The Future of Broadband Affordability (U.S. Senate Committee on Commerce, Science, and Transportation, Subcommittee on Communications, Media, and Broadband)

Hearing	The Future of Broadband Affordability
Committee	U.S. Senate Committee on Commerce, Science, and Transportation, Subcommittee on Communications, Media, and Broadband
Date	May 2, 2024

 

Hearing Takeaways:

• The U.S. Federal Communications Commission’s (FCC) Affordable Connectivity Program (ACP): The hearing mainly focused on the impending expiration of the FCC’s ACP. This Programs provides a monthly subsidy of $30 to low-income households for internet service, as well as a one-time $100 subsidy to purchase a tablet, laptop computer, or desktop computer. Subcommittee Democrats, some Subcommittee Republicans, Ms. Nevarez, Ms. de Wit, and Mr. Levin raised concerns that the expiration of the ACP would threaten broadband internet access for 23 million households and called on Congress to promptly extend the Program. They argued that the ACP is key for addressing the U.S.’s digital disparities and making it financially feasible for broadband service providers to reach difficult-to-serve populations (such as rural populations). Mr. Levin added that there would be significant costs associated with ending the ACP and then subsequently restarting the Program. Of note, Sen. Peter Welch (D-VT) and Sen. J.D. Vance (R-OH) have proposed the Affordable Connectivity Program Extension Act to temporarily extend the ACP. Some Subcommittee Republicans and Dr. Winfree expressed concerns with the ACP’s current structure and that the Program’s subsidies can have inflationary impacts on broadband service prices for all Americans. Dr. Winfree also raised doubts over the FCC’s claims that the ACP’s expiration would cause many households to lose internet service and stated that the FCC’s assertions are based on a substandard methodology.
  • Impact of the ACP on the Economy: Subcommittee Democrats and Mr. Levin argued that federal investments in the ACP and internet access yield positive economic returns for the broader economy. They stated that the internet serves as general purpose technology that enables innovations and efficiencies in many areas (including health care, education, jobs, and cheaper goods). They referenced a Benton Institute for Broadband & Society study finding that every $1 that is put into the ACP returns nearly $2 in impact for the recipient of the benefit and that every $1 spent on the ACP yields a $3.89 increase in gross domestic product (GDP). Subcommittee Ranking Member John Thune (R-SD) and Dr. Winfree raised concerns that the aforementioned study’s claims rely upon input-output analysis, which assumes that behaviors do not change in response to a new policy. Dr. Winfree added that the study does not account for impacts of federal spending on inflation and that policymakers must account for these impacts when deciding which federal programs to pursue.
  • Impact of the ACP on Rural and Tribal Areas: ACP supporters remarked that the ACP is key to expanding internet access to rural and tribal areas. They noted how broadband internet service and deployment can be more expensive in these areas given the more isolated nature of these areas and stated that the ACP makes it economically feasible for internet service providers (ISPs) to serve these areas. Subcommittee Chairman Ben Ray Luján (D-NM) also stated that broadband access is key for rural areas in terms of supporting the use of precision agriculture technologies. Ms. Nevarez added that rural and tribal broadband networks are key to supporting jobs for fiber optic technicians. Dr. Winfree remarked however that the ACP is not a rural area-focused program and noted how ACP recipients disproportionately live in urban areas. Sen. Shelley Moore Capito (R-WV) and Dr. Winfree also stated that policymakers should consider adopting a rural adjustment for the ACP subsidy to address rural broadband internet access concerns. Dr. Winfree also argued policymakers should focus on increasing the supply of rural broadband infrastructure (rather than extending the ACP) if policymakers they seek to make rural broadband internet service more affordable. 
  • Impact of the ACP on State Broadband Infrastructure Investments: ACP supporters also warned that the expiration of ACP would impact state broadband infrastructure investments under the U.S. National Telecommunications and Information Administration’s (NTIA) Broadband Equity, Access, and Deployment (BEAD) Program and the U.S. Department of the Treasury’s Capital Projects Fund (CPF). They elaborated that state broadband infrastructure deployment strategies for these programs assume that the continuation of ACP subsidies will make the newly deployed infrastructure financially sustainable. They expressed concerns that the end of the ACP could therefore threaten these planned investments.
  • Impact of the ACP on Military Service Members and Veterans: Subcommittee Democrats, Ms. Nevarez, Ms. de Wit, and Mr. Levin highlighted how nearly half of the families that are dependent on the ACP for broadband internet access are military families. They expressed concerns that the expiration of the ACP could harm these military families and veterans who depend on the ACP to access various services (such as health care) through the U.S. Department of Veterans’ Affairs (VA) and non-profit organizations.
  • Impact of the ACP on Senior Citizens: Subcommittee Democrats, Ms. Nevarez, Ms. de Wit, and Mr. Levin also highlighted how 10 million ACP recipients are over the age of 50. They warned that the ACP’s expiration could impede the ability of these senior citizens to coordinate and track medical services, overcome isolation, and deal with the fact that they may no longer be able to drive.
  • Impact of the ACP on Educational Access: Subcommittee Democrats, Ms. Nevarez, Ms. de Wit, and Mr. Levin raised concerns over how a lack of internet access during the COVID-19 pandemic had impeded access to education for many Americans. They argued that the ACP is a key program for expanding educational opportunities for students and preventing the continuation of educational access and outcome disparities. Ms. Nevarez further highlighted how students without home internet access must often travel to community anchor institutions to connect to education services and access WiFi to complete assignments.
  • Impact of the ACP on Health Care Access and Outcomes: Subcommittee Democrats, Ms. de Wit, and Mr. Levin discussed how internet-enabled telemedicine can improve health care access and outcomes and stated that the ACP will be key to enabling many patients to access this care. Subcommittee Democrats and Mr. Levin added that the telemedicine benefits of the ACP would ultimately save the federal government money through supporting health care interventions that prevent the need for expensive emergency room (ER) visits.  
  • Impact of the ACP on Job Training and Job Placement: Ms. de Wit and Mr. Levin discussed how the ACP provides internet access that supports many Americans in finding jobs and receiving job training. Mr. Levin added that this ability to obtain jobs faster reduces the need of these Americans to collect unemployment benefits (which results in savings to the federal government).
  • Impact of the ACP on Broadband Affordability: Subcommittee Democrats, Ms. Nevarez, Ms. de Wit, and Mr. Levin warned that Congress’s failure to extend funding for the ACP would cause many Americans to experience internet rate hikes. Subcommittee Chairman Luján also referenced research from the R Street Institute (which he indicated is a center-right think tank) finding that the ACP is successfully reducing internet plan prices for eligible households and that ISPs are passing on cost savings to their customers. Full Committee Ranking Member Ted Cruz (R-TX) and Dr. Winfree stated however that the ACP is having an inflationary impact on broadband prices because the Program’s subsidy acts as a price floor for internet service options. They elaborated that ISPs are now charging higher prices for their lowest tier internet service options with minimal improvements in quality (which leads ISPs to capture a significant producer surplus). Dr. Winfree testified that the average cost of broadband internet service is about $5.48 higher per month due to the ACP according to his research. Dr. Winfree added that the federal government’s spending on the ACP is also contributing to general inflation, which can further increase internet prices.
  • Impact of the ACP on Broadband Plan Quality: Dr. Winfree also remarked that the ACP’s subsidization of demand makes consumers less sensitive to prices and quality. He commented that this subsidization advantages large incumbent ISPs that were more likely to have had existing market share when the ACP was created. He stated that the exhaustion of the ACP’s funding would encourage companies to compete for consumers shopping for better internet service plans.
  • Targeting of ACP Subsidies: Several Subcommittee Republicans and Dr. Winfree criticized the FCC for providing overly broad ACP eligibility criteria and stated that this broad eligibility criteria results in inefficient targeting of the subsidy. They noted how most ACP recipients had internet service prior to the ACP’s establishment. Dr. Winfree suggested that the U.S. could require that ACP beneficiaries provide Social Security numbers to ensure the proper distribution of the Program’s benefits.
  • Calls for Broadband Companies to Temporarily Cover the Cost of ACP Subsidies: Sen. Ed Markey (D-MA) and Mr. Levin stated that ACP corporate beneficiaries should voluntarily cover the shortfall in the May 2024 ACP subsidiary as Congress works on a long-term extension of the ACP. They stated that this temporary coverage would constitute a small price to pay for these corporations given how ACP subsidies ultimately flow to the corporations. Subcommittee Ranking Member Thune criticized this request. He stated that this request is akin to rate regulation, which he asserted is a long-term goal of Democrats.
• The FCC’s Universal Service Fund (USF): Subcommittee Members and the hearing’s witnesses also expressed interest in making reforms to the FCC’s USF and better integrating the ACP into the USF. The USF is a federal program paid for by contributions from telecommunications providers (who assess fees on end-users) and the Fund seeks to expand access to telecommunications services. The USF has four programs: the Lifeline Program (which focuses on low-income consumers), the Connect America Fund (which focuses on rural consumers), the Schools and Libraries (E-Rate) Program, and the Rural Health Care Program. These programs together spend about $9 billion annually.
  • The Reforming Broadband Connectivity Act of 2023: Sen. John Hickenlooper (D-CO) mentioned how he had introduced the bipartisan Reforming Broadband Connectivity Act of 2023 with several Subcommittee Members. He explained that this legislation would expand the USF’s contribution base (which would help to ensure more sustainable funding for the USF). Mr. Levin stated that the FCC could expand the USF’s contribution base to broadband providers under current authorities. He stated however that the FCC could not expand the USF’s contribution base to large technology companies under current authorities.
  • The Rural Broadband Protection Act: Sen. Shelley Moore Capito (R-WV) expressed disappointment with the Committee for failing to markup the Rural Broadband Protection Act of 2023, which would require a more thorough vetting and verification process for ISPs seeking to participate in the USF’s Connect America Fund.
• Other Internet-Related Topics and Policy Issues: Subcommittee Members and the hearing’s witnesses used the hearing to discuss several other internet-related topics and policy issues meant to ensure internet access and proper federal spending.
  • The NTIA’s BEAD Program: Several Subcommittee Republicans and Dr. Winfree criticized the Biden administration’s handling of the BEAD Program and argued that the Program’s onerous conditions, rules, and regulations deter state and broadband provider participation. Dr. Winfree also mentioned how 20 states have indicated that they want to use their BEAD Program funds for non-broadband infrastructure deployment activities. He commented that this suggests that the BEAD Program’s initial allocations were incorrect.
  • Opening Up of the U.S. Department of the Treasury’s State and Local Fiscal Recovery Funds (SLFRF) for Broadband Deployment: Dr. Winfree also recommended that federal policymakers reform the U.S. Department of the Treasury’s SLFRF. He noted how Congress had allocated $350 billion for the SLFRF and indicated that $70 billion in SLFRF money remains unobligated. He suggested that policymakers could better encourage the use of SLFRF funding for broadband infrastructure projects.
  • The FCC’s Net Neutrality Rules: Several Subcommittee Republicans also criticized the FCC’s recent adoption of net neutrality rules. They stated that these newly adopted rules would cause broadband prices to increase and broadband infrastructure investments to decline, which would undermine the U.S.’s internet innovation. However, Sen. Ed Markey (D-MA) expressed support for the FCC’s recent vote to reinstate net neutrality rules as critical for protecting a free and open internet. He also stated that these net neutrality rules would not impact broadband investments.
  • The FCC’s Digital Discrimination Rules: Full Committee Ranking Member Ted Cruz (R-TX) also criticized the FCC’s 2023 rules to prevent and eliminate digital discrimination and commented that these rules open broadband providers to expansive, indeterminate, and crippling liability under a disparate impact standard.
  • Broadband Deregulation Policies: Subcommittee Ranking Member John Thune (R-SD) and Dr. Winfree argued that the FCC should focus on reducing regulatory burdens impacting the provision of broadband service and commented that deregulation can support broadband competition based on price and quality. Dr. Winfree recounted how Congress had nullified a 2016 FCC consumer data sharing rule in 2017 and stated that this nullification had reduced wireless internet prices by more than 10 percent and wired internet prices by as much as 2 percent.
  • FCC Oversight: Subcommittee Ranking Member Thune also expressed hope that the FCC appear before Congress to discuss their broadband affordability programs and other important issues. He criticized the Committee for not holding an oversight hearing of the FCC in over 1,400 days.
  • Spectrum Auctions: Full Committee Ranking Member Cruz and Dr. Winfree expressed support for the use of spectrum auctions and stated that these auctions would increase competition within the U.S. internet market. Full Committee Ranking Member Cruz mentioned how he had introduced the Spectrum Pipeline Act of 2024 to support these auctions and criticized the Biden administration for and not expanding access to mid-band spectrum.

