    [Senate Hearing 118-727]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 118-727

                     THE FUTURE OF BROADBAND AFFORDABILITY

    =======================================================================

                                    HEARING

                                   BEFORE THE

                     SUBCOMMITTEE ON COMMUNICATIONS, MEDIA,
                                 AND BROADBAND

                                     OF THE

                             COMMITTEE ON COMMERCE,
                          SCIENCE, AND TRANSPORTATION
                              UNITED STATES SENATE

                        ONE HUNDRED EIGHTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                  MAY 2, 2024

                                   __________

        Printed for the use of the Committee on Commerce, Science, and
                                 Transportation

                    Available online: http://www.govinfo.gov

                                    __________

                       U.S. GOVERNMENT PUBLISHING OFFICE
    61-850 PDF                  WASHINGTON : 2025

    -----------------------------------------------------------------------------------

           SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                        ONE HUNDRED EIGHTEENTH CONGRESS

                                 SECOND SESSION

                       MARIA CANTWELL, Washington, Chair
    AMY KLOBUCHAR, Minnesota             TED CRUZ, Texas, Ranking
    BRIAN SCHATZ, Hawaii                 JOHN THUNE, South Dakota
    EDWARD MARKEY, Massachusetts         ROGER WICKER, Mississippi
    GARY PETERS, Michigan                DEB FISCHER, Nebraska
    TAMMY BALDWIN, Wisconsin             JERRY MORAN, Kansas
    TAMMY DUCKWORTH, Illinois            DAN SULLIVAN, Alaska
    JON TESTER, Montana                  MARSHA BLACKBURN, Tennessee
    KYRSTEN SINEMA, Arizona              TODD YOUNG, Indiana
    JACKY ROSEN, Nevada                  TED BUDD, North Carolina
    BEN RAY LUJAN, New Mexico            ERIC SCHMITT, Missouri
    JOHN HICKENLOOPER, Colorado          J. D. VANCE, Ohio
    RAPHAEL WARNOCK, Georgia             SHELLEY MOORE CAPITO, West
    PETER WELCH, Vermont                     Virginia
                                         CYNTHIA LUMMIS, Wyoming
                       Lila Harper Helms, Staff Director
                     Melissa Porter, Deputy Staff Director
                         Jonathan Hale, General Counsel
                     Brad Grantz, Republican Staff Director
               Nicole Christus, Republican Deputy Staff Director
                         Liam McKenna, General Counsel
                                     ------

              SUBCOMMITTEE ON COMMUNICATIONS, MEDIA, AND BROADBAND

    BEN RAY LUJAN, New Mexico, Chair     JOHN THUNE, South Dakota, Ranking
    AMY KLOBUCHAR, Minnesota             ROGER WICKER, Mississippi
    BRIAN SCHATZ, Hawaii                 DEB FISCHER, Nebraska
    EDWARD MARKEY, Massachusetts         JERRY MORAN, Kansas
    GARY PETERS, Michigan                DAN SULLIVAN, Alaska
    TAMMY BALDWIN, Wisconsin             MARSHA BLACKBURN, Tennessee
    TAMMY DUCKWORTH, Illinois            TODD YOUNG, Indiana
    JON TESTER, Montana                  TED BUDD, North Carolina
    KYRSTEN SINEMA, Arizona              ERIC SCHMITT, Missouri
    JACKY ROSEN, Nevada                  J. D. VANCE, Ohio
    JOHN HICKENLOOPER, Colorado          SHELLEY MOORE CAPITO, West
    RAPHAEL WARNOCK, Georgia                 Virginia
    PETER WELCH, Vermont                 CYNTHIA LUMMIS, Wyoming

