ACP's End Could Bring New Subscribers, Providers Tell Wall Street

Numerous ISPs believe the affordable connectivity program's demise would give them a chance to snag subscribers from competitors. In earnings calls with analysts this quarter, many cable companies and telcos also told Wall Street they don't expect to take major hits to their subscriber base if the program ends (see 2311160076). The FCC said Monday that ACP funding will run out before the end of May (see 2403040077).

An ACP funding lapse might prompt those not satisfied with their provider to look for another, Cable One Chief Financial Officer Todd Koetje said last month. Cable One has about 50,000 ACP subscribers, he said. Similarly, TDS Chief Financial Officer Michelle Bruckwicki said ACP subs "might be looking for a new provider, and we'd be happy to serve them." She said TDS has "efforts in place to try to attract those customers." TDS has roughly 19,000 subs in ACP, she said.

About half of ACP spending nationwide goes to wireless providers, Ron Duncan, CEO of Liberty Broadband-owned GCI, told analysts. Duncan said Liberty Broadband's mobile and internet GCI+ bundle is cheaper than the cheapest AT&T and Verizon wireless offerings, and the ACP's end could help Liberty grow wireless subs at the expense of those wireless carriers. Altice Chief Financial Officer Marc Sirota said ending ACP funding is "a potential tailwind and an opportunity to attract new customers with plans in place to go after every jump ball." He said Altice has 125,000 subscribers receiving an ACP subsidy.

Most ISPs say they aren't expecting notable subscriber losses in the event of ACP's end.

Frontier Communications has "relatively low exposure" to ACP, representing about 4% of the company's total broadband customer base, Chief Financial Officer Scott Beasley told analysts. He said the company is currently unveiling plans that will serve as ACP alternatives. UScellular has "minimal exposure" to ACP, with about 20,000 customers, its president and CEO Laurent Therievel said last month. Marketing teams are working on "a soft landing" for those subs post-ACP, he added.

Many members of Congress support renewing ACP funding, but others consider it a bandwidth subsidy that customers will pay for out of pocket willingly, Liberty Broadband CEO Greg Maffei told analysts. If true, that would hurt efforts to secure ACP funding but could help providers in that it indicates subscribers may continue purchasing broadband despite ACP's absence, he said.

Cable One's Koetje said fewer than 20% of its 50,000 ACP subs have a plan that the program funds in full, with the rest paying for a portion. CEO Julia Laulis said most of those ACP subs were Cable One customers before they began receiving ACP. They use the federal program to increase the tier of service, she added. She said the company post-ACP can try to "position them ... into something that they can afford."

Comcast has started communicating with ACP participants and plans to have programs, including its Internet Essentials campaign, available if ACP is discontinued, Comcast President Mike Cavanagh told analysts. Comcast Cable CEO Dave Watson said the company has 1.4 million ACP subs, most of them Comcast customers prior to ACP. "We want the program to continue, but I think we’re very well positioned to support these customers if it does not," Watson said. He said the end of ACP "may be a risk, but one we feel is very manageable for us," given the company's ability to segment its customer base and have packages at various price points.

If ACP isn't funded, "we have plays that we'll run [and] things that we'll do with our customers and how we approach the market and what we do to respond to it," AT&T CEO John Stankey said. He said rather than focus on "triage" of ACP, there should be a broader re-do of federal subsides through revising USF for "a more holistic and sustainable approach, trying to get this right for the future, so we don't approach this moment again." Verizon Chief Financial Officer Tony Skiadas said the company has about 1.2 million prepaid subs who receive ACP benefits, less than 10% of its total prepaid base. T-Mobile's ACP exposure is not the same as a broadband company's, as they "went very big into it," CEO Mike Sievert said.

Charter Communications was less sanguine about ACP's possible end. That, along with fixed wireless competition, could add up to short-term customer growth headwinds for Charter in early 2024, Chief Financial Officer Jessica Fischer told analysts. She said Charter has slightly more than 5 million subs receiving the ACP benefits for wireline service. Very few used it to upgrade to higher speeds when they began receiving the benefit, she said. Calling Charter the largest ACP provider in the country, CEO Chris Winfrey said it's "going to work very hard to keep customers connected."