ACP: The true cost of winding down 

In separate conversations with the leaders of two internet service provider (ISP)–one, large, publicly traded and the other a small, regional coop–both mentioned, without prompting, that the Federal Communication Commission (FCC)-directed wind down of the Affordable Connectivity Program (ACP) is at the top of their things-that-keep-me-up-at-night list.

The FCC just issued wind down instructions and set February 7th as the last date for new applications and enrollments. The FCC forecasts that ACP funding will run dry by the end of April 2024.  

These leaders were grappling with how to tell customers and with the impact that it would have on their customers. Despite the stereotypical caricature of CEOs, these gentlemen were sincerely concerned about how the sudden end of the $30 a month subsidy would affect families. They recognized that some customers would terminate service. Because of mistrust, frustration or resignation many of these customers will never return, even if ACP is later funded. 

These conversations got me thinking about the true cost and fall out from the disruption of or termination of ACP. First and most importantly families will have to make the difficult decision to keep or end service. An inadequate alternative may be that they have to settle for cheaper, subpar service. Remote work, homework and telehealth options will be significantly limited . . . think pre-pandemic. The impacts are cataloged (NDIA) and not all costs are quantifiable. Nor do they need to to demonstrate that these households will be cut off from full participation in our society, democracy and economy.  

There may be other ways to quantify the cost of losing ACP. Sometimes pulling at heartstrings isn’t enough to motivate law makers. Articulating the cost to businesses, the government and the economy may be more convincing. 

Notifying customers, implementing changes in the billing process, and terminating services incur expenses in terms of money, staffing, and time. Programmatic changes come with inherent costs for any organization. However, these costs can be particularly burdensome for smaller providers with limited resources and staff. Additionally, there is the added impact on their brand reputation. ISPs may be perceived negatively by customers for “increasing their internet bill”. No matter who owns the program, ISPs are perceived as providing the benefit that is now being taken away. 

Then there is the cost to the government. I would imagine the FCC and USAC could calculate the amount of resources and staff time it will take to halt the program. These costs, typically borne by the taxpayer or rate payer, are often overlooked. By way of comparison consider the cost to the government if it has to shutdown due to a lapse in funding. 

According to the Peter G. Peterson Foundation?: 

A government shutdown pauses programs and government operations, only for them to eventually start up again, and that has costs. For example, the Office of Management and Budget (OMB) estimated that the lost productivity of government workers during the shutdown in 2013, which lasted 16 days, cost the government $2 billion

More recently, a report issued in September 2019 by the Senate Permanent Subcommittee on Investigations found that the “last three government shutdowns cost taxpayers nearly $4 billion — at least $3.7 billion in back pay to furloughed federal workers, and at least $338 million in other costs associated with the shutdowns, including extra administrative work, lost revenue, and late fees on interest payments. 

Finally, policy makers may want to assess how this impressive, nation-wide program will affect the economy. Through November 2023, ACP (including its predecessor EBB) has paid out more than $17 billion to approximately 23 million households. 

Brookings reported: 

As demonstrated by a 2021 study on the employment effects of subsidized broadband for low-income Americans, such programs increase employment rates and earnings of eligible individuals due to greater labor force participation and decreased probability of unemployment, with a benefit of $2,200 annually for low-income households. Ending the program would also limit the enormous potential for savings in critical services that broadband can deliver. For example, in health care, data from Cigna Healthcare shows that patients save an average of $93 when using non-urgent virtual care instead of an in-person visit. Similarly, patients save an average of $120 when the virtual visit involves a specialist, and $141 with a virtual urgent-care clinic over an in-person one. 

Other costs or savings may include lost worker productivity, lost revenue for ISPs, and a reduction in e-commerce. These could all be measured if necessary, but we’d only be wasting time to validate the obvious. 

In conclusion, while acknowledging the valid discussions surrounding long-term sustainability, funding sources, and the need for Lifeline/USF reform, it becomes evident that prioritizing these conversations after securing funding and ensuring stability for the program will benefit all those involved: the eligible households, governments, ISPs and the economy. Embracing the inertia of a successful and widely supported program not only promotes efficiency but also avoids the potentially costly and harmful consequences of halting and restarting it in the future. The logic of reauthorizing and funding the program now becomes apparent from both a common sense and economic standpoint. Therefore, the call to action is clear – securing the program’s continuity and stability now is a prudent and forward-thinking choice.

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