Charter has at least 4M subscribers on ACP, says New Street

As the federal government plans to freeze new Affordable Connectivity Program (ACP) enrollments next month, the broadband industry has started to think about how that will impact ISPs and subscribers on the subsidy.

New Street Research released a report over the weekend evaluating the ACP’s impact on Charter. The firm estimated Charter has at least 4.1 million fixed broadband ACP subscribers. That figure is a “conservative” estimate, taken from Charter’s share of broadband passings.

But when considering the Federal Communications Commission’s (FCC) data on ACP disbursements by operator (reported on March 2023), Charter could have as many as 4.8 million ACP subs.

As for which customers will continue to receive internet service after ACP runs out, New Street grouped them into three categories. Customers that previously consented to receive service after ACP ends, “which we believe applies to most or perhaps all Charter subs,” customers that received service from the carrier before they got ACP and subscribers that “currently contribute towards the cost of service over and above the ACP benefit.”

“The rest will be disconnected,” wrote New Street’s Jonathan Chaplin, but noted carriers will strive to ensure all ACP customers fall into one of the three above groups before the program runs out.

“Again, we think Charter mostly resolved this when customers signed up for ACP benefits (we believe Charter secured consent to continue providing them with service),” Chaplin added.

According to ACP enrollment data as of December 2023, approximately 9.9 million (45%) of ACP recipients use the subsidy for fixed broadband. The majority of consumers – around 12 million – use ACP for wireless service. Fixed wireless or satellite customers make up just under 1% (around 182,000) of ACP enrollees.

Congress has proposed a $7 billion lifeline for the ACP, an extension that aims to keep the program running through the end of 2024. But the chance of that bill becoming law is “significantly below 50%,” New Street’s Blair Levin previously told Fierce Telecom.

John Heitmann, counsel for the National Lifeline Association, said the reaction from ISPs regarding ACP is “twofold.”

First, providers are trying to figure out what to do in terms of customer engagement, both with existing customers and potential customers. For instance, ISPs need to send out notices to subscribers already enrolled in the program.

Should the ACP freeze last for a couple of months, providers are thinking about “what they need to do with the distribution that they have set up in order to reach as many people as the program has met already.”

Heitmann noted that the total number of ACP enrollments has been achieved through “a combination of public and private efforts.”

“A significant percentage of that work is done by providers assembling distribution partnerships with say, a food pantry or a veterans group or simply setting up outside a busy bus station, or knocking door to door in rural areas,” he told Fierce. “That distribution infrastructure, if you will, has been built and is unprecedented.”

“So we’re trying to figure out what we can do to preserve it as much as possible.”

And of course, providers are thinking about how to keep the ACP funded. But that will be up to Congress.

“Hopefully the enrollment freeze will be [a] relatively short duration,” said Heitmann, and that the ACP extension gets passed before “we fall off the cliff and there’s no more money.”