How Much Will ACP Demise Affect Home Broadband?

It is not unusual to see estimates of U.S. households that will “lose their home broadband service” because a particular subsidy program is out of funding at about six million homes, or roughly 25 percent of households that had used the ACP subsidy, as estimated by researchers at Maravedis, for example. 

According to the Federal Communications Commission, some 21 million ACP accounts were in service in December 2023. 

The issue then is how many of those households will find some other way to obtain home broadband, as was the case before the Affordable Connectivity Program was funded. In other words, users of ACP subsidies often had already been buying home broadband service, or had chosen to use their smartphones, before the ACP was available. 

So the end of the ACP subsidy does not automatically mean all or most of those who used the program will simply stop buying home broadband services. By way of reference, it has been estimated that “low-income households” with less than $30,000 a year in income had home broadband buy rates in the 70-percent range before the ACP was funded. 

source: Pew Research

Also, according to Pew Research estimates, about 15 percent of U.S. adults say they rely on their smartphones to access the internet, though such practices are about 27 percent of adults with incomes less than $30,000 annually  and about 19 percent of adults with incomes less than $50,000 but at least $30,000 annually. 

 

source: Pew Research

By implication, perhaps 46 percent of U.S. adults with incomes less than $50,000 annually rely on their smartphones for internet access instead of buying home broadband. 

Keep in mind, though, that home broadband is purchased “by the household” while “smartphone internet access” is purchased by the person. 

So 86 percent of U.S. adults with incomes of $30,000 or less are estimated to use internet access services by some means, while 91 percent of U.S. adults with incomes of $30,000 to $50,000 have internet access. 

In total, between 93 percent and 95 percent of U.S. homes purchase home broadband services, according to Pew Research estimates.  

If one assumes that it was primarily the adults with annual incomes of less than $30,000 annually that were the bulk of the ACP subsidy recipients, and if ACP accounts numbered about 23 million households, with an average household density of about 2.5 persons, that suggests as many as 57.5 million U.S. adults might have been using the ACP (some of the household members were younger than 18). 

The Federal Communications Commission survey of ACP recipients in December 2023 said ACP recipients numbered 21 million. The FCC survey found that mobile-only service was used by 25 percent of survey respondents; 30 percent had both mobile and home broadband access and 23 percent already had home broadband service. About 22 percent reported they had no internet access prior to the ACP. 

The FCC survey also found that 11 percent of the “had no internet access service” respondents also said they had no need to access the internet. And more than 80 percent of those reporting no pre-ACP internet access said they used access services in some other way (library, school, business or friend’s account). 

Using the FCC’s 21 million ACP account figure, and subtracting the 11 percent of respondents who said they had no need to use the internet, perhaps 2.5 million of the ACP accounts were homes that wanted to use the internet and did not have a home broadband service prior to the ACP.

On the other hand, more than 50 percent of respondents who already had mobile internet access before the ACP was available said they used the subsidy to reduce the cost of mobile service they already had, and did not add a home broadband service. But a significant percentage (about 38 percent) said they did add home broadband using the ACP benefit. 

About 84 percent to 85 percent of respondents who already had some form of internet access used the ACP to reduce the cost of their existing plans. 

None of that is to minimize the remaining portion of the U.S. adult population that does not buy internet access or home broadband. But consumer choices also play a role. 

The whole point of public, school and business access is to allow people to use the internet without buying a personal subscription. Some consumers make rational choices not to purchase home broadband, instead using their mobile connections or free access of some sort.

Not every statistical artifact is the result of invidious action or circumstances.