ACP Seen Living on Borrowed Time, With Further Funding Questionable

The end seems nigh for affordable connectivity program (ACP) funding, with dicey odds of Congress acting before its money runs out in early 2024, speakers said Wednesday at ACA Connects' 2023 Washington summit. Small cable operator participation in the broadband equity, access and deployment (BEAD) program will depend on the rules governing it, they said.

“Nobody is talking” about ACP worries, ACA Connects President Grant Spellmeyer said. He said odds of it being extended are highly questionable given a divided Congress, and more pressure on lawmakers is needed. It's also unclear when ACP will run out of funding, short of sometime in Q1, he said. "Everything related to budget and programs is fraught with danger" despite bipartisan support for more funding, echoed New Street Research policy adviser Blair Levin.

Senate Communications Subcommittee Chairman Ben Ray Lujan, D-N.M., said ACP was built with bipartisan support, and there are bipartisan arguments for extending it, but it’s not clear there are sufficient votes to do so.

More optimistic, ACA Chairwoman Patty Jo Boyers, CEO of Missouri's Boycom Cablevision, said she expects Congress "will get their heads out and do something," in part because of how effective ACP has been.

State broadband officials from Georgia and Pennsylvania said ACA estimates of BEAD funds they would receive -- $1.3 billion for Pennsylvania, $1.5 billion for Georgia -- are roughly in line with the states' own estimates. Tamarah Holmes, Virginia Department of Housing and Community Development broadband director, said ACA's $1.4 billion estimate for Virginia is somewhat higher than other figures it has heard. She said that amount would let the state "completely close" the digital divide there and potentially leave some funding still available for investment in non-deployment activities such as adoption and affordability. Josh Hildebrandt, Georgia Technology Authority director-broadband initiatives, said "anything close to $1 billion, $1.5 billion" would let it "get very close" to fixing the digital divide. He said some policy talks are starting in Georgia about what could be done with any leftover BEAD funding. He said the first step would be talking to providers about ensuring long-term sustainability of their projects.

NTIA expects sizable bidding by smaller providers, said Doug Kinkoph, NTIA Office of Internet Connectivity and Growth associate administrator. The 25% match for planning funds can be waived, he said.

The "vast majority" of ACA members are interested in taking part in BEAD, but their participation will depend on the individual states and how they allocate money, Spellmeyer said. He said there's a concern some states could lean toward favoring a single large provider.

Boyers said participation can be "onerous" for small operators with little staffing and expertise in federal programs. "Our engineering department is one guy," she said. But NTIA has been adept at tweaking its program rules to boost participation, she said, contrasting that with such programs as the rural digital opportunity fund.

Coordination

The two minority FCC commissioners in separate talks raised similar concerns about duplicative federal program spending on broadband.

Lack of good coordination among federal agencies has always been a problem, but it was exacerbated by the big uptick in digital divide spending, Brendan Carr said. Different agencies having different standards and requirements risks "building a broadband Tower of Babel," he said. Carr said there should be more congressional effort on permitting and siting revisions before BEAD dollars start flowing to states and providers.

There are mechanisms for federal agency coordination, such as the FCC-NTIA memorandum of understanding, but there can be major differences between what's prohibited and what actually gets enforced, Nathan Simington said. He said the extra layer of government in BEAD, with states involved, adds to the complexity. There inevitably will be discrepancies among states in implementation and the FCC will "exercise what oversight we can," Simington said, noting providers such as cable ISPs need to be active in flagging issues with state broadband offices. Given the size and scope of what's being spent on the digital divide, 'it's inevitable a lot of people should go to jail" because such money will attract some fraud, he said.

Treasury’s $10 billion capital projects fund (CPF) has awarded nearly $5 billion since June to 33 states for broadband projects, said Joseph Wender, Treasury Department Capital Projects Fund director. Almost all the rest of the money will be awarded later this year, he said. The first states awarded funding have work underway now because the funds expire in 2026, he said. That Treasury spending, plus BEAD and other federal programs, will cover "the vast, vast majority" of U.S. connectivity needs, but ACP's future is one potential caveat, he said. The ACP subsidy helps determine if there's a business case to build to an area, he said. ACP's end could chill interest in covering an unserved low-income area, he said. "It would really have a cascading effect" on the CPF, he said.

Standard General/Tegna

Standard General/Tegna is all but dead, having been referred by the Media Bureau for hearing (see 2302240068), and won’t ever get to that stage of a hearing, ACA's Spellmeyer said. He said retransmission consent pricing was cited as a reason for it being referred to the administrative law judge and could mean an opportunity to revisit retrans reform.

The Standard General/Tegna referral “has almost zero relevance” as a precedent for courts or future commissions but will throw some cold water on future deals, said New Street's Levin. It shows the FCC chair can block any transaction by shipping it to an ALJ for adjudication, he said: “It’s not really about law but about institutional power.”

Lujan said he's “hopeful” for FCC spectrum auction reauthorization before the March deadline. NTIA’s focus has been unserved areas, but underserved areas with dial-up-like connectivity also need attention, he said. Yet there might not be many resources for tackling underserved areas, he said.

State broadband offices aren't likely to disappear post BEAD, said NTIA's Kinkoph. They may get smaller but should have longevity, he said. He said NTIA will release guidance in coming months on all 19 of the key points in the BEAD notice of funding, such as what constitutes middle-class affordability and meeting Build America Buy America Act requirements. Asked whether funding will be available for a competitor who builds their network through a competitor's territory to reach unserved territory, he said transiting an area isn't the same as overbuilding an area.