Hearing Witnesses:

1. Ms. Jennifer Case Nevarez, Director and Lead Educator, Community Learning Network; Member of the Broadband and Digital Equity Support Team for New Mexico and the Office of Broadband Access and Expansion
2. Ms. Kathryn de Wit, Project Director, Broadband Access Initiative, The Pew Charitable Trusts
3. Mr. Blair Levin, Policy Advisor, New Street Research; Nonresident Senior Fellow, Brookings Metro
4. Dr. Paul Winfree, President and CEO, Economic Policy Innovation Center

Member Opening Statements:

Subcommittee Chairman Ben Ray Luján (D-NM):

• He discussed how many Americans rely upon the FCC’s ACP to connect with health care providers, to attend work or school, and to access federal benefits.
  • He noted how the U.S. contains many areas where families have no options for high quality broadband internet service.
• He recounted how Congress had passed the bipartisan Infrastructure Investment and Jobs Act (IIJA), which had included the BEAD Program to support the construction of new broadband internet networks.
• He also discussed how Congress had created the ACP to help low-income families afford internet service through providing a $30 per month benefit to these families.
  • He indicated that there are currently over 23 million households participating in the ACP, which amounts to over 55 million people.
• He mentioned how the Benton Institute for Broadband & Society had recently published a study finding that every $1 that is put into the ACP returns nearly $2 in impact for the recipient of the benefit.
  • He commented that the ACP enables families to obtain better paying jobs through training and education and to access cheaper goods.
• He called on Congress to save the ACP and noted how the ACP’s funding had recently expired.
  • He indicated that households currently relying upon the ACP will only receive a partial benefit if Congress fails to act.
  • He further expressed frustration with Congress for failing to extend the ACP, despite having several months to do so.
• He mentioned how he is currently working with Congressional colleagues to extend the ACP.
  • He thanked Full Committee Chairman Maria Cantwell (D-WA) for introducing legislation that would restore the FCC’s spectrum auction authority and use proceeds from spectrum auctions to fund the ACP.
  • He also thanked Sen. Peter Welch (D-VT) and Sen. J.D. Vance (R-OH) for introducing legislation that would fund the ACP through the end of 2024 using Congressional appropriations.
• He expressed support for the two aforementioned legislative proposals to temporarily extend the ACP and commented that these proposals would provide Congress with more time to develop a longer-term funding solution for the ACP.
• He also mentioned how he leads the USF Working Group with Subcommittee Ranking Member John Thune (R-SD) and indicated that the Group is working on a long-term funding solution for the ACP.
  • He elaborated that the Working Group is seeking to develop a permanent funding mechanism for the ACP that can receive bipartisan and bicameral support.
• He warned that allowing the ACP to lapse would constitute a “significant waste” of federal investments and would harm many Americans.

Full Committee Ranking Member Ted Cruz (R-TX):

• He remarked that the U.S. is the standard bearer for high-speed internet connectivity and commented that U.S. internet providers had significantly outperformed European internet providers during the COVID-19 pandemic.
• He accused the Biden administration of seeking to assert U.S. government control over the internet.
  • He criticized the FCC’s recent party-line vote to adopt net neutrality rules, which he asserted would subject the broadband industry to an “oppressive” regulatory regime.
  • He also criticized the FCC’s 2023 rules to prevent and eliminate digital discrimination and commented that these rules open broadband providers to expansive, indeterminate, and crippling liability under a disparate impact standard.
• He remarked that the FCC’s policies will force companies to divert significant resources toward compliance with the Biden administration’s “woke” priorities.
  • He warned that these policies will cause broadband prices to increase, investment and innovation to decline, and Americans to suffer.
• He recounted how the Obama administration had previously imposed broadband regulations in 2015 under Title II of the Communications Act of 1934.
  • He stated that these regulations had caused broadband capital expenditures to fall by $500 million in 2015 and by another $2.7 billion in 2016.
• He remarked that the Biden administration has mismanaged Congress’s “massive” broadband investments.
  • He asserted that the NTIA under the Biden administration has prioritized “woke” social policies, union mandates, technology biases, and price controls at the expense of delivering high-speed internet service to unserved Americans.
• He criticized the Biden administration for withholding and delaying broadband funding from several states (including Virginia).
• He also remarked that the ACP is not working as Congress had intended and noted how the ACP had received a $14 billion budget.
  • He indicated that this $14 billion budget was anticipated to last several years.
• He accused the FCC of deliberately oversubscribing the ACP, which caused the Program to exhaust its funding ahead of schedule.
  • He noted how most of the 23 million households enrolled in the ACP already had high-speed internet service prior to the Program’s establishment.
• He further mentioned how there have been reports finding that the ACP has an inflationary impact on broadband internet service prices.
• He stated that broadband companies are treating the ACP’s $30 subsidy as a new price floor for their internet service options.
  • He elaborated that companies that previously offered broadband internet service for $15 or less per month now charge $30 per month for the same or marginally upgraded broadband service.
• He remarked that the inflationary impact of the ACP’s subsidy is self-perpetuating because these subsidies drive broadband costs higher (which in turn leads to calls for more subsidies).
  • He warned that this situation would ultimately result in a “government takeover of the internet.”
• He also mentioned how the FCC’s Lifeline Program already serves indigent people and commented that Congress should work to improve the Program if it is not functioning well.
• He called on the Biden administration to abandon “toxic” regulatory mandates, remove unnecessary barriers to investment, and ensure that federal broadband internet service subsidies are working as Congress had intended.

