Last week, the Federal Communications Commission announced plans to wind-down the Affordable Connectivity Program (ACP). The ACP offers a $30 monthly subsidy for internet service to qualifying households, and up to $75 per month for households on Tribal lands and high-cost rural areas. The program began in 2022 as a follow-up to the Emergency Broadband Benefit (EBB) – which was set up to help households struggling to afford internet during Covid-19.
These programs were unique for federal broadband efforts, which until then had largely focused on offering grants and loans to internet providers in an effort to address the “digital divide” in broadband availability. However, a wide body of evidence has shown that broadband adoption, and not simply having it available, is much more closely linked to economic development. For households without a reliable internet connection, the overwhelming reason why is cost. The ACP was the first federal effort to seriously address the internet affordability issue, with $14.2 billion dollars in funding provided by the Infrastructure Investment and Jobs Act of 2021.
The ACP has largely been hailed as a success, with over 22 million households signing up for the program as of late 2023 and research showing that it has helped increase broadband adoption rates, particularly in high-poverty areas. However, helping such a large number of households meant a quicker drawdown in the associated funding, and current estimates show the funds running out by April 2024. While there are still significant efforts to save the program (including the ACP Extension Act of 2024 filed last week), ongoing deadlock in Congress prompted the FCC to announce a freeze in new enrollments as of February 7, 2024.
While the future of the ACP remains uncertain, it is worth reviewing how the program fared in rural America. Home broadband adoption rates in rural areas have historically been 5-10 percentage points lower than those in urban locations. This is due partly to lower internet availability but also higher monthly costs in rural geographies. So, were rural households, with lower broadband adoption rates and higher monthly bills more likely to embrace the program?
As the chart below suggests, the short answer is no. Using county-level data on ACP subscribers for each month of the program and estimates of the number of eligible households in each county, it shows that rural households were far less likely to participate than urban households. Even more tellingly, the gap grew dramatically over the life of the program.
As the ACP began in January 2022, only about 13% of eligible households in the most rural counties (defined as codes 7-9 in the USDA’s Rural-Urban Continuum Code) signed up. This was well below the 21% rate for eligible urban households (RUC Codes 1-3). These highly-rural counties saw their participation rate grow to 28% by late 2023, while urban households increased to 46%. So, the rural-urban ACP participation gap increased from 8 percentage points (21% – 13%) to nearly 20 percentage points (46% – 28%) over the roughly two-year life of the program. A smaller gap (and increase) was seen for less rural counties (RUC Codes 4-6), from 3 percentage points in January 2022 to 9 percentage points by late 2023.
There are several reasons for the rural-urban ACP participation gap visualized above. The ACP (and EBB) was initially heavily marketed to the FCC’s Lifeline program participants, which had a strong urban presence (any Lifeline participant automatically qualified for ACP). This largely explains higher urban participation early on. As time went on, rural areas were disadvantaged by
1) lower numbers of internet providers advertising the program and
2) fewer civic organizations like libraries or non-profits spreading word about the program and helping people sign up.
ACP Outreach grants were funded in mid-2023 to help spread the word and enroll eligible households, but most have not had much time to make an impact. A recent academic study also explores the “hassle costs” and “benefits stigma” associated with program participation – both of which are likely higher in rural areas.
Regardless of the future of the ACP, there are lessons to be learned for rural broadband advocates. The program’s focus on consumer costs and increasing adoption rates answered calls for action that many of us have been making for years. But the lower adoption and slower growth of the program in rural areas speaks to additional barriers that need to be overcome.
Brian Whitacre is a professor and Neustadt Chair in the Department of Agricultural Economics at Oklahoma State University. Howard Song is an undergraduate at Oklahoma State.
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