Internet service providers including Charter, Verizon and Comcast are shifting customers away from the Affordable Connectivity Program, an expired federal internet subsidy that helped low-income households pay for broadband, according to earnings calls and people familiar with the matter.<\/p>\n
The $14.2 billion\u00a0program, which went into effect in December 2021, served roughly\u00a023 million\u00a0households, two-thirds of which had either inconsistent or zero internet access prior to enrolling, according to a\u00a0December survey\u00a0from the Federal Communications Commission. It provided a discount of up to $30 per month for some qualifying households and up to $75 a month for households on eligible tribal land.<\/p>\n
But it officially\u00a0ended\u00a0in June after Congress decided not to renew its funding.<\/p>\n
Since the ACP lapsed, some Democratic and Republican\u00a0lawmakers\u00a0have been working to bring back the program.<\/p>\n
But broadband companies have been focused on transitioning their customers to other affordable options to help them make up the expired discount, according to the companies\u2019 earnings calls.<\/p>\n
In the wake of the ACP\u2019s expiration, broadband companies have reported losing some customers. But overall, they have weathered the storm better than expected, according to analysts\u2019 notes and to executives\u2019 comments in recent earnings reports.<\/em><\/p>\n \u201cGenerally speaking, the impact on the companies so far is less than feared,\u201d said analyst Craig Moffett of MoffettNathanson. \u201cBut that doesn\u2019t take away from the families for whom this was important, and could now lose access to broadband.\u201d\u00a0<\/p>\n And though broadband companies supported ACP\u2019s renewal before it expired, since then they have done little to revive the program, given uncertainty over where the funding would come from, according to the people familiar with the matter, who were granted anonymity due to the private nature of these discussions.<\/p>\n Part of that uncertainty comes from the unknown future of party control in Congress given the November election.<\/p>\n \u201cI know the difference between when industry really wants something to happen, and when they say, \u2018Well, we support it, sure,\u2019 but they don\u2019t put money into advertising, they don\u2019t put money into lobbyists, they don\u2019t put money into doing the kind of studies that support the case,\u201d New Street Research analyst Blair Levin told CNBC.<\/p>\n Charter and Comcast representatives\u00a0declined to comment. Verizon did not respond to requests for comment.<\/p>\n Comcast\u00a0owns NBCUniversal, the\u00a0parent company\u00a0of\u00a0CNBC and NBC News.<\/p>\n Both Democrats and Republicans in the Senate and the House have brought forward bills that would spend between $6 billion and $7 billion to relaunch the ACP, at least temporarily.<\/p>\n \u201cMy hope is that we can get something done rather quickly, especially as kids are getting ready to go back to school,\u201d said Rep. Mike Carey, R-Ohio, in August. He jointly proposed the\u00a0House bill\u00a0with Rep. Nikki Budzinski, D-Ill.<\/p>\n The ACP was originally funded as the\u00a0Emergency Broadband Benefit\u00a0program, a pandemic-era internet subsidy that quickly gained support when reliable access became a necessity in a world dominated by online school and work.\u00a0<\/p>\n Internet usage soared in 2020 and 2021. Even now, usage levels are well above pre-pandemic levels, according to broadband data provider\u00a0Open Vault.<\/p>\n But as Covid grows more distant in public memory, convincing lawmakers to spend billions to extend these subsidies has become an uphill battle.<\/p>\n One key reason is\u00a0election year\u00a0timing.<\/p>\n For example, GOP Sen. JD Vance of Ohio was one of the\u00a0lead supporters\u00a0of the ACP. But after he was tapped to be Republican presidential nominee\u00a0Donald Trump\u2019s running mate, Vance quieted his advocacy.<\/p>\n In Congress, both the Republican House majority and Democratic control of the Senate could flip in November. This means Democratic leaders may choose to put other priorities ahead of the ACP, while they still control the Senate.<\/p>\n \u201cThis is going to be a really close election, so maybe they want to use floor time for judicial nominations,\u201d Gigi Sohn, a consumer broadband advocate and lawyer whom President Joe Biden nominated to be an FCC commissioner, said in an interview with CNBC.<\/p>\n Still, Sohn believes bipartisan support for the ACP should make reauthorizing it a political slam dunk for Democrats.<\/p>\n \u201cThis is one of the things that absolutely perplexes me, because to me, this is the kind of thing you absolutely want to do in an election year.\u201d<\/p>\n As the Sept. 30 government funding deadline inches closer, congressional leaders are heads-down on the scramble to pass a stopgap funding bill to avert a shutdown, pushing the ACP further down the priority list. After September, Congress is expected to be out on recess until after the election.<\/p>\n As some Capitol Hill lawmakers cling to the narrowing possibility of an ACP comeback, the private sector is reining in its hopes.<\/p>\n \u2033[ISPs] are making their plans, they are telling Wall Street that this thing is dead and they\u2019re just not putting effort into it,\u201d Sohn said.