Subcommittee Ranking Member John Thune (R-SD):

• He first expressed interest in working through the USF Working Group with Subcommittee Chairman Ben Ray Luján (D-NM) to develop reforms to USF programs.
• He then discussed the importance of internet connectivity for running businesses, accessing health care, and completing homework and expressed support for the principle of universal service.
  • He stated that Congress should ensure that rural Americans have access to communications services that are comparable in quality and price to the communications services in urban areas.
• He noted how the FCC has a long history of addressing broadband affordability through its Lifeline Program.
  • He commented that a carefully designed and properly administered broadband affordability program is important for achieving universal service.
• He stated however that the Lifeline Program (which is part of the USF) has underdelivered on its promises and highlighted how the Program has a long-documented history of rampant waste, fraud, and abuse.
• He lamented that the FCC’s ACP appears to be plagued with similar inefficiencies as the Lifeline Program.
  • He noted how the ACP had been established during the COVID-19 pandemic and has subsequently been expanded to become a much broader and more expensive program.
• He remarked that the ACP does a poor job in terms of directing support to those that truly need it (which he defined as people that would not be able to obtain broadband internet service without a subsidy).
• He stated that the ACP has “overly broad” eligibility criteria that allows for over 40 percent of American households to receive a subsidy.
  • He indicated that the ACP would cost federal taxpayers $19 billion annually if all eligible households were enrolled in the Program.
• He largely attributed the inefficiencies of the Lifeline Program and the ACP to the FCC’s failure to set Program performance goals and to address whether either of these programs are an effective means of increasing broadband internet adoption among low-income consumers.
  • He noted how the FCC’s own survey indicates that 22 percent of the current ACP subscribers at best did not have an internet connection prior to the ACP’s establishment.
• He called it imperative that the FCC conduct appropriate analyses of current federal broadband affordability programs so that Congress can make informed decisions on the future of these programs.
  • He commented that Congress cannot solely rely upon claims that 23 million Americans will lose access to broadband service if the ACP does not receive new funding as a justification for the Program.
• He expressed his appreciation for the USF Working Group’s efforts to address the needs and shortfalls of USF Programs.
• He also remarked that policymakers must recognize that the federal government will not address digital disparities on its own.
• He stated that the U.S.’s “light touch” regulatory approach to broadband internet policy has resulted in U.S. telecommunications providers prioritizing network affordability, connectivity, and resilience.
  • He highlighted how U.S. broadband providers had been able to keep Americans connected to the internet during the COVID-19 pandemic and how broadband providers in other countries had not performed as well during this period.
• He applauded the private sector for working to ensure that low-income Americans remain connected to broadband service during the ACP’s wind down through turning to low-income programs offered prior to the ACP’s establishment.
• He mentioned how the Biden administration and some Members of Congress have called on companies to continue offering free broadband service, despite the ACP’s funding being exhausted.
  • He asserted that these calls are akin to rate regulation and asserted that Democrats have always desired this course of action.
• He remarked that the FCC is harming efforts to provide quality and affordable broadband internet service and criticized the FCC’s recent adoption of broadband rules under Title II of the Communications Act of 1934.
  • He commented that Title II of the Communications Act of 1934 had been designed for addressing telephone monopolies during the Great Depression.
• He stated that the FCC’s previous adoption of regulations under Title II of the Communications Act of 1934 had caused broadband investments to decline and predicted that the FCC’s newly adopted rules would result in future declines in broadband investments.
  • He further warned that these new rules would imperil the U.S.’s global leadership in internet innovation.
• He asserted that the FCC should instead focus on addressing other challenges, such as reducing regulatory burdens that drive up broadband internet costs.
• He further expressed hope that the FCC could appear before Congress to discuss their broadband affordability programs and other important issues.
  • He criticized the Committee for not holding an oversight hearing of the FCC in over 1,400 days.

Witness Opening Statements:

Ms. Jennifer Case Nevarez (Community Learning Network; Broadband and Digital Equity Support Team for the New Mexico Office of Broadband Access and Expansion):

• She called on Congress to extend the ACP before it lapses and stated that the internet is critical for connecting people.
  • She warned that the ACP’s lapse would force many rural Americans to go without home internet connectivity and indicated that these rural Americans will be forced to travel far distances to public libraries to access the internet.
• She noted how more than 23 million U.S. households are at risk of losing their internet connectivity with the impending lapse of the ACP and indicated that nearly half of these households are military families.
• She also highlighted how 10 million ACP recipients are over the age of 50.
  • She noted how seniors report that they rely heavily upon the internet to coordinate and track medical services, overcome isolation, and deal with the fact that they may no longer be able to drive.
• She further mentioned how 320,000 ACP recipients are households on tribal lands where high-speed internet is generally more expensive.
• She highlighted how more than 184,000 households in her state of New Mexico face losing internet access if the ACP were to lapse.
  • She indicated that 28 percent of all households in New Mexico’s Second U.S. Congressional District are enrolled in the ACP.
• She stated that families may experience challenges finding affordable alternative broadband services if the ACP were to lapse.
  • She noted how rural areas often only have one broadband service provider and can have higher broadband service costs.
  • She added that low-cost broadband options in rural areas may be unreliable or inadequate for whole families that are working or learning from home.
• She discussed how deploying fiber optic internet in New Mexico is especially costly given its low population density.
  • She elaborated that New Mexico’s subscriber pools are smaller and more scattered and that the state’s networks are more difficult to maintain.
• She stated that internet subscribers are especially critical for New Mexico’s small tribal and rural communities that have built networks and companies to provide internet service in difficult-to-reach areas.
  • She indicated that these providers often serve as their area’s only broadband internet service option.
• She discussed how local broadband providers serving low density areas with low-income customers often operate on tight margins and face higher expenses.
  • She commented that these providers face a higher risk of bankruptcy without a reliable and consistent pool of active subscribers.
• She stated that collaborative investments and ACP outreach have supported local broadband networks and providers in building relationships and trust and growing their customer bases.
• She remarked that the termination of the ACP and a loss of subscribers would put the BEAD Program in jeopardy and some local networks at risk of failure.
  • She commented that the termination of the ACP would especially impact needy areas and providers that serve traditionally underserved communities.
• She discussed how the U.S. had made significant investments and efforts to establish the ACP through coordinating between more than 1,500 ISPs and 23 million subscribers.
  • She asserted that allowing the ACP lapse would be wasteful and irresponsible given these investments and efforts.
• She highlighted how both Republican and Democratic mayors and governors have publicly prioritized the ACP and made the Program part of their efforts to address digital disparities.
  • She called the broad support for the ACP across government, industry, and communities “rare but inspiring” and attributed this support to the important role that broadband internet plays in American life.
• She discussed how ACP participation is widespread and directly impacts many Americans across urban, suburban, and rural communities.
• She warned that the end of the ACP would put broadband networks, local ISPs, and BEAD Program infrastructure investment at risk and would erode public trust.
  • She commented that ending the ACP would be especially wasteful given how it had only recently launched.
• She concluded that broadband access is an essential component of modern American life and stated that this dynamic underscores the need for Congress to extend the ACP.

Ms. Kathryn de Wit (Broadband Access Initiative, The Pew Charitable Trusts):

• She discussed how the U.S. has made the largest federal investment in affordable broadband access in its history and called the ACP “essential” to this work.
• She remarked that achieving universal broadband internet access requires two things: supply side solutions and demand side interventions.
  • She explained that the supply side solutions entail policies that reduce the costs of building broadband networks and delivering services to American homes.
  • She explained that the demand side interventions that reduce the cost of broadband internet service for consumers (particularly low-income and vulnerable households).
• She discussed how tens of millions of Americans had struggled to work, learn, and access health care during the COVID-19 pandemic because they lacked access to high quality internet service.
  • She noted how some Americans could not afford such internet service while other Americans lacked available internet service options.
• She highlighted how Congress had taken swift action to address these internet access issues during the COVID-19 pandemic and described these efforts as successful.
• She discussed how 23 million U.S. households currently participate in the ACP and indicated that almost half of these families are military families.
  • She added that 19 percent of the ACP’s beneficiaries are age 65 or older.
• She stated that the high enrollment in the ACP is a “remarkable testament” to the response from ISPs, the public sector, and community partners across the country.
• She then discussed how Congress had established two important broadband deployment initiatives: the U.S. Department of the Treasury’s CPF the NTIA’s BEAD Program.
  • She highlighted how Congress had conditioned eligibility for broadband deployment grants on participation in a broadband affordability program.
• She asserted that the ACP is currently the best available tool for addressing the U.S.’s digital disparities because the Program alleviates cost burdens on households and increases financial certainty for broadband providers to expand their services.
  • She noted how all 50 states have incorporated the ACP into their broadband internet deployment strategies for the CPF and BEAD Program.
• She remarked however that the potential end of the ACP is introducing risk to states, broadband providers, and consumers at a “critical moment” of federal broadband program implementation.
  • She noted how states have expressed concerns about various implementation challenges, including permitting and workforce shortages.
• She mentioned how state broadband programs have raised concerns about the potential termination of the ACP and how broadband providers have expressed hesitation regarding their participation in the BEAD Program if the ACP were to end.
  • She called on Congress to act quickly and decisively to keep the ACP funded.
• She mentioned how Ohio’s digital equity plan states that the end of the ACP will abruptly disrupt access to affordable internet that the state’s low-income residents rely upon for accessing education, work, and health care.
  • She indicated that other ACP recipients (including military families and senior citizens) have echoed similar concerns.
• She remarked that the ACP should be improved to better reach the households that need it and to ensure that taxpayers are being protected from waste, fraud, and abuse.
• She concluded that Congress must extend the ACP at the next legislative opportunity in order to support the deployment of broadband infrastructure.

