Sen. Capito Floats USF As Possible ACP Funding Source

Feb 11, 2024

By Ted Hearn, Editor of Policyband

Washington, D.C., Feb. 11, 2024 – A U.S. Senator on Sunday reportedly indicated possible movement on extending funding for a major Internet subsidy program backed by the White House.

Sen. Shelley Moore Capito (R-W.Va.) indicated to West Virginia TV station WTRF that Capitol Hill lawmakers were looking at the Universal Service Fund as a source of money for the Internet subsidy program.

The USF has about $8.5 billion to fund telecommunications providers in high-cost areas and connect schools and libraries to the Internet throughout the country, accounting for about 80% of the USF’s total annual budget.

The Internet subsidy program, called the Affordable Connectivity Program (ACP), began with $14.2 billion in late 2021 to connect low-income households with $30 monthly discounts on their Internet bills. But April will be the ACP's last month without new funding from Congress. President Biden has requested $6 billion in new ACP money.

In her comments to WTRF in Wheeling, Capito did not offer any details on how Congress would go about tapping the USF to extend the ACP beyond April. The ACP is helping more than 22 million households but unlike the USF, the ACP relies on congressional appropriations to exist.

The USF receives funding via a 34.6% tax on the interstate and international end-user revenue of telecommunications carriers. The amount of the tax keeps rising quarterly because the USF’s revenue base continues to shrink as a result of consumers’ shifting their spending to broadband. 

USF funding sources include wireline and wireless companies, and interconnected Voice over Internet Protocol (VoIP) providers. According to the FCC, 82 percent of USF contributors pass through their USF costs to customers, representing 40% of the program’s revenue.

About 22% of ACP enrollees were new to the Internet. Several key Republicans – including Sen. John Thune (R-S.D.) and Rep. Cathy McMorris Rodgers (R-Wash.), Chair of the House Energy and Commerce Committee, believe the Federal Communications Commission in administering the ACP failed to focus on low-income households that would be first-time Internet users.

Capito told WTRF that the ACP should not assist Internet users who can afford a monthly broadband subscription.

"I will tell you this, anecdotal data in West Virginia, some people are receiving this benefit that don’t really need it,” Capito said. “So I think we need to have accountability to make sure that the people that are receiving this benefit are the ones that actually cannot pay, and would not pay otherwise had they not had the extra money to be able to afford this,” Capito told the TV station.

Capito is part of a House-Senate working group on the ACP's future that includes Rep. Bob Latta (R-Oh.), who is Chairman of the House Subcommittee on Communications and Technology. The ACP stopped accepting new enrollees on Feb. 8.

FCC Chair Jessica Rosenworcel has told Congress that the law that established the ACP did not limit support to low-income households that never had Internet access before.

“In the law, Congress included a provision on consumer protection and outreach that specifically requires providers to notify existing subscribers at the time they renew a broadband subscription of the availability of the ACP,” Rosenworcel said in a Jan. 5 letter to Thune. “As a result, providing the ACP benefit for both new adopters and existing low-income subscribers is consistent with the law.”