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on May 2, 2024......................................     1
    Statement of Senator Lujan.......................................     1
        Letter dated May 1, 2024 to Hon. Ben Ray Lujan and Hon. John
          Thune from Jonathan Myles Laurier Cannon, Policy Counsel
          Tech and Innovation, R Street Institute....................    58
        Prepared statements from various organizations supporting the
          extension of the Affordable Connectivity Program (ACP).....    62
    Statement of Senator Cruz........................................     3
    Statement of Senator Thune.......................................     5
    Statement of Senator Vance.......................................    32
    Statement of Senator Klobuchar...................................    34
    Statement of Senator Peters......................................    38
    Statement of Senator Welch.......................................    40
    Statement of Senator Capito......................................    41
    Statement of Senator Warnock.....................................    43
    Statement of Senator Tester......................................    47
    Statement of Senator Markey......................................    49
    Statement of Senator Rosen.......................................    51
        Letter dated April 26, 2024 to Hon. Mike Johnson, Hon. Chuck
          Schumer, Hon. Hakeem Jeffries, Hon. Mitch McConnell, Hon.
          Tom Cole, Hon. Patty Murray, Hon. Rosa DeLauro and Hon.
          Susan Collins from Alliance of Community Health Plans,
          Association for Community Affiliated Plans, Blue Cross Blue
          Shield Association, Medicaid Health Plans of America,
          National MLTSS Health Plan Association, and Special Needs
          Plans Alliance.............................................    53
    Statement of Senator Hickenlooper................................    56

                                   Witnesses

    Jennifer Case Nevarez, Director and Lead Educator, Community
      Learning Network (CLN) and Member, Broadband and Digital Equity
      Support Team, New Mexico and the Office of Broadband Access and
      Expansion (OBAE)...............................................     7
        Prepared statement...........................................     9
    Kathryn de Wit, Project Director, Broadband Access Initiative,
      The Pew Charitable Trusts......................................    12
        Prepared statement...........................................    13
    Blair Levin, Policy Advisor, New Street Research; Nonresident
      Senior Fellow, Brookings Metro.................................    17
        Prepared statement...........................................    19
    Paul Winfree, Ph.D., President and CEO, Economic Policy
      Innovation Center..............................................    24
        Prepared statement...........................................    25

                                    Appendix

        Letter dated May 2, 2024 to Hon. Ben Ray Lujan, Hon. John
          Thune, Hon. Maria Cantwell and Hon. Ted Cruz from Gary
          Bolton, President and CEO, Fiber Broadband Association.....    67
    Response to written questions submitted to Kathryn de Wit by:
        Hon. Tammy Duckworth.........................................    68
        Hon. Ted Cruz................................................    69
    Response to written questions submitted by Hon. Ted Cruz to:
        Blair Levin..................................................    71
        Paul Winfree, Ph.D...........................................    93

                     THE FUTURE OF BROADBAND AFFORDABILITY

                                  ----------

                             WEDNESDAY, MAY 2, 2024

                                   U.S. Senate,
                Subcommittee on Communications, Media, and Broadband,
            Committee on Commerce, Science, and Transportation,
                                                        Washington, DC.
        The Subcommittee met, pursuant to notice, at 10 a.m., in
    room SR-253, Russell Senate Office Building. Hon. Ben Ray
    Lujan, presiding.
        Present: Senators Lujan [presiding], Klobuchar, Markey,
    Peters, Tester, Rosen, Hickenlooper, Warnock, Welch, Cruz,
    Thune, Young, Vance, and Capito.