Mr. Blair Levin (New Street Research; Brookings Metro):

• He expressed support for extending the ACP and for maintaining the ACP as part of any border USF reform efforts.
• He discussed how the costs of digital exclusion are already large and growing and predicted that artificial intelligence (AI) will magnify these costs.
  • He noted how the U.S. had sought to address these costs in a bipartisan manner through its response to the COVID-19 pandemic.
• He warned that the U.S.’s failure to extend the ACP would constitute the “greatest step backwards” in terms of addressing digital disparities.
  • He commented that the cost of disconnected broadband internet service associated with the ACP’s ending would be “extraordinarily painful” to individuals and families.
• He remarked that digital disconnection would impose immediate costs on the U.S. economy, which would lead to shrinking economic growth.
  • He mentioned how his written testimony cites studies demonstrating how the ACP increases earnings for low-income households and increases GDP.
  • He called it unsurprising that business groups support extending the ACP given the Program’s economic benefits.
• He warned that the loss of the ACP would raise the cost of government-provided health care and worsen health care outcomes.
  • He noted how numerous studies have demonstrated that telehealth can lower health care costs and improve health care outcomes in many circumstances (including cancer, maternal mortality, opioid treatment, and ER visits).
• He also warned that the loss of the ACP would increase government costs and diminish government performance in other areas.
  • He commented that broadband internet service supports other key areas where the government is involved, including job training, job placement, education, and other social services.
• He called broadband’s importance in these other areas unsurprising given how broadband is a general purpose technology that supports innovations and efficiencies across multiple areas.
  • He referenced how Google’s chief economist had estimated in 2013 that the internet generates $500 in consumer surplus per user annually.
• He stated that the consumer surplus that ACP recipients obtain also creates a surplus to the federal government.
• He warned that the loss of the ACP would particularly harm rural areas and military families.
  • He noted how rural areas are suffering from an “epidemic” of hospital closures and commented these closures heighten the importance of telehealth access.
  • He also stated that the loss of the ACP would reduce the value of the BEAD Program’s funding, which will cause rural communities to receive inferior internet connections.
• He remarked that the aforementioned negative consequences of not extending the ACP will become even worse as AI becomes embedded in the U.S. economy and society.
  • He also stated that there would be significant costs associated with ending the ACP and then subsequently restarting the Program.
• He remarked that the loss of ACP would result in slower economic growth and increases in the costs of health care, education, job training, job placement, and other social services.
• He mentioned how 20 Republican U.S. Representatives had sent a letter to U.S. Speaker of the House Mike Johnson (R-LA) calling for Congress to temporarily extend the ACP as it develops long-term reforms to the Program.
  • He expressed agreement with this letter’s recommended approach.

Dr. Paul Winfree (Economic Policy Innovation Center):

• He remarked that access to affordable high-speed internet will determine regional development and will support the U.S.’s continued growth through ensuring its leadership in global innovation.
  • He commended U.S. policymakers for their focus on broadband affordability issues over the previous decade.
• He discussed how the U.S. has pursued many broadband affordability policies, such as deregulation and subsidizing the demand for high-speed internet and the supply of ISPs.
  • He commented that deregulation policies have been effective in terms of reducing broadband internet prices.
  • He also commented that the policies subsidizing demand can increase prices if the policies do not fundamentally change the demand for high-speed internet or the supply of ISPs.
• He stated that deregulation can produce “significant gains” for consumers, especially when the deregulation policies enhance transparency through increasing the scale on which providers can compete on price and the quality of services.
• He recounted how Congress had nullified a 2016 FCC consumer data sharing rule in 2017 and noted how companies had previously designed plans that had allowed consumers to opt-in or opt-out of data sharing at different subscription rates.
  • He indicated that consumers that had opted into data sharing paid lower rates for service than consumers that had opted out of data sharing.
• He noted how the 2016 FCC consumer data sharing rule had required consumers to opt into data sharing and how Congress had nullified this rule using the Congressional Review Act (CRA) process.
• He stated that the nullification of the FCC’s 2016 consumer data sharing rule had created more options at different price points for consumers.
  • He mentioned how the 2020 Economic Report of the President had found that this nullification of the 2016 rule had reduced wireless internet prices by more than 10 percent and wired internet prices by as much as 2 percent.
• He then remarked that subsidizing demand for internet service can increase prices, especially when the unemployment rate is low and the underlying inflation rate is high.
• He stated that the federal government subsidizes demand for broadband in several ways, including through the ACP.
  • He explained that the ACP provides a monthly subsidy of $30 to low-income households for internet service, as well as a one-time $100 subsidy to purchase a tablet, laptop computer, or desktop computer.
• He remarked that economic theory would predict that a demand subsidy could act as a price floor, especially in a market where the demand and supply of a product remains relatively fixed.
  • He commented that the producer in this situation (which would be the ISPs) would capture a portion (if not all) of the subsidy.
• He mentioned how he had found a positive relationship between the percentage of households receiving ACP subsidies and the increase in the average total monthly price of broadband internet service.
• He testified that he had not found any statistically meaningful association between ACP subsidies and internet service prices when the level of households receiving subsidies is below 7 percent.
  • He indicated that approximately 15 percent of U.S. households currently receive an ACP subsidy, which corresponds with an average price increase of about 7 percent for the total broadband service subscription.
  • He added that these estimates do not change, even when factoring in the market concentration of ISPs.
• He remarked that the average cost of broadband internet service is about $5.48 higher per month due to the ACP according to his findings.
  • He commented that his findings imply that ISPs are capturing about 18 percent of the ACP’s total subsidy.
• He stated that the Biden administration’s ACP enrollment proposal would result in 40 percent of U.S. households being enrolled in the Program and that this would result in the price of internet service plans increasing by $9.39 on average.
• He also remarked that the ACP’s subsidization of demand makes consumers less sensitive to prices and quality.
  • He commented that this subsidization advantages large incumbent ISPs that were more likely to have had existing market share when the ACP had been created.
• He stated that the exhaustion of the ACP’s funding would encourage companies to compete for consumers shopping for better internet plans.
  • He mentioned how Communications Daily has reported that most ISPs have told their investors that they do not plan to lose any money when the ACP ends because the ISPs will be competing based on price and quality to attract consumers that had just received subsidized broadband internet coverage.
  • He also noted how a major ISP had recently begun to offer a $9.95 per month internet plan and commented that this plan was not being offered before the ACP’s end had appeared imminent.
• He concluded that the exhaustion of the ACP’s funding will ultimately benefit everyone through creating a more sustainable and affordable marketplace for high-speed internet.

Congressional Question Period:

Subcommittee Chairman Ben Ray Luján (D-NM):

• Chairman Luján asked Ms. Nevarez to indicate whether a lapse in the ACP would harm students, veterans, senior citizens, tribal community residents, and rural Americans.
  • Ms. Nevarez answered affirmatively.
• Chairman Luján asked Ms. de Wit to identify the populations that would be most impacted by a lapse in the ACP.
  • Ms. de Wit noted how nearly one-fifth of ACP-enrolled households include a senior citizen. She stated that any changes to the ACP will have an adverse impact on Americans over 50 and veterans. She called for better data and more transparency regarding the ACP’s enrollment and trends in population. She commented that this improved data and transparency would enable policymakers to fully understand how changes to the ACP would harm current and prospective ACP recipients.
• Chairman Luján then mentioned how Mr. Levin’s testimony had stated that the ACP helps Americans to access health care services via telemedicine, which can create large savings for the U.S. health care system. He noted how many ACP recipients are also Medicare beneficiaries, Medicaid beneficiaries, or veterans that receive health care through the VA. He asked Mr. Levin to indicate whether the economic benefit of the ACP to the health care system could exceed the federal government’s cost of administering the Program.
  • Mr. Levin stated that the economic benefit of the ACP to the health care system likely exceeds the federal government’s cost for administering the Program. He added that if this economic benefit does not exceed the cost of administering the Program right now, he predicted that this economic benefit would exceed the cost of administering the Program within the “very near future.” He discussed how the COVID-19 pandemic had led to an acceleration in telehealth’s adoption. He mentioned how the share of Medicare visits involving telehealth had grown from 1 percent in February 2020 to around 70 percent in April 2020. He stated that this growth in telehealth was inevitable and commented that this growth would result in new efficiencies. He concluded that greater internet access will eventually result in savings for federal health care programs.
• Chairman Luján asked Mr. Levin to indicate whether investments in the ACP may result in net cost savings for the U.S. government based on the Program’s impact on health care, employment, and education.
  • Mr. Levin answered affirmatively. He noted how people that have internet access tend to obtain jobs faster than people without such access. He commented that this ability to obtain jobs faster reduces their need to collect unemployment benefits (which results in savings to the federal government).
• Chairman Luján then mentioned how some of New Mexico’s small local ISPs are at risk of going bankrupt without the reliable customer base that the ACP provides. He asked Ms. Nevarez to indicate whether rural New Mexico broadband customers can find another ISP when an ISP goes bankrupt.
  • Ms. Nevarez stated that it can be difficult for rural New Mexico broadband customers to find an alternative ISP. She noted how broadband networks in rural areas often lack competition and that the failure of rural ISPs can cause rural residents to completely lose broadband service. She added that the failure of these ISPs can also cause small and regional government offices (as well as community anchor institutions) to lose broadband service. She highlighted how 22 tribes in New Mexico are building and operating their own broadband networks. She stated that the failure of these broadband networks causes job losses for fiber optic technicians. She indicated that these laid-off fiber optic technicians must search for new jobs (which can be difficult), travel further for work, or move to cities to obtain employment. She further highlighted how New Mexico had successfully worked to train over 200 fiber optic technicians over the previous two years. She indicated that 80 percent of these technicians have been Native American or Hispanic and that 70 percent of these technicians had no college degree. She called this development “very exciting.”

