Minnesota Gov. Tim Walz, Vice President Kamala Harris’ running mate on the Democrats’ 2024 presidential ticket, enters the national stage with a record of pro-rural broadband action but is largely a blank slate on other tech and telecom matters, observers said in interviews. Harris announced Walz as her pick Tuesday after a two-week vetting process in which other governors with stronger broadband policy backgrounds were in contention (see 2407260001). Sen. JD Vance of Ohio, the Republicans’ vice presidential nominee, has been a leading congressional advocate for injecting funding into the FCC’s lapsed affordable connectivity program (see 2407150062).
Affordable Connectivity Program (ACP)
What is the Affordable Connectivity Program (ACP)?
The Affordable Connectivity Program was a recently expired subsidy for low-income households to lower the cost of purchasing broadband internet and connected devices. The program was signed into law as part of the 2021 Infrastructure Investment and Jobs Act and administered by the FCC up until June 1, 2024, due to expiration of the ACP’s funding.
Will the ACP Return?
Congress continues to debate restoring ACP funding, with immediate next steps likely to come from the Senate Commerce Committee or Congressional discussions on revising the Universal Service Fund.
Cable One and Altice say the end of the affordable connectivity program isn't having a big effect so far on subscriber numbers. The companies announced their Q2 results Thursday. Charter Communications last week said it took a notable subscriber hit from ACP, which ended in June. Also, last week, Comcast said it expects an ACP-related impact in Q3 (see 2407260006). WideOpenWest reports Q2 results Aug. 8. With Cable One ending Q2 with 963,000 residential internet primary service units, up from 960,100 in Q2 a year ago, it's the only publicly traded cable operator with positive year over year subscriber growth, MoffettNathanson's Craig Moffett wrote investors. In a call with Wall Street last week as Altice announced Q2 results, CEO Dennis Mathew said ACP's demise spurred "nominal" increased churn. The company said it lost 51,000 broadband subs in Q2, in part due to competition as well as ACP. Altice ended Q2 with 4.1 million residential broadband PSUs, down more than 130,000 from the same quarter a year earlier. Cable One said that of its 48,000 ACP subscribers, 4,000 left in Q2. While 91% were retained at least through Q2, CEO Julie Laulis said future churn is possible. Moreover, she said the company faces "steadily increased" wireline competition. Asked about the possibility of a wireless offering, Laulis was noncommittal and said Cable One models a mobile virtual network operator partnership multiple times a year. Cable One CFO Todd Koetje said the company's network is 42% by fiber operators, but that the pace of overbuilding could start slowing due to the increased cost of capital. Altice ended the quarter with 385,000 mobile lines, up from 264,000 year over year. CFO Marc Sirota said mobile line additions in the quarter were more than double the pace of what they were Q2 a year ago, and he expects accelerated mobile growth in the second half of the year. Moffett wrote Altice "might actually be better positioned" than other cable operators in wireline/wireless convergence because it has a big opportunity to offload wireless traffic in its legacy Cablevision footprint in the East onto its own network.
T-Mobile on Wednesday became the last of the three major wireless carriers to report Q2 results, announcing it added 777,000 net postpaid phone subscribers and 406,000 fixed wireless subscribers. However, it warned of a financial hit of up to $450 million this year from the shuttering of the affordable connectivity program. Meanwhile, CEO Mike Sievert told analysts T-Mobile is “open-minded” but not set on buying additional fiber assets.
The Senate Commerce Committee’s surprise adoption Wednesday of an amendment to the Proper Leadership to Align Networks for Broadband Act (S-2238) that would allocate $7 billion in stopgap funding for the FCC’s lapsed affordable connectivity program likely imperils chamber passage of that measure, lawmakers and lobbyists told us. Debate over the pro-ACP amendment and a proposal that attached $3.08 billion to fully fund the FCC’s Secure and Trusted Communications Networks Reimbursement Program also signaled continued friction among panel members over the Spectrum and National Security Act (S-4207).
Reps. Nikki Budzinski, D-Ill., and Mike Carey, R-Ohio, led filing of a House companion to the Secure and Affordable Broadband Extension Act (S-4317) Tuesday in a bid to give the FCC’s lapsed affordable connectivity program $6 billion in stopgap funding for FY 2024. Senate Communications Subcommittee Chairman Ben Ray Lujan, D-N.M., filed S-4317 in May after he unsuccessfully attempted to attach identical language to the FAA reauthorization package (see 2405090068). The measure would couple the stopgap ACP funding with changes to the program’s scope and eligibility rules. Affordable Broadband Campaign spokesperson Gigi Sohn praised Budzinski and Carey for filing S-4317’s House companion. In a statement, Sohn said, “There is no excuse not to move this legislation forward.” Also praising the lawmakers were the ACLU, Common Sense Media, Incompas, National Digital Inclusion Alliance, National Lifeline Association, New America’s Open Technology Institute and Public Knowledge.
Members of the congressional Universal Service Fund revamp working group are considering whether, and how much, the 5th U.S. Circuit Court of Appeals' ruling will affect their rollout of a framework for overhauling the program. The court ruled last week that the FCC's USF contribution factor is unconstitutional (see 2407240043). Experts believe lawmakers will likely factor the ruling into the framework, but it could be moot should the U.S. Supreme Court reverse the decision on appeal (see 2407260044). Uncertainty about USF’s future will likely extend the working group’s already lengthy process, lobbyists told us.
Wisconsin Gov. Tony Evers (D) said Friday he will ask the legislature to spend more on broadband in the next state budget. Evers made the announcement as his broadband task force released its fourth annual report. Spending $345 million in state and federal funds for broadband since 2019 has brought Wisconsin a broadband adoption rate of about 88%, the report said. “Through our investments, more than 410,000 homes and businesses will be connected to new or improved high-speed internet service, but as this report shows, we've got more work to do,” said Evers. The report’s recommendations include continued state spending on broadband, more workforce training, streamlined permitting and locating processes and greater coordination with tribes and localities. To fill the gap the end of the federal affordable connectivity program (ACP) left, the task force recommended creating “a state internet assistance program to increase broadband affordability and adoption.”
Charter Communications' internet subscriber numbers took a hit in Q2 from June's expiration of the affordable connectivity program, the company said Friday. It followed Comcast saying ACP wasn't a big weight yet but is expected to be a notable drag in Q3.
Kentucky Gov. Andy Beshear and North Carolina Gov. Roy Cooper possess the best telecom policy credentials among the main contenders to be the Democrats’ vice presidential nominee, broadband advocates and other policy observers told us. All the contenders hold broadly similar views to Vice President Kamala Harris on broadband and telecom policy matters, but could bring different perspectives to the ticket, experts said in interviews last week.
Verizon lost 410,000 prepaid wireless customers tied to the end of the affordable connectivity program in Q2, the company said Monday as it became the first major wireless carrier to report earnings since the impact of ACP's demise could be measured. Overall prepaid customer losses were 624,000. But Verizon also gained a net 148,000 postpaid customers, which beat expectations. Revenue of $32.8 billion just missed consensus estimates. Though most numbers were positive, Verizon was down 6.08% to $39.09 for the day.