<\/p>\n While broadband providers were generally supportive of the ACP, many in the industry believed the subsidy benefitted too wide a swath of U.S. households. In some instances customers used the benefit toward other products, such as mobile or pay TV.<\/p>\n For example, one in four New York households used the ACP, per a\u00a0White House fact sheet\u00a0released in February.<\/p>\n Starting from scratch with a new subsidy program, while also building digital literacy among low income consumers, could be a better alternative after the election, some people close to the companies say.<\/p>\n And disillusioned with the temporary model, industry players are more likely to lobby for permanent solutions like strengthening the\u00a0Universal Service Fund, according to Sohn. But that comes with its own set of\u00a0political obstacles, especially after a federal\u00a0court found the USF to be unconstitutional.<\/p>\n With or without private sector resources, lawmakers assure they will not quit the push to bring the ACP back.<\/p>\n \u201cWhat we\u2019re focused on is the near-term problem,\u201d Carey said. \u201cThen we can build consensus to look at something for a longer-term plan.\u201d<\/p>\n But dwindling support from industry partners casts doubt on the ACP\u2019s future because companies are ultimately the ones who deliver the internet service and can help educate customers about the program.<\/p>\n \u201cIndustry is one voice in this because they are the structure providing this service,\u201d Budzinski told CNBC. \u201cIt\u2019s important that they be at the table.\u201d<\/p>\n The ACP\u2019s expiration has also cast a shadow over some businesses \u2014 namely the companies that had invested heavily in getting new and existing customers enrolled in the program.<\/p>\n Charter Communications CEO Chris Winfrey said in July that the ACP\u2019s expiration impacted both losses and low income broadband connections after the company had \u201cput a lot of effort into the ACP program.\u201d<\/p>\n Charter was one of the ACP\u2019s biggest industry proponents: It received roughly $910 million from the program from 2022 to February 2023, according to\u00a0FCC data.\u00a0<\/strong>Comcast and Verizon each received over\u00a0$200 million\u00a0from the program.\u00a0<\/p>\n When Congress decided not to renew ACP funding, these companies were forced to absorb the shock at a time when cable companies have already seen broadband customer growth\u00a0stagnate\u00a0due to heightened competition and a slowdown in home sales.<\/p>\n Charter and Comcast representatives\u00a0declined to comment. Verizon did not immediately respond to requests for comment.<\/p>\n During the second quarter, Charter\u00a0reported\u00a0a loss of 149,000 internet customers, while Comcast\u00a0reported\u00a0a decline of 120,000 broadband customers.\u00a0While some of this could be attributed to the ACP, the companies expect the biggest impacts to be felt in the third quarter.<\/p>\n Since the ACP ended, companies have tried to help customers transition to low income or different internet plans, in some cases reverting back to plans they had before the subsidy.<\/p>\n Comcast\u00a0said\u00a0in July that it has been helping customers migrate to other broadband plans.<\/p>\n Charter has tried to retain its low-income consumer base by rolling out new savings deals like offering ACP customers a free unlimited mobile line for one year. Others like Verizon decided to just pencil in the financial hit of the customer loss, reporting a loss of 410,000 prepaid wireless subscribers in its\u00a0second quarter earnings.\u00a0<\/p>\n The initial bottom-line pain of the ACP\u2019s lapse so far appears to be milder than what some company leaders and analysts had initially expected. But the process is far from over.<\/p>\n \u201cWe\u2019ve only seen the first chapter so far, in that we\u2019ve only seen the impact on gross additions. But we haven\u2019t yet seen the impact on bad debt and unpaid disconnects,\u201d Moffett of MoffettNathanson told CNBC. \u201cThat will come in the third quarter.\u201d\u00a0<\/p>\n CORRECTION<\/strong> (Sept. 11, 5:56 p.m. ET): <\/strong>A previous version of this article misstated Gigi Sohn\u2019s appointment to the FCC. She was nominated but withdrew before\u00a0becoming a commissioner.<\/p>\n<\/p>\n Internet service providers including Charter, Verizon and Comcast are shifting customers away from the Affordable Connectivity Program, an expired federal internet subsidy that helped low-income households pay for broadband, according to earnings calls and people familiar with the matter. The $14.2 billion\u00a0program, which went into effect in December 2021, served roughly\u00a023 million\u00a0households, two-thirds of which […]<\/p>\n","protected":false},"author":0,"featured_media":9406,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-9405","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/9405","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=9405"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/9405\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/9406"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=9405"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=9405"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=9405"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}