Sen. J.D. Vance (R-OH):

• Sen. Vance noted how Mr. Levin’s testimony had discussed the positive impacts that cheaper internet service has on employment rates. He expressed interest in identifying the ACP’s potential cost savings and mentioned how budgetary concerns are stalling the reauthorization of the ACP. He expressed support for the ACP’s reauthorization. He asked Mr. Levin to discuss the ACP’s economic upsides.
  • Mr. Levin mentioned how Google’s chief economist had found in 2013 that the consumer surplus from internet access was $500. He commented that this figure has likely increased during the ensuing years. He also highlighted how internet access enables consumers to save time and find cheaper products. He further discussed how telehealth can result in direct government savings through helping to prevent expensive ER visits. He then noted how the internet supports job training and placement, which benefits both workers and governments. He further discussed how AI will likely transform the education sector and commented that improved educational performance will result in future government savings.
• Sen. Vance asked Mr. Levin to indicate whether he had performed any analyses regarding the net benefits of the ACP. He expressed interest in identifying how ACP spending may support savings for health care patients and general consumers.
  • Mr. Levin mentioned how Dr. John Horrigan of the Benton Institute for Broadband & Society had found that every $1 spent on the ACP results in $2 in gains for the ACP recipients. He also mentioned how one study had found that every $1 spent on the ACP yields a $3.89 increase in GDP. He stated that he was unaware of any comprehensive studies on the ACP’s impact on health care expenditures. He suggested that the U.S. government should perform such a study. He predicted that any study on the ACP’s impact on health care expenditures would find that the Program is beneficial.
• Sen. Vance then discussed how it can be very expensive to deploy broadband infrastructure into rural areas (especially compared to more urban areas). He stated that the knowledge that there will exist rural customers to purchase internet service is key to economically justifying the deployment of rural broadband infrastructure. He commented that the ACP helps to ensure that there will exist rural customers to purchase internet service. He asked Mr. Levin to discuss the importance of the ACP for supporting broadband infrastructure.
  • Mr. Levin mentioned how the Boston Consulting Group had performed a study that suggested that BEAD Program funding would be 25 percent more effective with the existence of the ACP. He elaborated that the ACP ensures that there will be consistent demand for broadband internet service, which reduces the need for government subsidies to build out rural broadband networks.
• Sen. Vance mentioned how many rural broadband investors within his state of Ohio had told him that they would not have invested in Ohio rural broadband projects without the existence of the ACP. He stated that policymakers should be cognizant of this dynamic when considering digital infrastructure policies.

Sen. Amy Klobuchar (D-MN):

• Sen. Klobuchar first thanked Sen. Peter Welch (D-VT) and Sen. J.D. Vance (R-OH) for their introduction of the Affordable Connectivity Program Extension Act. She remarked that the pending exhaustion of the ACP’s funding remains an ongoing problem. She discussed how rural communities in her state of Minnesota are in particular need of support to make broadband internet service available at affordable prices. She mentioned how rural teachers had told her that students had been unable to access classes virtually during the COVID-19 pandemic. She asked Mr. Levin to indicate whether programs like the ACP can help incentivize broadband providers to serve high cost areas.
  • Mr. Levin answered affirmatively. (Note: Mr. Levin’s response was largely inaudible).
• Sen. Klobuchar also noted how the challenge of building out broadband networks is distinct from ensuring that consumers can afford to access those networks. She asked Ms. de Wit to discuss how the ACP’s potential expiration could impact current federal investments in broadband infrastructure.
  • Ms. de Wit remarked that households that are currently unserved by broadband internet service are the most expensive and difficult to serve. She noted how the cost-per-passing in Minnesota involving CPF monies is $7,300 per location. She stated that the absence of the ACP will make BEAD Program connections even more expensive, which will cause the cost-per-passings to increase. She warned that rural broadband providers may not be able to afford capital deployments and operations without the ACP subsidy.
• Sen. Klobuchar then noted how students without home internet service have worse grades and lower homework completion rates. She asked Mr. Levin to address why the ACP is important for helping students with education.
  • Mr. Levin warned that the ending of the ACP would result in inequitable access to internet service for students. He noted how the internet serves as a key informational resource and support tool for students.
• Sen. Klobuchar asked Ms. Nevarez to discuss how affordable internet access has supported more educational and learning opportunities based on her experience at the Community Learning Network.
  • Ms. Nevarez recounted how many New Mexico students had experienced troubles when the COVID-19 pandemic started. She noted how many of these students had needed to complete their homework using paper and pen or smartphones. She stated that the internet has become a central aspect of modern American life and that it is now difficult to complete schoolwork without using the internet. She called access to reliable and affordable internet essential for completing schoolwork and accessing communications tools (such as video calls). She further noted how students without home internet access must often travel to community anchor institutions to connect to education services and access WiFi from their cars to complete assignments. She commented that this situation creates education access disparities.
• Sen. Klobuchar lastly thanked Subcommittee Chairman Ben Ray Luján (D-NM) for his work to address broadband access issues.

Full Committee Ranking Member Ted Cruz (R-TX):

• Ranking Member Cruz discussed how a recent Econ One study had found that competition from 5G, fixed wireless service, and home broadband internet service markets was shown to produce billions of dollars each year in consumer savings. He mentioned how he had introduced the Spectrum Pipeline Act of 2024 to promote competition within these markets. He criticized the Biden administration for engaging in an anti-competitive technology bias and not expanding access to mid-band spectrum. He asked Dr. Winfree to address how the Spectrum Pipeline Act of 2024 would compare to the ACP in terms of promoting long-term broadband internet affordability.
  • Dr. Winfree remarked that spectrum auctions would increase competition and bring more parties into the spectrum market. He commented that this increased ISP participation within the spectrum market would ultimately reduce internet prices.
• Ranking Member Cruz asked Dr. Winfree to indicate whether lower internet prices would benefit consumers.
  • Dr. Winfree answered affirmatively.
• Ranking Member Cruz stated that the ACP has led to higher internet prices. He asked Dr. Winfree to confirm that these higher internet prices harm consumers.
  • Dr. Winfree remarked that the ACP has led to higher internet prices, which harms consumers. He described the ACP as a “one size fits all” policy and noted how the Program provides a $30 subsidy to all beneficiaries, regardless of the beneficiary’s unique circumstances. He noted how urban residents are more likely to enroll in the ACP as compared to their rural counterparts. He asserted that the ACP is not a solution for addressing rural broadband access challenges. He remarked that rural broadband connectivity is a problem and that the U.S. has an opportunity to address this problem. He stated that Congress should work to reform the ACP.
• Ranking Member Cruz discussed how inflation is harming millions of Americans and asserted that Democratic spending policies had largely driven this inflation. He criticized proposals to increase the ACP’s funding and commented that this increased funding would fuel inflation and drive-up broadband internet service costs for consumers.
  • Dr. Winfree expressed agreement with Ranking Member Cruz’s assessment of the ACP. He stated that the first way that the ACP impacts inflation is through setting a price floor for plans. He mentioned how there had existed many internet service plans prior to the ACP’s creation that had offered 20 Mbps symmetrical upload and download speeds for $10 per month. He indicated that these plans have stopped being offered since the ACP’s establishment. He noted that while broadband plan speeds have increased moderately since the ACP’s establishment, he highlighted how plan price levels had jumped from $10 per month to $30 per month. He attributed this significant jump to the fact that the ACP’s subsidy is $30 per month. He stated that the second way that the ACP impacts inflation is through government spending. He noted how the U.S. Federal Reserve is currently facing challenges as it seeks to control inflation and asserted that all current federal spending is inflationary at the moment.
• Ranking Member Cruz then mentioned how the U.S. Government Accountability Office (GAO) has identified over 130 taxpayer subsidies for internet connectivity. He indicated that the FCC’s USF programs are the longest standing subsidies for internet connectivity. He commented that the Subcommittee would not currently be considering broadband affordability issues if the FCC were to properly manage its USF programs. He asked Dr. Winfree to confirm that some of the existing federal internet connectivity programs are demand-side subsidies. He also asked Dr. Winfree to indicate how much the federal government spends on these programs each year.
  • Dr. Winfree noted how the USF includes both demand-side subsidies and supply-side subsidies for internet connectivity. He indicated that the USF has four main programs: the Lifeline Program, the Connect America Fund, the E-Rate Program, and the Rural Health Care Program. He noted that these programs together spend about $9 billion annually.
• Ranking Member Cruz suggested that the U.S. work to reform its existing internet connectivity programs and apply lessons learned from the ACP to these existing programs. He mentioned how he had proposed this approach in his blueprint for USF reform. He asked Dr. Winfree to recommend changes that Congress should make to the ACP and the USF before increasing funding for these programs.
  • Dr. Winfree remarked that Congress should work to ensure that ACP subsidies are being properly targeted to low-income individuals. He also suggested that the U.S. could require that ACP beneficiaries provide Social Security numbers to ensure the proper distribution of the Program’s benefits. He then criticized the ACP’s “one size fits all” approach and recommended that Congress take regional differences into account when reforming the ACP.

