Free Press Calls on Congress and the FCC to 'Reimagine and Reinvent' Efforts to Bridge the Digital Divide

On Friday, Free Press called on Congress to transform universal service policies to ensure that low-income households in the United States can afford broadband access now and in the future. In comments submitted to the Senate Commerce Commitee’s Universal Fund Working Group, Free Press urged Congress to make the Affordable Connectivity Program (ACP) a permanent feature. Free Press also called on Congress to end the practice, via the Universal Service Fund (USF), of regressive taxation of consumers to subsidize major internet service providers’ connectivity efforts.

The ACP, which passed in the last Congress as a component of the bipartisan infrastructure act, is already benefiting more than 20 million families in need. But federal funding for the program will run out by or before April 2024. This requires “immediate further Congressional appropriations to prevent massive disruption and disconnection,” read Free Press’ comments to the Senate working group.

It also requires a shift away from the USF’s emphasis on high-cost distribution policies, which are rooted in an outdated framework designed to provide ongoing support to incumbent telephone companies in rural areas. The government needs to focus program spending on affordability and adoption, not solely on deployment and availability, especially in light of the massive deployment investments made in the infrastructure act and in earlier COVID relief bills.

“The affordability problem is one that will persist however,” read the comments. “Therefore, we urge Congress to make the ACP a permanent program, and appropriate the funding needed to ensure that low-income households can afford broadband long after the initial appropriation from the Infrastructure Act is expended.”

Free Press Senior Economic and Policy Advisor S. Derek Turner said:

“When the previous Congress appropriated more than $80 billion to address the nation’s broadband deployment, adoption and homework gaps, it earmarked more than $50 billion in deployment funding alone to connect to broadband to people living in rural areas. This was more than enough to accomplish that goal. Now policymakers must eliminate all unnecessary high-cost subsidies for ISPs — and focus on ensuring that the broadband market offers affordable options to everyone and is as competitive as possible.

“This shift in emphasis marks a sea change in the work needed to bridge the digital divide. And — despite what some big-business lobbyists claim, the FCC universal service program is not in a death spiral. These massive companies simply want to shift their USF contribution burden onto households and small businesses.

“The data clearly show that the amount of funds collected for USF is stable, and even declining in inflation-adjusted terms. Any move to broaden the contribution base to include retail broadband services would significantly shift the USF contribution burden away from large companies and onto residential households and small businesses. This would hurt low-income households already harmed by the home-internet digital divide. Taxing broadband via USF’s regressive fee system would result in an approximate $4-billion annual wealth transfer from consumers and small businesses to giant companies.

“The FCC’s high-cost universal service distribution policies in particular are structured to benefit legacy telephone-company incumbents. The result is a massive waste of scarce funds — not to mention funds that are collected in a regressive manner.

“This is why we strongly urge Congress to end the practice of regressive taxation of consumers, and instead fund universal service via progressive methods. Achieving and maintaining the end goal of universally available broadband requires that Congress — not ratepayers — provide the funding needed to ensure the availability of quality services at reasonably comparable prices.

“Congress and the FCC must reject the cynical call from some of the nation’s largest businesses to massively lower their own USF contribution burdens by imposing a regressive tax on residential broadband services. Such a regressive change would harm the public interest. It would frustrate the Commission’s universal service goals by making broadband more expensive for residential consumers and small businesses — disproportionately harming low-income families.

“The best way forward is for Congress to make the Affordable Connectivity Program permanent with additional funding at levels needed to ensure equitable broadband access for all.”