The death of the U.S. government’s Affordable Connectivity Program (ACP) is starting to result in internet service being cut off for low-income Americans. On Friday, Charter Communications reported a net loss of 154,000 internet subscribers, which it said was largely due to customers canceling their subscriptions after losing their federal rebate. About 100,000 of those subscribers reportedly received the rebate, which in some cases made internet service free to consumers.
The $30 monthly broadband rebates offered by the ACP ended in May after Congress failed to appropriate additional funding. The Biden administration requested $6 billion to fund the ACP through December 2024, but Republicans have called the program “wasteful.”
The main complaint from Republican lawmakers was that most of the ACP money went to households that already had broadband before the subsidy was implemented. FCC Chairwoman Jessica Rosenworcel warned that eliminating the rebates would reduce internet access, saying an FCC survey found that 77 percent of participating households would change their plans or cancel internet service altogether once the rebates expired.
Charter’s Q2 2024 earnings report provides some of the first evidence that users are canceling their internet subscriptions after losing their discounts. “Residential internet customers in the second quarter decreased by 154,000, largely driven by the end of the FCC’s Affordable Connectivity Program subsidies in the second quarter, compared to an increase of 70,000 in the second quarter of 2023,” Charter said.
Across all ISPs, 23 million U.S. households were enrolled in ACP. Research published in January 2024 found that Charter served more than 4 million ACP recipients, and that up to 300,000 of those Charter customers were at risk of canceling their internet subscriptions if the rebates expired. Since ACP recipients must meet low-income requirements, losing the rebates could strain their overall finances, even if they choose to continue paying for internet.
“The real question is the customer's ability to pay”
Charter, which offers services under the Spectrum brand, has 28.3 million residential internet customers in 41 states. The company's earnings report noted that Charter offered retention offers to customers who previously received ACP subsidies. The customer loss apparently would have been higher if the offers had not been made.
Light Reading reported that Charter attributed about 100,000 of its 154,000 customer losses to the ACP shutdown. Charter said it has retained most of its ACP subscribers so far, but that low-income households may not be able to continue paying for internet service for much longer without a new subsidy:
The ACP only lasted a few years. The FCC implemented the $30 monthly subsidy in early 2022, replacing a previous $50 monthly subsidy from the Emergency Broadband Benefit Program that began enrolling users in May 2021.
In addition, the FCC’s Lifeline program, which offers $9.25 monthly rebates, is in jeopardy after a court ruling last week. Lifeline is paid for by the Universal Service Fund, which has been the subject of a constitutional challenge.
The U.S. Court of Appeals for the 5th Circuit ruled that Universal Service charges on phone bills are an “unreasonable tax” that violates the Constitution. But in similar cases, the 6th and 11th Circuit courts of appeals have held that the fund is constitutional. The circuit split increases the likelihood that the Supreme Court will hear the case.
Disclosure: The Advance/Newhouse Partnership, which owns 12.4 percent of Charter, is part of Advance Publications, which also owns Ars Technica and WIRED parent company Condé Nast.
This story originally appeared on Ars Technica.
