T-Mobile expands participation in dwindling Affordable Connectivity Program

T-Mobile is expanding its participation in the federal government’s Affordable Connectivity Program (ACP) through its Lifeline Assistance brand – Assurance Wireless.

Lifeline is an FCC program for low-income consumers, which provides a discount on qualifying monthly phone and broadband services.

ACP is a newer FCC program. It provides a discount of up to $30 per month toward internet service for eligible households. And those households can also receive a one-time discount of up to $100 to purchase a laptop, desktop computer or tablet from participating providers.

T-Mobile said today that it is offering ACP in seven more states, bringing the total number to 48 states and the District of Columbia. The seven new states are Montana, Nebraska, North Dakota, Oklahoma, South Dakota, Vermont and Wyoming.

With the ACP benefit at Assurance Wireless, subscribers can receive data, texting and calling via the power of T-Mobile's nationwide network. Assurance Wireless is also offering a free Android smartphone for new customers. T-Mobile said that during congestion, customers choosing Assurance Wireless may notice lower speeds than other customers due to data prioritization.

ACP controversy

It’s not just low-income people who benefit from ACP. Service providers also benefit because they can sign up new subscribers, who previously may not have had wireless or wired broadband service. The new subs get the $30 discount on their monthly plans, and the service providers get reimbursed this money from the government.

In effect, it’s another government subsidy program. The government has committed $14.2 billion to ACP, and there is currently no end date to the program. However, the funds could run out as soon as January 2024.

Consultant Michael O’Reilly, who is a former FCC commissioner, is an advocate for ACP. O’Reilly told Fierce, “Broadband providers do benefit from ACP with new subscribers, but ACP is a much more efficient subsidy mechanism overall. For instance, rather than the existing structure of providing funding to high-cost carriers under USF on the guise that it keeps rates lower, here we know exactly how many subscribers are being assisted and Congress can adjust the eligibility as economic circumstances change.”

The big three wireless carriers haven’t mentioned ACP revenues in their earnings calls, and it’s unclear how many ACP subs each of them have.

The FCC keeps a weekly ACP tracker, and as of February 6, there were 16.04 million households enrolled in the program. Of those, 54.6% were mobile subscribers and 44.6% were fixed broadband subs. The remaining were fixed wireless or satellite subs.

New Street Research policy analyst Blair Levin has written about the options if ACP funds run out. He said that as many as 40 million Americans may now be relying on ACP. If the program lapses, “It would create a significant branding, economic and operational headache for ISPs losing millions of profitable customers.”

An option would be for Congress to simply appropriate more funds for the program. “That is possible, but given the upcoming debate about the debt ceiling and the ways the House Republicans have set the rules to make it even more difficult to spend new money, we think it unlikely,” wrote Levin.

Fraud in ACP

In October 2022 the chair of the House Energy and Commerce Committee sent letters to the large broadband providers, demanding that they explain their ACP processes, after consumers complained about enrollment hassles and in some cases being required to opt-in to a full-priced service in the future.

RELATED: Key politician grills ISPs about broadband subsidy signup trouble

Asked if he was concerned about fraud in ACP, O’Reilly said, “Absolutely. Waste, fraud and abuse are present in most government programs. The key here is that Congress is directly overseeing ACP with appropriations rather than delegating funding and oversight.”

Effect on ISPs

Despite all the controversies and the possibility that ACP funds could run out at the end of this year, T-Mobile is forging ahead with its participation in the program.

But Levin reiterated, “One cannot look at the political landscape and think there are high odds that the end of current ACP appropriation will resolve itself without economic, branding, and political problems for the ISPs.”