The elimination of the U.S. government’s Affordable Connectivity Program (ACP) is beginning to leave low-income Americans without access to internet service. Charter Communications announced a net loss of 154,000 internet subscribers on Friday, mostly due to customers canceling their contracts after federal discounts were removed. About 100,000 of those subscribers were reportedly receiving discounts that, in some cases, made internet service free for the consumer.
The $30-a-month broadband discount offered by the ACP ended in May after Congress failed to allocate additional funds. The Biden administration has requested $6 billion to fund the ACP through December 2024, but Republicans have criticized the program as a “waste.”
A major complaint among Republicans is that most of the ACP funding goes to households that already had broadband before the subsidies were created. FCC Chairwoman Jessica Rosenworcel has warned that eliminating the discounts would reduce internet access, saying FCC research shows that 77% of participating households would change their plans or drop internet service altogether when the discounts expire.
Charter’s second-quarter 2024 earnings report provides some of the first evidence that users are dropping internet service after discounts run out. “We lost 154,000 residential internet customers in the second quarter, primarily due to the end of the FCC’s Affordable Connectivity Program subsidy in the second quarter, compared to an increase of 70,000 in the second quarter of 2023,” Charter said.
Combined, ACPs serve 23 million U.S. households. According to a study released in January 2024, Charter serves more than 4 million ACP subscribers, and up to 300,000 of Charter’s customers are “at risk” of losing their internet service when the discounts expire. Because ACP subscribers must meet low-income eligibility requirements, the loss of the discounts could strain their overall finances, even if they choose to continue paying for their internet service.
“The real issue is the customer’s ability to pay.”
Charter, which operates under the brand name Spectrum, has 28.3 million residential internet customers in 41 states. In its earnings report, Charter said it made retention offers to customers who previously received ACP subsidies. Without those offers, customer losses would likely have been much greater.
Right Reading reported that Charter attributes about 100,000 of its 154,000 customer losses to the ACP closure. Charter has so far retained most of its ACP subscribers, but said low-income families may not be able to continue paying for internet service for much longer without new subsidies.
The ACP lasted only a few years, and the FCC implemented a $30 per month subsidy in early 2022, replacing the previous $50 per month subsidy under the Emergency Broadband Benefit Program, which began enrolling users in May 2021.
Separately, the FCC Lifeline program, which offers a discounted rate of $9.25 per month, is in jeopardy after a court ruling last week: Lifeline is paid for by the Universal Service Fund, which was the subject of a constitutional challenge.
The U.S. Fifth Circuit Court of Appeals has ruled that the universal service fee on telephone bills is an unconstitutional “unjust tax.” However, in similar cases, the Sixth and Eleventh Circuits have ruled that the fund is constitutional. The split in those circuits makes it more likely that the Supreme Court will hear the case.
Disclosure: Advance/Newhouse Partnership, which owns 12.4% of Charter, is part of Advance Publications, which also owns Ars Technica and WIRED parent company Condé Nast.
This story originally Ars Technica.