               OPENING STATEMENT OF HON. BEN RAY LUJAN,
                      U.S. SENATOR FROM NEW MEXICO

        Senator Lujan. And we'll come to order. Today this
    subcommittee is convening a hearing on the future of broadband
    affordability.
        So I want to thank our Ranking Member, Mr. Thune, as well
    as Chair Cantwell and Ranking Member Cruz for working with me
    to schedule this hearing on such an important topic.
        I want to start with a story from one of my constituents.
    Her name is Kelly, and she's from a small community by the name
    of Ranchos de Taos out in New Mexico. Now she reached out to my
    office last month about the importance of the Affordable
    Connectivity Program. And here's what she said, ``In my
    capacity as program manager for New Mexico Veterans up bound--
    Upward Bound program at UNM Taos, my team and I serve veterans
    in eight northern New Mexico counties in some very rural areas.
    We are finding it more difficult to connect our Native veterans
    who may not even be aware of the benefits that they've earned,
    or are unable to apply for them since most communications is
    via the Internet. My team is working on that. Many live in
    extremely remote areas and only receive phone or Internet
    service when they go into the nearest town. That's not fair.
    They are no less deserving of veteran benefits than anyone
    else.''
        Now I want to emphasize that point, because it's why we're
    here today. The people who rely on the Affordable Connectivity
    Program to connect with health care providers, attend work or
    school, or access their benefits are no less deserving anywhere
    across America than anyone else.
        There are so many areas across the country where families
    have no options for high-quality broadband service. That's why
    we worked together to pass the Bipartisan Infrastructure Law,
    which included the Broadband Equity Access and Deployment,
    otherwise known as the BEAD Program, to build out broadband
    networks in regions of our country that have, until now, been
    left behind.
        But building the network isn't the end of the story. We
    have to make sure that people can afford to access it. That is
    why we created the Affordable Connectivity Program in a
    bipartisan way, to help low-income families afford Internet
    service by contributing a $30-per-month benefit. Right now
    there are over 23 million households participating in this
    program. That's more than 55 million people.
        But it's not only benefiting these individuals and
    families, it's benefiting their local communities as well. A
    study from the Benton Institute for Broadband and Society
    published last month found that every dollar that is put into
    ACP returns nearly two dollars in impact for the recipient of
    the benefit. It gives families access to better-paying jobs, to
    training and education, to create economic mobility, to better
    deals on groceries and household goods. It means stimulating
    our local economies.
        So the time is now to save this program. This last full
    month of funding for ACP, we saw the expiration just a few days
    ago.
        Now each household will only receive a partial benefit if
    Congress fails to act. That will be the end of the Affordable
    Connectivity Program. And--and mind you, all of these customers
    across America received notices back in January as well that
    this program was going away. Congress had a little bit of time
    to be able to fix things, to get this correct.
        But here's another one where Congress let the American
    people down. My colleagues and I have been working to find a
    solution to keep this program going. Thank you to Chair
    Cantwell, who has introduced legislation to restore the FCC's
    auction authority and use $7 billion in auction proceeds to
    keep this program alive.
        And thank you to Senator Welch and Senator Vance, who have
    introduced legislation to fund the program through the end of
    the year with appropriations. They're both strong proposals to
    temporarily fund the program and give Congress time to find a
    long-term solution so we don't face this cliff every 6 months
    or every year.
        Now the Universal Service Fund Working Group that I've been
    proud to be a part of and lead with Ranking Member Thune has
    been working on a long-term solution.
        Once we save this program in short term, I believe, I'm
    looking forward to bringing a solution to this committee that
    provides a permanent funding mechanism, modernizing programs,
    looking at what the out years will certainly look like here to
    earn bipartisan support in both chambers.
        And I'm very proud that this working group has had
    participation from members of the Senate, members of the House,
    and members of leadership. It has really been incredible to see
    how these thoughts and these ideas, and embracing some of those
    differences, actually shows where we agree on how to get this
    achieved. So I very much appreciate that.
        Now it would be a significant waste of government funds to
    let this program lapse. It would mean letting all the time and
    resources the Federal Government and our state and local
    partners have put into standing up the program and enrolling 23
    million households go to waste.
        I'm looking forward to hearing from our panel of witnesses
    who will provide clear evidence that we are on the brink of
    wasting significant Federal investments and causing real harm
    to our constituents. Each will share their perspective on the
    role that the Affordable Connectivity Program plays in our
    economy and in the lives of low-income families across the
    country.
        Now our panelists, we're going to hear from Ms. Jennifer
    Case Nevarez, who is the director and lead educator of
    Community Learning Network and member of the Broadband and
    Digital Equity Support Team for New Mexico and the Office of
    Broadband Access and Expansion. I'm proud that Ms. Nevarez has
    joined us this morning all the way from Santa Fe, New Mexico to
    share what she's seen on the ground, and the importance of ACP,
    and the consequences if we let it lapse.
        Ms. Kathryn de Wit, Project Director of the Broadband
    Access Initiative at the Pew Charitable Trust, who will speak
    to the economic importance of ACP to families across this
    country.
        Mr. Blair Levin, policy advisor at New Street Research and
    nonresident senior fellow at Brookings Metro, who will speak to
    the economic impact of a potential ACP lapse across our
    economy.
        And Dr. Paul Winfree, President and CEO of the Economic
    Policy Innovation Center, who Ranking Member Thune will
    introduce. Now I look forward to hearing from each of you.
        And I now want to recognize Ranking Member Thune for his
    opening statement.
        We're going to hear first from the Ranking Member of the
    Full Committee, Senator Cruz of Texas. Senator Cruz.

