Assessing Broadband Affordability Initiatives

Abstract

Reducing the broadband affordability gap is a noble and important policy goal. Unfortunately, it is far from clear whether Lifeline, the federal program tasked with getting low-income households online, actually addresses this problem. d service for qualifying low-income households.

But despite a decade of prodding by Congress and governmental watchdogs, the Federal Communications Commission has not developed metrics to evaluate whether the program is effective. A recent independent audit concluded that “there is no evidence to support whether or not the Lifeline program has improved access to voice and broadband services for low-income consumers,” while other studies suggest that much of Lifeline’s spending is likely wasted on households that are at little risk of dropping off the network. The program is also unnecessarily paternalistic, restricting recipients in ways that likely distort communications markets.

The recently enacted Affordable Connectivity Program threatens to compound Lifeline’s errors. ACP offers a larger subsidy to a bigger class of eligible recipients. While this new pandemic-legacy initiative avoids some of Lifeline’s paternalism, it replicates Lifeline’s basic design flaw of spending broadly based on untested assumptions about which households lack broadband access and why.

The advent of ACP provides a unique opportunity to rethink our approach to broadband affordability initiatives. Rather than replicating a faulty subsidy model originally developed during the Reagan administration for landline telephones, Congress should adopt a tailored, data-driven program targeting only those low-income households that currently lack broadband service or that are at significant risk of losing access absent a subsidy.

Keywords: broadband, universal service, federal communications commission, Lifeline, Affordable Connectivity Program, telecommunications

JEL Classification: K2, K23