Sen. Gary Peters (D-MI):

• Sen. Peters noted how almost one million households in his state of Michigan are on the precipice of losing ACP subsidies to obtain internet access. He asserted that the internet is no longer a luxury in the modern world. He stated that internet access must be affordable for all Americans and called on Congress to fund the ACP as soon as possible. He warned that Congress’s failure to pass additional funding for the ACP would cause 16 percent of U.S. households to face internet shut offs or rate hikes. He expressed support for the Affordable Connectivity Program Extension Act. He then discussed how the ACP is closely linked with state BEAD Program infrastructure deployment efforts. He mentioned how Michigan had received nearly $1.6 billion in BEAD Program funding, which amounts to the fourth highest allocation in the U.S. He asked Ms. de Wit to address how a lapse in the ACP would impact the BEAD Program’s ability to reach all unserved and underserved locations. He also asked Ms. de Wit to indicate whether a lapse in the ACP could impact where BEAD Program participants apply for funding and the overall scope of proposed BEAD Program projects.
  • Ms. de Wit remarked that the ACP’s lapse would impact whether ISPs decide to participate in the BEAD Program. She commented that the U.S. must provide ISPs with ACP funding certainty so that they can confidently participate in the BEAD Program. She then remarked that the U.S. must maximize the BEAD Program to connect all Americans to internet service. She stated that the BEAD Program and the ACP were designed to work in tandem to defray the costs associated with constructing broadband networks. She noted how Congress requires ISPs to participate in the ACP to receive BEAD Program funding. She commented that this structure provides ISP with a guaranteed customer base, decreased customer churn, and long-term customer retention.
• Sen. Peters then discussed how the USF has long served as a tool to connect Americans to voice and broadband service. He stated however that the USF has not been modernized to account for current needs for universal broadband internet service. He mentioned how is a member of the USF Working Group. He stated that the Working Group has made progress in developing bipartisan reforms that would enable the USF to support broadband accessibility and affordability for all consumers. He expressed interest in working to develop a long-term sustainable funding mechanism for the ACP so that the Program will not face future uncertainty. He asked Ms. de Wit to discuss the importance of developing a sustainable funding mechanism for the ACP, such as through modernizing the USF.
  • Ms. de Wit indicated that the Pew Charitable Trusts does not currently have research on solutions for the modernization of the USF. She stated however that the USF needs to be modernized for the reasons that Sen. Peters had outlined. She expressed appreciation for the USF Working Group’s efforts to modernize the USF and its work to incorporate the ACP into the USF. She stated however that USF reform will take time to develop and implement. She asserted that the U.S. does not have time to make reforms to the USF right now and highlighted how the ACP is exhausting its funds. She also stated that delays in ACP reauthorization are jeopardizing the connectivity solutions of potential BEAD Program participants (including states, ISPs, and communities). She called on Congress to reauthorize the ACP and to continue its work to reform the USF.

Sen. Peter Welch (D-VT):

• Sen. Welch remarked that Congress must address the impending expiration of the ACP. He stated that there now exists broad consensus regarding the importance of universal broadband service access. He compared the current need for the U.S. to deploy broadband internet service to the U.S.’s rural electrification efforts during the 1930s. He commented that the COVID-19 pandemic had underscored the need for the U.S. to ensure that all Americans could access broadband internet service. He noted that while the U.S. has spent a significant amount of money to deploy broadband infrastructure, he asserted that these expenditures would ultimately prove meaningless if people cannot afford broadband internet access. He then warned that the end of the ACP would force many Americans to make significant sacrifices. He remarked that Congress should make reforms to the ACP so that the Program fulfills its intended purpose. He also stated that Congress cannot allow for the ACP to expire given the large number of Americans (including veterans and senior citizens) that depend on the Program. He expressed hope that Congress can work in a bipartisan manner to pass a short-term extension of the ACP while Congress develops longer-term USF reforms.

Sen. Shelley Moore Capito (R-WV):

• Sen. Capito first expressed disappointment with the Committee for failing to markup the Rural Broadband Protection Act of 2023. She called on the Committee to schedule a legislative markup to consider this legislation. She then mentioned how her state of West Virginia had been the second state to receive approval for Volume II of its BEAD Program proposal. She noted how West Virginia’s BEAD Program involves the ACP. She asked Ms. de Wit to address how Congress’s failure to extend funding for the ACP will impact state BEAD Program plans.
  • Ms. de Wit first thanked Sen. Capito for her support for the ACP. She noted how West Virginia’s current cost per passing is $4,200 per location based on CPF information. She noted how Boston Consulting Group had found that the cost per passing may increase by $500 per location without the ACP subsidy. She stated that this finding suggests that West Virginia’s broadband infrastructure deployment costs would increase without access to ACP funds.
• Sen. Capito asked Ms. de Wit to confirm that West Virginia’s current cost per passing is $4,200 per location.
  • Ms. de Wit confirmed that West Virginia’s current cost per passing is $4,200 per location based on CPF information. She also noted how this amount includes “significant” matching funds from ISPs.
• Sen. Capito stated that West Virginia’s terrain likely makes it more challenging to deploy broadband infrastructure within the state. She asked Ms. de Wit to address how West Virginia’s cost per passing of $4,200 per location compares to other states.
  • Ms. de Wit indicated that she would need to follow up with Sen. Capito regarding how West Virginia’s cost per passing compares to the costs per passing of other states. She stated however that West Virginia’s cost per passing of $4,200 per location is high. She noted that this cost depends on several factors, including topography and population density.
• Sen. Capito then mentioned how the President of a local West Virginia ISP had learned that he was eligible for ACP subsidies because West Virginia’s school lunch program makes everybody eligible for these subsidies. She asserted that Congress must ensure that ACP subsidies are going to households that truly need the subsidies to access internet service. She asked Dr. Winfree to comment on this situation.
  • Dr. Winfree remarked that the ACP is not a rural-area focused program and noted how ACP recipients live disproportionately in urban areas. He commented that broadband internet access challenges vary greatly across urban and rural areas. He remarked that the ACP must have a reconciliation process to ensure that the Program’s funds are properly targeted and that there exist rural and urban adjustments for ACP subsidies.
• Sen. Capito expressed interest in the concept of rural and urban adjustments for ACP subsidies. She then noted how the ACP’s subsidy would drop from $30 per month to $14 per month as the Program’s expiration nears. She noted how this $14 per month subsidy would only last for one month before the Program ends. She criticized proposals to extend the ACP without making reforms to the Program. She expressed support for extending the ACP and enacting reforms to the ACP to ensure that Program beneficiaries are truly in need of the Program’s subsidies. She mentioned how her state of West Virginia has significant digital disparities and expressed interest in working to expand broadband internet availability and affordability.

