Takeaways from Georgetown on the Hill: Broadband Subsidy Programs
By: Alex Dragone (SFS’26)
Why do government programs aimed at helping Americans so often fail to achieve their potential? The Center for Business and Public Policy at Georgetown’s McDonough School of Business convened a panel of experts at the Rayburn House Office Building on Sept. 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.
Timothy DeStefano, associate research professor at Georgetown McDonough and senior scholar at CBPP, presented research co-authored with center directors and professors John Mayo and Jeffery Macher, which explores 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.
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, 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,” Cooper said. Heartland Forward launched an “old school” media campaign to spread the word – billboards, flyers, and radio ads – which she credited with helping 100,000 people sign up for the ACP.
Scott Wallsten, president of the Technology Policy Institute and a senior scholar at CBPP, 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 (i.e., percentage of eligible households that 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 who 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 per 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 in federal funding. 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.