Takeaways from Georgetown on the Hill: Broadband Subsidy Programs

Posted in Events

By Alex Dragone, MBA/MSFS’27

Why do government programs aimed at helping Americans so often fail to achieve their potential? The Georgetown Center for Business and Public Policy convened a panel of experts to the Rayburn House Office Building on September 15 to give a post-mortem on the Affordable Connectivity Program (ACP), an initiative that sprang from the Infrastructure Investment and Jobs Act of 2021 to subsidize broadband purchases for low-income households.

Professor Timothy DeStefano, a professor at Georgetown’s McDonough School of Business and a senior scholar within the Center for Business and Public Policy, presented research he co-authored with John W. Mayo and Jeff Macher of Georgetown looking into why households that are eligible for government programs do not sign up. The research found three main causes: information costs (a lack of awareness about the program or how a household stands to benefit), transaction costs (the difficulties in signing up and receiving the benefits), and a stigma against receiving government benefits. Professor DeStefano offered that those crafting benefit programs going forward should aim to minimize the information and transaction costs, target areas with higher numbers of government employees (to spread the word) and participation rates in other government programs (citizens there being most familiar with engaging government programs), and align private interests with the program goals.

Angie Cooper, the President of Heartland Forward, a “think-and-do tank” dedicated to spurring economic activity in the Midwest and Great Plains, spoke about her organization’s efforts to make people aware of the ACP. She recounted a meeting in which she asked members of the Federal Communications Commission how people could access the ACP. “They said ‘there’s a platform that you can [access] online,’ and I said, oh no – we’re trying to get in touch with people who don’t have access to the internet.” Heartland Forward launched an “old school” media campaign to spread the word – billboards, flyers, and radio ads, which Cooper credited with helping one hundred thousand people sign up for the ACP.

Scott J. Wallsten, President of the Technology Policy Institute and a senior scholar at the Center, reviewed the positives and negatives of the ACP. It was a voucher subsidy program, the method most economists recommend for making goods more accessible. The ACP’s take rate (percentage of eligible households which participate) of 43% was more effective than similar programs. His primary criticism was that the program’s measure of means testing meant too many Americans were eligible, resulting in the program’s funding dwindling faster than expected. “If you want to make a difference to get people to sign up for broadband,” Wallsten said, “you want to hard-target what we call ‘the margin.’ We want to target people that do not have broadband but could be convinced one way or another to get it… If you have not given money to people who go online because of the subsidy, you haven’t done anything for the digital divide.”

Wallsten also noted that the ACP’s monthly subsidy of $30 a month resulted in internet service providers scrapping any plans that fell below that price point, another factor in the ACP’s short lifespan. Furthermore, he advocated for dedicated funding to research the price elasticity of demand for broadband for low-income households.

The ACP expired in June 2024, having spent all of its $14.2 billion. Whether broadband programs will prove more effective and long-lasting in the future will depend on whether the legislators and regulators who design such programs learn from previous experiences.

 Watch the full discussion here:

https://www.youtube.com/live/hTRUfKEY1DU?si=BvVCCawo6W5YG7nP