Sen. Raphael Warnock (D-GA):

• Sen. Warnock expressed his disappointment with Congress for allowing the ACP to run out of funding. He noted how the ACP helps 720,000 Georgia residents to afford internet service. He compared the need for broadband internet service in modern American life to the need for electrification in 20th century American life. He warned that Congress’s failure to extend the ACP would cause many Americans to experience spikes in their internet bills. He also stated that the ACP supports access to health care services for many rural Americans, veterans, and military service members. He highlighted how nearly half of the households that benefit from the ACP are military families. He asked Mr. Levin to indicate whether the ACP helps veterans and military families to access critical health care services.
  • Mr. Levin remarked that there have been several studies demonstrating how the ACP helps veterans and military families to access critical health care services.
• Sen. Warnock also noted how Mr. Levin had cited a VA study showing that veterans that use telehealth emergency services were half as likely to make a costly trip to an ER. He commented that ER visits create problems for patients and are not cost-effective. He also mentioned how another study had found that telehealth access had helped save both patients and the federal government money. He stated that the ACP can both increase access to health care services while saving the government money. He asked Mr. Levin to indicate whether he agrees with this statement.
  • Mr. Levin expressed agreement with Sen. Warnock’s statement that the ACP can both increase access to health care services while saving the government money.
• Sen. Warnock mentioned how he has worked to reduce health care costs, including working to cap the cost of insulin at $35. He also expressed his continued support for the ACP and stated that the Program is key to expanding health care access and reducing health care costs. He then mentioned how Mr. Levin’s testimony highlights how maternal mortality rates tend to be higher in areas with lower internet subscription rates. He asked Mr. Levin to discuss the relationship between broadband internet affordability and maternal mortality.
  • Mr. Levin acknowledged that the correlation between high maternal mortality rates and low internet subscription rates does not mean that the relationship between the two items is causal in nature. He stated that the FCC’s mapping of broadband connectivity does imply a correlation between high maternal mortality rates and low internet subscription rates. He also mentioned how broadband internet connections have been used to help pregnant women identify health problems and proactively address these problems. He remarked that preventative care benefits both patients and the health care system and noted how people often cannot obtain in-person care. He stated that broadband internet service enables pregnant women to access care more easily, which increases utilization of preventative care.
• Sen. Warnock discussed how his state of Georgia is experiencing hospital closures, which he attributed to Georgia’s failure to expand its Medicaid Program under the Patient Protection and Affordable Care Act (ACA). He stated that increased broadband internet access would lead to improved health care.
  • Mr. Levin expressed agreement with Sen. Warnock’s statement.
• Sen. Warnock concluded by expressing hope that Congress could extend the ACP’s funding.

Subcommittee Ranking Member John Thune (R-SD):

• Ranking Member Thune stated that the current FCC appears intent on increasing its regulatory control over the internet, including through its recent net neutrality rules. He asked Dr. Winfree to discuss how heavy regulation impacts various sectors of the U.S. economy. He also asked Dr. Winfree to address the practical effects of the FCC’s regulations on broadband prices.
  • Dr. Winfree mentioned how Congress’s nullification of the FCC’s 2016 consumer data sharing rule had led to a significant price decrease for wired and wireless internet services. He indicated that this nullification had led wireless internet service prices to decrease by 10 percent and wired internet service prices to decrease by 2 percent. He remarked that highly regulated marketplaces (such as education, health care, and transportation) tend to experience higher prices. He asserted that there exists a direct connection between more regulation and higher prices. He also stated that there typically exists a direct connection between more government involvement (including the use of government subsidies) and higher prices.
• Ranking Member Thune then mentioned how a white paper referenced during the hearing had found that every $1 invested in the ACP yields an almost four-fold increase in GDP. He asked Dr. Winfree to respond to this white paper’s findings.
  • Dr. Winfree expressed concerns that this white paper relies upon input-output analysis, which assumes that behaviors do not change in response to a new policy. He stated that economists have known input-output analysis to be suboptimal since the late 1970s. He mentioned how the late University of Chicago economist Bob Lucas had won a Nobel Memorial Prize in Economic Sciences in 1995 for demonstrating the challenges associated with input-output analysis. He asserted that there exist better ways to assess the effectiveness of the ACP. He stated that the white paper’s conclusion is therefore not very reliable.
• Ranking Member Thune asked Dr. Winfree to clarify whether this white paper employs a static model.
  • Dr. Winfree indicated that the white paper does employ a static model. He stated that one of the white paper’s main assumptions is that the ACP does not actually exist. He indicated that this white paper adds the ACP on top of a preexisting economy without modeling any of the ACP’s potential behavioral impacts (including on prices). He stated that his research considers the impact that the ACP has on prices. He also noted how 76 percent of all new federal spending since the first quarter of 2020 has been funded by debt and how 14 percent of all new federal spending during this period has been funded through money creation. He indicated that just 7 percent of all new federal spending during this period has been funded through government revenues. He asserted that this spending is causing debt interest payments and interest rates to significantly increase. He stated that this federal spending is driving inflation and that federal policymakers must account for inflationary concerns when assessing the impacts of any program (including the ACP) on economic growth.
• Ranking Member Thune remarked that the U.S. economy is very dynamic and that multiple factors can impact it. He commented that the aforementioned white paper’s analysis is fairly isolated. He then mentioned how FCC Chairman Jessica Rosenworcel has put forward an ACP Fact Sheet that states that more than three-quarters of respondents report that losing ACP subsidies would disrupt their internet service. He noted how the Fact Sheet states that this disruption would occur through either forcing an internet plan change or disenrollment from a plan. He asked Dr. Winfree to indicate whether the FCC’s survey data supports this claim.
  • Dr. Winfree stated that the FCC’s data indicates that only 15.7 percent of ACP beneficiaries will lose broadband coverage if the ACP were to end. He noted however that the FCC had surveyed 110,000 households and approximately 5,300 households responded to the survey. He indicated that the White House Office of Management and Budget (OMB) requires federal agencies to employ a new methodology for addressing low-response rates to surveys if the survey response rate is below 70 percent (which was the case in this FCC survey). He noted that the FCC had not employed such a methodology and stated that the FCC’s failure to employ this methodology undermines their survey’s validity. He asserted that federal policymakers should therefore not accept the FCC’s survey as valid. He suggested that Congress ask the FCC to collect more and better data on the ACP. He added that Congress should considerer providing greater funding to the FCC.
• Ranking Member Thune lastly remarked that South Dakota telecommunications providers cannot participate in the BEAD Program because of the Program’s conditions, rules, and regulations. He commented that these conditions, rules, and regulations are “completely unrealistic” for the provision of rural broadband service.

Sen. Jon Tester (D-MT):

• Sen. Tester remarked that the private sector tends to not be interested in deploying broadband service to rural areas on its own. He mentioned how Congress had provided funding for rural broadband service deployment as part of the IIJA. He noted how this federal rural broadband funding had gone to broadband deployment efforts in previously unserved areas to avoid redundant infrastructure (which means that these areas will not have broadband service competition). He stated that broadband infrastructure deployment will ultimately be meaningless if consumers cannot afford the broadband service being deployed. He asked Dr. Winfree to address how the U.S. can make rural broadband deployment service affordable for consumers absent the ACP. He emphasized that rural areas tend to lack broadband service competition (which typically helps to drive down broadband service prices). 
  • Dr. Winfree remarked that while the subsidization of broadband service demand has “major problems,” he stated that the subsidization of broadband service supply does not pose the same problems. He noted how 20 states have indicated that they want to use their BEAD Program funds for non-broadband infrastructure deployment activities. He commented that this suggests that the BEAD Program’s initial allocations were incorrect. He stated that federal policymakers should work to encourage broadband infrastructure deployment. He also recommended that federal policymakers review the U.S. Department of the Treasury’s SLFRF, which was passed as part of the American Rescue Plan Act of 2021 (ARPA). He noted how Congress had allocated $350 billion for the SLFRF and indicated that $70 billion in SLFRF money remains unobligated. He remarked that the SLFRF requires states and localities to allocate these funds to one of seven categories and highlighted how SLFRF spending on infrastructure, broadband, and housing requires additional paperwork. He noted how states and localities are channeling these funds into revenue replacement or negative economic impact categories because these categories have easier compliance requirements. He commented that this dynamic has resulted in an underspending of SLFRF money on critical infrastructure projects. He suggested that policymakers could better encourage states and localities to use SLFRF funding for broadband infrastructure projects.
• Sen. Tester then mentioned how Congress will often increase housing allowances for U.S. military service members. He noted how announcements of these allowance increases are often followed by increases in rents for U.S. military service members. He asked Dr. Winfree to indicate whether there exist any ways to prevent large broadband providers from increasing their prices for consumers following an increase in broadband service subsidies.
  • Dr. Winfree highlighted how the ACP disproportionately serves urban areas relative to rural areas. He noted how rural broadband markets face different challenges than urban broadband markets. He mentioned how his sister lives in a rural area with one broadband service option. He predicted that this rural area’s broadband service prices will likely increase overtime absent competition. He stated that the U.S. should focus on expanding the supply of broadband service providers and on promoting competition in order to sustainably bring down broadband service rates.
• Sen. Tester indicated that while he agrees generally with Dr. Winfree’s response, he emphasized that it is very expensive to deploy broadband infrastructure to rural areas. He expressed doubts that broadband service competition in rural areas will ever be feasible. He asserted that the broadband marketplace is fundamentally different from other marketplaces because the broadband marketplace puts consumers at a disadvantage relative to broadband providers.

