Increasing the Affordable Connectivity Program Subsidy

The Federal Communications Commission recently implemented an increase in the monthly Affordable Connectivity Program subsidy in qualifying high-cost areas from $30 to $75. The reason for the change is easy to understand – this was codified in the Infrastructure Investment and Jobs Act (IIJA) legislation. The legislation required higher ACP payments be higher in areas of the country designated as high-cost. The National Telecommunications and Information Administration (NTIA) has been working with State Broadband Offices to designate the high-cost areas in each state – because such areas are also eligible for special treatment and consideration in the upcoming Broadband Equity, Access, and Deployment (BEAD) grants. Now that high-cost areas are being defined, the FCC can implement the legislatively mandated ACP change. What puzzles me is why this was in the legislation. The concept seems to be that areas with higher costs need additional support. I agree with the concept that areas with particularly high costs might need some kind of broadband subsidy. But the extra ACP subsidy doesn’t help internet service providers (ISP). ISPs use the ACP program to discount customer rates and then get reimbursed for the customer discount from the ACP funding provided by Congress. Whether the discount is $30 or $75, this is a net wash for the ISP. None of this support goes to the ISP and all of the benefit flows directly to the customer. It appears to me that the folks who wrote the legislation thought the ACP benefits ISPs and not low-income households. I have a hard time rationalizing why this extra discount is only given in high-cost areas. Isn’t a low-income household located elsewhere just as worthy of extra help? This extra subsidy would a little make more sense if ACP was a permanently funded program. But it seems like a rural ISP can be badly harmed if it relies on ACP and suddenly loses a lot of customers if the ACP fund runs dry.