrollment. Both are necessary for this analysis, but claims data is reported on a lag, so any conclusions drawn using claims data (e.g., USAC's Remaining Appropriations Available for Disbursement) must be adjusted.
