Update 1/11/24 3:30 p.m. ET: The FCC issued a notice today stating it plans to halt new ACP enrollments after February 7.

The fate of the Affordable Connectivity Program (ACP) hangs in the balance. Amid warnings that the internet subsidy program will shut down this spring without additional funds, Congress proposed legislation that would allocate another $7 billion to the ACP pool.

But chances of the bill becoming law is “significantly below 50%,” said New Street Research’s Blair Levin. The ACP Extension Act was introduced in both the Senate and the House, and “if it were to get to the floor it would pass both.”

However, “I don't think the speaker and/or the Freedom Caucus will allow a vote on the bill,” Levin said, referring to the congressional caucus consisting of Republican representatives. But that could change if there’s “significant pressure” from Republican governors or mayors to support the bill or “after the ISP notices go out, there is significant push back from constituents.”

The $7 billion allotment is slightly higher than the $6 billion figure the Federal Communications Commission (FCC) requested, saying it would extend ACP benefits through the end of the year. Currently, just under $4 billion remains in the program’s funding pot.

Levin noted while $7 billion is only enough to keep the program running through 2024, “better to get to the end of the year than have the program collapse in April.”

He added “there is a view that by the end of the year, Congress will have figured out [Universal Service Fund] such that no further congressional appropriations are necessary.”

The USF is undergoing a number of legal battles. While the Eleventh Circuit Court of Appeals in December upheld the fund’s constitutionality, the USF will still need to go through an en banc review by the Fifth Circuit.

Joe Kane, director of broadband and spectrum policy at ITIF, said the $7 billion allotment would “at least give Congress enough time to enact USF reform that makes ACP, rather than outdated deployment programs, the long-run focus of broadband subsidies.”

But Levin disagreed, noting “I believe that Congress is unlikely to do anything on USF in a presidential election year unless the courts (i.e., the 5th circuit) force its hand.”

What’s more, $7 billion “is a lofty price tag in the current Congressional environment,” said Andrew Lock, principal at lobbying firm Monument Advocacy. Especially as the government faces a “highly contested election cycle.”

“The cost of ACP is likely to be more than just monetary,” he said. “The FCC has other COVID-era authorities facing funding shortfalls that are reliant on further Congressional action,” including the Rip and Replace program.

An ACP shutdown would have a rippling effect on consumers, ISPs and BEAD

How big of a problem will it be if the ACP shuts down? Consumers and businesses alike would be impacted, according to Kathryn de Wit, director of the Broadband Access Initiative at the Pew Charitable Trusts.

“Letting ACP’s funding dry up would abruptly cut millions of low-income families off from the connectivity,” she said, whereas the ISPs “that have enjoyed increased customer bases, decreased customer turnover and more stable revenue could see those benefits fade.”

An alternative solution – reforming the USF – would take years to finalize and implement, “largely due to debates regarding which entities pay into the fund and who receives benefits from it,” de Wit said.

Whereas ACP provides the necessary support “to keep folks online now.”

Roughly half of ACP recipients are aged 50 and above, de Wit noted, with the program’s larger demographic spanning low-income households, families receiving nutrition assistance, public housing residents, Pell Grant scholars and veterans receiving survivors pension benefits.

“Policymakers will also lose the trust of individuals if they ever try to provide such low-income support again,” Kane said. “Getting the word out about ACP was hard enough the first time; if Congress yanks that benefit away, few people will take their word for it next time.”

Moreover, allowing the ACP to lapse could stifle participating in other federal programs, including the Broadband Equity, Access and Deployment (BEAD) program and the Capital Projects Fund.

“BEAD requires states to detail their ‘low-cost’ option for consumers, but our early analysis of their proposals indicates these will work in tandem with ACP or whatever federal program follows,” said de Wit.

Kane added many BEAD subgrantees are relying on ACP to stimulate demand for new networks. Without that boost to customers, BEAD builds “will be less attractive to ISPs and more costly to the federal government.”

This means it’s unlikely BEAD – or another longer-term program – could fill the gap left by ACP.

“That debate has been going on for almost a year and we still haven’t found a better solution,” said de Wit. “In that timeframe, states and ISPs have grown increasingly concerned about their ability to meet the requirements of BEAD.”

“ACP is the best program we've ever had to address the affordability component of the digital divide,” Kane said, noting it’s also the kind of voucher program “that Republicans have long sought.”

“Letting ACP [lapse] would be a significant step backward in broadband policy,” he concluded.