Millions of Low-Income Families Set to Lose Internet Subsidies

Phyllis Jackson, a retired administrative assistant in Monroeville, Pa., signed up for home internet service for the first time in about two decades early last year. She now regularly uses the internet to pay her bills online, buy clothes, find new recipes and learn about her medication.

Ms. Jackson said she signed up for internet service after enrolling in a federal program that provided a monthly discount for low-income households. That program is set to run out of funding this spring, however, which will make it harder for Ms. Jackson and millions of other households to afford to stay connected to the internet.

“I really can’t do without it,” said Ms. Jackson, 79. “The way things are today, everyone needs to be able to use the computer.”

The $14.2 billion Affordable Connectivity Program provides low-income households up to $30 off their internet bill each month, and households living on eligible tribal lands can receive a discount of up to $75 a month. More than 23 million households receive either reduced bills or effectively free internet service through the program.

But federal officials began winding down the program early last month, when they stopped accepting new applications and enrollments. The program was tucked into the 2021 infrastructure law as a replacement for a pandemic-era program that provided certain households discounts on their internet bills. Although there is some bipartisan support to continue the subsidies, lawmakers have not passed an extension.

Participants will continue receiving full benefits through April, according to the Federal Communications Commission. In May, internet companies will have the option to provide them with partial discounts using the remaining federal funding. Based on provider claims data as of Feb. 15, the program had about $2.5 billion left, which is meant to cover the subsidies and other program expenses.

The program is part of the Biden administration’s broader initiative to connect every American to affordable, high-speed internet, which officials hope will stimulate economic growth and widen access to health care and education. The administration is spending an additional $42.5 billion to expand access to broadband to every corner of the country.

The administration is funneling billions of dollars into the expansion of internet access largely because officials see it as a critical way to strengthen the economy. Across U.S. metros, prime-age workers who have access to high-speed internet on home computers participate in the labor force at a much higher rate than those without access, according to research from the Federal Reserve Bank of Philadelphia. Other research has found that internet connectivity can bolster economic growth in rural areas, helping to create jobs and attract workers.

Some Democratic and Republican lawmakers have coalesced around a bill that would provide $7 billion to fund the program for about another year. Senator Peter Welch of Vermont, a Democrat who has sponsored the bill, said that he was encouraged by the bipartisan support, but that it was “tough to be optimistic.”

“It’s hard to get anything done in this Congress,” Mr. Welch said. “Anything on the budget becomes very contentious.”

In October, Biden administration officials sent Congress a supplemental request for $6 billion to extend funding for the program, which they have urged Republicans to support. “It’s past time for them to step up for the American people so that we can continue our work to close the digital divide across America,” Robyn Patterson, a White House spokeswoman, said in a statement.

F.C.C. officials have said more funding is “urgently needed” to help millions of households stay connected to high-speed internet. According to a survey the F.C.C. conducted of program recipients in December, 48 percent of respondents said they would switch to a lower-cost plan that could be slower than their current one, and 29 percent said they would drop service after losing the benefit.

Paloma Perez, a spokeswoman for the F.C.C., said that the end of the program would be a “step backward” and that officials were working with lawmakers to “think about what the future of this program looks like.”

But some Republicans have argued that the program is wasteful. In a December letter to the F.C.C., Senator John Thune of South Dakota and other Republican lawmakers raised concerns about the program subsidizing households that already had internet service. They have also pointed to findings from the F.C.C.’s Office of Inspector General, which has in recent months expressed concerns about some providers failing to comply with program rules and improperly claiming funds.

“Some people are receiving this benefit that don’t really need it,” Senator Shelley Moore Capito of West Virginia said during a recent local news interview. “So I think we need to have accountability and make sure that the people that are receiving this benefit are the ones that actually cannot pay.”

According to the F.C.C. survey, 22 percent of respondents said they did not have any internet service and 25 percent only had mobile internet service before enrolling in the program. Thirty percent of respondents said they had both mobile and home internet service.

Blair Levin, a nonresident senior fellow at the Brookings Institution and an F.C.C. official during the Obama administration, said that changes to the program would be problematic, but that lawmakers should reach a compromise before millions of Americans are left at risk of losing internet access.

Ms. Jackson, who enrolled in the program with assistance from a Pittsburgh-based nonprofit, said she was not sure if she could afford internet service after the program ends. She said she would most likely have to purchase fewer groceries and reduce her electricity use to cut expenses, but her monthly rent is also set to increase by $50 next month.

The end of the subsidy program could also complicate the Biden administration’s other $42.5 billion program to provide every American access to broadband, said Drew Garner, the director of policy engagement at the Benton Institute for Broadband & Society. The funds, which will be distributed as grants to internet providers, are meant to cover much of the cost of building broadband infrastructure.

Without the subsidy program, however, more low-income households will struggle to afford broadband service. With fewer potential customers in low-income areas, internet providers will have less incentive to expand service in those neighborhoods and may ask for bigger federal grants, Mr. Garner said.

“It’s a big task to reach every unconnected household in the country,” Mr. Garner said. “That’s going to be way harder without the A.C.P. attracting infrastructure to those very hard-to-reach areas.”

Mr. Garner said the subsidy program has also helped provide households more stable internet access. In the year before enrolling in the program, many participants reported only having internet service during the months they could afford it. Although some households could drop service entirely, others might opt into slower internet plans, which could impede their ability to complete many tasks online, Mr. Garner said.

Vincent Coleman, a 26-year-old medical student in Huntington, W.Va., said he would probably have to downgrade his internet plan. Although the new plan would cost about $40 a month — roughly the same amount he pays now with the discount — he worries his internet connection would be too slow to watch lectures or view patient records at home.

Mr. Coleman said the benefit has helped provide relief for him and his wife.

“It’s a great help,” Mr. Coleman said. “Finances are always a major source of stress, and I budget very carefully.”