The broadband industry has silently given up its struggle to restore the low-income internet subsidy on Capitol Hill.

• Federal internet subsidy for low-income households, the Affordable Connectivity Program, is being scaled back by internet service providers such as Charter, Verizon, and Comcast.
• Bills to temporarily extend the ACP have been proposed by Democrats and Republicans in Congress.
• Since the ACP lapsed in June, telecom companies have experienced customer losses and anticipate further backlash in the upcoming third quarter, causing them to be cautious about supporting another temporary subsidy program that may expire again.

The Affordable Connectivity Program, a federal internet subsidy that aided low-income households in paying for broadband, has seen reduced efforts from internet service providers like and .

The $14.2 billion program, which offered discounts of up to $30 per month for some qualifying households and up to $75 a month for households on eligible tribal land, ended in June after Congress decided not to renew its funding.

The ACP, which served about 23 million households, mostly had inconsistent or no internet access before enrolling, according to a December survey by the Federal Communications Commission. However, the program stopped accepting new applications in February due to dwindling funding.

Despite the expiration of the ACP, broadband companies have fared better than anticipated in terms of customer retention.

"While analyst Craig Moffett of MoffettNathanson stated that the impact on companies is less than expected, the loss of broadband access for families who relied on it remains a concern."

The ACP program has lapsed, prompting some Democratic and Republican lawmakers to work towards its revival.

Despite lobbying to renew the ACP before its expiration, broadband companies have not taken action to revive the program due to uncertainty about funding sources and the impact of the November election on Capitol Hill.

Blair Levin, a New Street Research analyst, stated to CNBC that he is aware of the distinction between when the industry genuinely desires something to occur and when they merely express support, but do not invest in advertising, lobbyists, or studies that bolster their argument.

Comcast owns NBCUniversal, the parent company of CNBC.

Capitol Hill revival effort

The Senate and House Democrats and Republicans have proposed bills to temporarily relaunch the ACP with a budget of between $6 billion and $7 billion.

Rep. Mike Carey, R-Ohio, and Rep. Nikki Budzinski, D-Ill, proposed a House bill in August, with the hope of quickly accomplishing something, as kids prepare to return to school.

The Emergency Broadband Benefit program, which was initially funded as the ACP, rapidly gained support during the pandemic era when online access became crucial for school and work.

According to Open Vault, internet usage surged in 2020 and 2021 and remains above pre-pandemic levels.

It is becoming increasingly difficult to persuade lawmakers to continue providing billions in subsidies as Covid recedes from public consciousness.

One key reason is election year timing.

JD Vance, an Ohio GOP senator, was a key supporter of the ACP. However, after being named as Donald Trump's running mate, Vance ceased his advocacy.

In November, the Republican House majority and Democratic control of the Senate could switch, potentially causing Democratic leaders to prioritize other issues over the ACP.

Gigi Sohn, a consumer broadband advocate and lawyer who formerly served as an FCC commissioner under the Biden administration, stated in an interview with CNBC that the close nature of the election may prompt them to use floor time for judicial nominations.

Democrats should easily secure bipartisan support for reauthorizing the ACP, according to Sohn.

"This thing perplexes me because it's the kind of thing you want to do in an election year."

With the Sept. 30 government funding deadline approaching, congressional leaders are focused on passing a stopgap funding bill to prevent a shutdown, which may push the ACP lower on their priority list. After September, Congress is expected to be on recess until after the election.

'This thing is dead'

While some Capitol Hill lawmakers hold onto the slim chance of an ACP revival, the private sector is curbing its expectations.

According to Sohn, ISPs are informing Wall Street that the thing is dead and they are not putting in much effort.

Although most broadband providers backed the ACP, many in the industry felt that the subsidy was too inclusive and benefited too many American households. In certain cases, customers utilized the benefit for products other than broadband, such as mobile or pay TV.

In February, a White House fact sheet stated that one in four New York households utilized the ACP.

Some people close to the companies suggest that starting a new subsidy program and promoting digital literacy among low-income consumers could be a better alternative after the election.

According to Sohn, industry players are more likely to lobby for permanent solutions like strengthening the Universal Service Fund, but this comes with its own set of political obstacles, especially after a federal court found the USF to be unconstitutional.

Lawmakers vow to continue their efforts to bring back the ACP, regardless of whether they have private sector resources.

"Carey stated that the near-term problem is our current focus, after which we can establish a consensus to examine a long-term plan."

The future of the ACP is uncertain due to decreasing support from industry partners, as these companies are responsible for providing internet service and educating customers about the program.

"Budzinski emphasized the importance of industry being involved in the discussion, stating, "Industry is one voice in this because they provide the structure for this service.""

Industry disenchantment

The expiration of the ACP has negatively impacted businesses that heavily invested in enrolling customers in the program.

In July, Chris Winfrey, CEO of Charter Communications, stated that the expiration of the ACP affected both losses and low-income broadband connections, as the company had invested significantly in the ACP program.

The ACP's biggest industry proponent was Charter, which received approximately $910 million from the program between 2022 and February 2023, according to FCC data. Additionally, Comcast and Verizon each received more than $200 million from the program.

Due to Congress's decision not to renew ACP funding, cable companies were hit with a shock at a time when they were already struggling with stagnated broadband customer growth due to heightened competition and a slowdown in home sales.

Neither Charter nor Comcast officials responded to requests for comment, while Verizon did not immediately provide a statement.

In the second quarter, Charter lost 149,000 internet customers, while Comcast lost 120,000 broadband customers. Although some of this can be attributed to the ACP, the companies anticipate the greatest impact in the third quarter.

After the ACP ended, companies have attempted to assist customers in shifting to low-income or alternative internet plans, with some reverting to their previous plans.

In July, Comcast announced that it has been assisting customers in transitioning to different broadband plans.

To retain its low-income consumer base, Charter has introduced new savings deals, including offering ACP customers a free unlimited mobile line for one year. In contrast, Verizon has chosen to absorb the financial impact of customer loss, reporting a loss of 410,000 prepaid wireless subscribers in its second quarter earnings.

Although the initial pain of the ACP's lapse was milder than expected, the process is not yet over.

"Moffett of MoffettNathanson stated on CNBC that we have only seen the first chapter, which is the impact on gross additions, but we have not yet seen the impact on bad debt and unpaid disconnects. He added that this information will be revealed in the third quarter."