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Long 2024 Deal Odds: Levin

Thune and Latta Skeptical of White House Call for $6B in Supplemental ACP Money

The Biden administration’s Wednesday request for Congress to appropriate an additional $6 billion to fully fund the FCC’s affordable connectivity program (ACP) through the end of 2024 (see 2310250075) is drawing initial skepticism from top telecom-focused Republicans amid their push for the commission to be more transparent about how it has been spending the program’s existing $14.2 billion allocation. Congressional Democrats enthusiastically backed the White House’s request, noting it would give Capitol Hill more breathing room to examine whether and how to tie in changes to a longer-term ACP with a push for broader USF revamp legislation. Current estimates peg ACP as likely to exhaust its funding from the 2021 Infrastructure Investment and Jobs Act during the first half of 2024 (see 2309210060).

I can’t think of a single Republican who’s going to be for” giving ACP or any other federal broadband program additional money “right now,” said Senate Communications Subcommittee ranking member John Thune, R-S.D., in an interview. It’s already “hard enough right now trying to figure out” how to move through the Biden administration’s national security-related supplemental budget request for money to aid Israel and Ukraine. Stakeholders believe the position Senate Commerce Committee ranking member Ted Cruz, R-Texas, and House Commerce Committee Chair Cathy McMorris Rodgers, R-Wash., take on the proposal will be crucial to its future prospects. Cruz’s office didn’t immediately comment.

I’d say that’s very unlikely” to make it through the Hill given Congress has already “spent like $125 billion” on connectivity “over the last few years” without a clear plan for addressing mission overlap, said Thune, who’s also Senate minority whip. He and House Communications Subcommittee Chairman Bob Latta, R-Ohio, have been probing the commission's management of broadband money it received during the COVID-19 pandemic (see 2305100073). The FCC’s Office of Inspector General is set to complete an audit in November of the FCC’s ACP spending (see 2305310080) that could factor into whether Republicans back further money for the program, Hill aides told us.

There's so much money out there” already, Latta told us. “I'm a firm believer that before you send more money out” there needs to be a full accounting of how the FCC has already doled out the existing ACP appropriation. “We want to make sure every dollar is accounted for,” especially given the emphasis new House Speaker Mike Johnson, R-La., (see 2310250072) is placing on concerns about the rising national debt incurred in part via the 2021 Infrastructure Investment and Jobs Act that created the ACP, Latta said. A Latta spokesperson later clarified that he intends to address ACP items as part of the USF revamp working group he and House Communications ranking member Doris Matsui, D-Calif., formally joined in September.

Democrats' Enthusiasm

Matsui and other congressional Democrats are far more enthusiastic. “It's really very important” that Congress provide stopgap funding for ACP while lawmakers sort through how to modify the program and potentially integrate it into the USF apparatus, Matsui told us: “I feel that the White House understands this,” as indicated by the supplemental request. “You don't want to cut people off” from programs like ACP once they have become available because “it's so hard to get them back on again” if Congress is able to subsequently fund the program after the money taps out, she said.

Matsui wrote President Joe Biden Sunday urging him to include the ACP and rip-and-replace funding in the domestic supplemental. “If this vital program were even to briefly lapse, it would [undo] years of progress closing the digital divide,” Matsui told Biden. It’s “a national security imperative that we immediately remove vulnerable equipment manufactured by companies” like Huawei and ZTE from U.S. networks, but the rip-and-replace program's funding gap “is preventing this bipartisan goal from being realized.” Sens. Jacky Rosen of Nevada and Gary Peters of Michigan led a letter last week with Senate Communications Chairman Ben Ray Lujan of New Mexico and 28 other Democratic caucus members urging congressional leaders to give ACP more money as part of appropriations legislation.

I don’t think my colleagues will want to go and face their constituents and tell them, 'Sorry, you’re not important enough to me to do something to prevent you from using your internet access,’” Lujan told us. “I’ve heard from Republicans and Democrats in both chambers who are supportive of providing more money to ACP, understanding that it will run out of funds as early as March.” The USF working group formed in May (see 2305110066) is “looking at solutions that can be long in providing more certainty around” ACP, but “it does not appear that there will be any change to the funding mechanism other than Congress providing the necessary funding,” Lujan said.

We need more funding” for ACP “because it will run out in the middle of next year,” which could soon negatively impact its “take-up rate,” said Senate Appropriations Financial Services Subcommittee Chairman Chris Van Hollen, D-Md. He noted the issue came up during a September subpanel hearing on the FCC’s FY 2024 budget request (see 2309190075). “It’s very important that Congress provide confidence and certainty that that program will continue” even as lawmakers debate changes to its operation because “a lot of people in every state depend on it for their access to high-speed internet,” Van Hollen told us.

'Positive Step'

The White House’s call for additional ACP funding is “still a very positive development” even though Republicans aren’t publicly supporting such action right now, said Digital Progress Institute President Joel Thayer in an interview. DPI was one of a range of communications policy stakeholders that praised the White House for seeking the additional money. Others included: the American Civil Liberties Union, Benton Institute for Broadband & Society, Comcast, CTIA, Digital First Project, Incompas, NCTA, National Digital Inclusion Alliance, NTCA, T-Mobile, USTelecom, Verizon and WTA. The Competitive Carriers Association praised the White House’s request for Congress to allocate an additional $3.08 billion to close the FCC’s Secure and Trusted Communications Networks Reimbursement Program funding shortfall.

I don’t think Republicans have really hit the ball on where they are on ACP” yet because they generally “understand that the program is important and aren’t opposed to renewing it,” but “it needs some reforms” as part of a broader USF revamp, Thayer said. The White House’s proposal addresses Republicans’ “main issue” that there hadn’t been a clear governmental champion for reupping ACP responding to other stakeholders’ calls for action, he said: “This opens the door now for a lot of productive conversations.”

It does make sense to give ACP some more runway” while Congress sorts out what it wants to do about modifying the program or including it in a broader USF revamp, said Joe Kane, Information Technology and Innovation Foundation director-broadband and spectrum policy. “I know that itself is politically dicey because of the way the Republicans have tied themselves to reducing spending at all costs.” There “is a deal to be made” on “tying ACP funding to USF reform, but I think at this point we're cutting it so close” to when the program is set to use up its funding “that I don't know if it's viable politically to do both at the same time,” he told us.

The Biden administration’s funding request is a “positive step for ACP and the ISPs,” but the odds the White House and Congress can reach a "deal to assure that households are not cut off just before Christmas are not high,” said New Street’s Blair Levin in a note to investors. “There are positive indicators for the ACP, but the budget process is so fraught, every new request faces hurdles.” There “are still too many uncertainties about the budget process ahead to have confidence that the ACP program will be re-funded and sustained,” he said. Levin noted 29% of households in Johnson’s district are enrolled in ACP, as are 21% in the district of House Majority Leader Steve Scalise, R-La.