Sen. Ed Markey (D-MA):

• Sen. Markey first expressed agreement with Sen. Tester’s comments regarding the market dynamics of rural broadband service. He then applauded the FCC’s recent vote to reinstate net neutrality rules and asserted that these rules are critical for protecting a free and open internet. He also stated that these net neutrality rules would not impact broadband investments. He then remarked that the ACP is at a “crisis point” and noted how ACP recipients will not receive the traditional $30 subsidy for the first time in May 2024. He indicated that these households would instead receive a $14 subsidy for broadband internet service. He also mentioned how the ACP subsidy for households on tribal lands will fall from $75 per household to $35 per household in May 2024. He raised concerns that this reduced ACP subsidy will cause many Program beneficiaries to eliminate their broadband internet service. He mentioned how he had recently led a Congressional letter to the trade associations representing the major ACP corporate beneficiaries. He indicated that this letter had urged these trade associations to cover the shortfall in the May 2024 ACP subsidy. He commented that the coverage of the shortfall would be a “small price to pay” for these corporations given how ACP subsidies ultimately flow to the corporations. He asked Mr. Levin to indicate whether broadband service providers should ensure that ACP households receive the full $30 ACP subsidy in May 2024.
  • Mr. Levin expressed hope that broadband service providers would follow the call of Sen. Markey’s letter and cover the shortfall in the May 2024 ACP subsidy. He stated however that voluntary efforts are not a long-term solution and that the U.S. must provide a long-term solution to universal broadband service coverage.
• Sen. Markey commented that Congress has a “short window” to address the current shortfalls in the ACP’s funding and expressed his desire for households to not lose their ACP benefits. He also stated that Congress must ensure the protection of existing programs that address digital disparities as it works to reform the USF. He mentioned how he had authored the E-Rate Program in 1996. He noted how the E-Rate Program has delivered over $60 billion to connect schools and libraries to the internet and indicated that the Program has provided $900 million to his commonwealth of Massachusetts. He highlighted how this Program’s funding has primarily gone to disadvantaged and low-income communities. He asked Mr. Levin to indicate whether any changes to the USF should protect the E-Rate Program.
  • Mr. Levin answered affirmatively. He stated that while the E-Rate Program has aged “extremely well” since its enactment, he commented that the E-Rate Program has required reforms over time. He mentioned how the FCC had made reforms to the E-Rate Program in 2014 and commented that these reforms had resulted in improvements for states. He expressed support for protecting the E-Rate Program and the Program’s mission. He also expressed openness to making improvements to the E-Rate Program. He further stated that the ACP is part of a broader mission to ensure that all Americans can access the internet.
• Sen. Markey remarked that any changes to the E-Rate Program must be “carefully calibrated” to ensure that the Program is actually being improved. He also stated that the ACP demonstrates how the federal government, industry, and community organizations can work together to improve broadband internet connectivity. He remarked that Congress must build upon this work and extend the ACP. He warned that the ACP’s failure would undermine public trust in the federal government and the private sector.

Sen. Jacky Rosen (D-NV):

• Sen. Rosen noted how the ACP would no longer provide U.S. households with a $30 per month subsidy for broadband internet service (absent Congressional action). She mentioned how she had helped to author the IIJA’s broadband provisions, which had created the ACP. She stated that Congressional inaction is causing Americans to experience higher internet service costs because the ACP’s funding has been exhausted. She expressed interest in working to save the ACP and to ensure that high-speed internet service is both accessible and affordable for working families. She warned that the loss of internet access can raise costs for seniors, veterans, and the federal government. She discussed how federal agencies use telehealth and online services to save taxpayer funds and to provide more timely assistance to veterans and senior citizens. She stated that telehealth has been very helpful to rural residents in her state of Nevada given how the nearest in-person health care services can be hundreds of miles away. She asked Mr. Levin to discuss how a lapse in the ACP would make it more difficult for veterans to access their VA benefits.
  • Mr. Levin noted how the ACP had led many social services providers (both in the government and in the non-profit organization community) to restructure how they deliver their services. He highlighted how these service providers often offer 24/7 help now. He remarked that a lapse in the ACP could therefore impact veterans that depend on a variety of government services. He stated that the inability of veterans to afford internet connectivity will result in challenges for these veterans.
• Sen. Rosen stated that the challenges that Mr. Levin had identified would also impact senior citizens and social service agencies. She then discussed how research had found that broadband internet adoption is a “super multiplier” because this adoption increases access to health care, education, jobs, and tourism. She asked Mr. Levin to discuss the downstream effects of greater broadband affordability. She also asked Mr. Levin to address how a lapse in the ACP would stifle broadband internet’s benefits.
  • Mr. Levin remarked that broadband internet access is a general purpose technology because it enables many things. He discussed how broadband internet access will be key for enabling Americans to receive continuing job and skills training. He also noted how most job openings are currently posted online exclusively, which underscores the importance of broadband internet access.
• Sen. Rosen also expressed concerns that Congress’s failure to extend the ACP would exacerbate digital disparities between urban and rural communities. She indicated that she would submit questions on this topic for the hearing’s record.

Subcommittee Chairman Ben Ray Luján (D-NM):

• Chairman Luján noted how the Pew Charitable Trusts had found that broadband affordability can vary widely across regions, states, and counties. He asked Ms. de Wit to explain why broadband internet service prices tend to vary widely across regions, states, and counties.
  • Ms. de Wit remarked that more research is needed to confirm the reasons behind the wide broadband pricing differences across regions, states, and counties. She stated that there exist many factors that influence broadband affordability, including the types of broadband services that are available and what customers can afford. She also noted that many families might still not be able to afford the broadband service plans that the Pew Charitable Trusts deems affordable for middle class families. She remarked that there exist a range of economic, social, and educational factors that influence broadband affordability for households.

Sen. John Hickenlooper (D-CO):

• Sen. Hickenlooper discussed how U.S. students had been forced to adapt to remote learning during the COVID-19 pandemic. He stated that this remote learning had disadvantaged students without broadband internet connections and broadband-enabled devices. He asked Ms. Nevarez to describe how the relationship between broadband service adoption and education has evolved in recent years.
  • Ms. Nevarez mentioned how various New Mexico communities (including the state’s tribal, Hispanic, and disabled communities) have worked with the state to address educational access issues. She discussed how New Mexico is currently working to ensure that its students have broadband internet access and broadband-enabled devices and commented that this task is difficult. She noted how the cost of broadband-enabled devices and their maintenance is expensive. She also highlighted how many New Mexico students from tribal communities must travel for two hours by bus to school every day. She stated that it can be expensive to deploy fiber optic internet to rural areas and noted how this deployment can entail traversing canyons and mountains. She emphasized that New Mexico is sparsely populated with an average of 17 people per square model. She stated that many New Mexico families lack any broadband internet service options or cannot afford broadband internet service options. She also mentioned how many students that have returned to in-person learning following the COVID-19 pandemic remain behind in terms of their learning. She stated that technology and broadband access will be necessary tools for supporting students in their continued education moving forward.
• Sen. Hickenlooper then discussed how Congress had provided the Lifeline Program, the Connect America Fund, the E-Rate Program, and the Rural Health Care Program with direct appropriations and unique appropriations rules during the COVID-19 pandemic. He asked Ms. de Wit to provide recommendations for how Congress can make these programs sustainable over the long-term.
  • Ms. de Wit remarked that she does not have research on this topic to provide an informed answer to Sen. Hickenlooper’s question. She stated that the U.S. needs to reform the USF. She then asserted that the ACP is foundational to the BEAD Program and warned that the U.S.’s failure to fund the ACP would threaten the U.S.’s current broadband infrastructure deployment efforts. She called on Congress to develop a short-term solution for the ACP and long-term reforms for the USF.
• Sen. Hickenlooper then mentioned how he had introduced the Reforming Broadband Connectivity Act of 2023 with Sen. Amy Klobuchar (D-MN) and Subcommittee Ranking Member John Thune (R-SD). He explained that this legislation would expand the USF’s contribution base. He asked Mr. Levin to discuss the FCC’s current authorities to expand the USF’s contribution base.
  • Mr. Levin stated that the FCC could expand the USF’s contribution base to broadband providers under current authorities. He stated however that the FCC could not expand the USF’s contribution base to large technology companies under current authorities. He then called on Congress to provide a short-term extension of the ACP and commented that broadband internet connectivity saves the U.S. government money. He also expressed support for having Congress consider longer-term reforms to the USF. He noted however that there are ongoing court cases that might impact potential USF reform proposals.
• Sen. Hickenlooper remarked that most Americans are willing to pay additional money to ensure that all Americans can access the internet.

Subcommittee Chairman Ben Ray Luján (D-NM):

• Chairman Luján mentioned how the R Street Institute (which he indicated is a center-right think tank) had called the ACP a bipartisan success. He also noted how the R Street Institute had found that the ACP is successfully reducing internet plan prices for eligible households and that ISPs are passing on cost savings to their customers. He asked Mr. Levin to indicate whether there exists any evidence that the ACP is driving broadband internet prices higher. (Note: Mr. Levin’s response was inaudible). He then expressed hope that the ACP will lead to the elimination of slow broadband speeds. He mentioned how he lives in a rural community and noted how rural communities often have slow broadband internet speeds. He expressed appreciation for Congress’s recent efforts to promote rural broadband internet deployment. He remarked that the ACP is beneficial for rural areas and commented that rural broadband internet access will be key for supporting precision agriculture technologies. He also stated that competition will be key to driving down broadband internet service prices in rural areas. He further expressed hope that the USF Working Group can serve as a forum to develop better federal broadband policies. He lastly expressed his commitment to working to extend the ACP and develop longer-term reforms for the USF.