                      STATEMENT OF HON. TED CRUZ,
                        U.S. SENATOR FROM TEXAS

        Senator Cruz. Thank you, Mr. Chairman. Thank you to Ranking
    Member Thune, and thank you to our witnesses today.
        The United States is the standard bearer for high-speed
    Internet connectivity. During the pandemic, American Internet
    providers significantly outperformed our more highly regulated
    European counterparts with faster and more competitive service.
        Yet this highly functioning industry is under relentless
    attack by the Biden administration. Despite being handed a
    generational opportunity to connect all Americans, this
    administration has made it clear they would prefer to assert
    government control of the Internet.
        This was epitomized by last week's FCC party-line vote to
    subject the broadband industry to an oppressive regulatory
    regime under the pretense of so-called net neutrality.
        This follows the FCC's digital equity power grab late last
    year in which the agency asserted control over nearly every
    aspect of the broadband business, and opened providers to
    expansive, indeterminate, and crippling liability under a
    disparate impact standard.
        The Biden administration claims that it wants to improve
    broadband affordability for American families. But the FCC is
    sabotaging these goals. What happens when companies need to
    divert significant resources to--towards complying with woke
    Biden priorities over their customers? Prices go up, investment
    and innovation declines, and Americans suffer.
        And we know this from experience. When the Obama FCC
    imposed Title II on broadband, their first iteration of net
    neutrality in early 2015, capital expenditures fell by $500
    million that year, and by another $2.7 billion in 2016. That
    hurts American consumers across the country.
        We see similar trends in the Biden administration's
    mismanagement of Congress's massive broadband investments--over
    $125 billion in the last 4 years. The Biden NTIA has
    prioritized woke social policies, union mandates, tech biases,
    and price controls at the expense of delivering high-speed
    Internet to unserved Americans. The largest of these programs,
    a $42 billion broadband infrastructure program, is already
    being waylaid.
        Biden administration officials are withholding and delaying
    funding from states like Virginia, where Governor Youngkin's
    team is standing up to the coercive and lawless demands of the
    Biden administration.
        Likewise, the Affordable Connectivity Program is not
    working as Congress intended. To assist those for whom cost was
    the barrier to gaining Internet access, ACP, which gives a $30
    monthly subsidy for Internet service and $75 per month if
    you're on tribal lands, was given a record $14 billion budget.
    This was anticipated to last several years.
        But the FCC deliberately oversubscribed the program,
    blowing through the money in record time. We have heard from
    the White House and from Chairman Rosenworcel that this massive
    welfare program should be considered a success, because 23
    million households enrolled in it. But it turns out the vast
    majority of these people already had high-speed Internet.
        Here's an FCC survey showing that just 22 percent of the
    households receiving the taxpayer subsidy were previously
    unsubscribed to broadband. This means that for every household
    that didn't subscribe to premium Internet, the Federal
    Government is subsidizing four households that did.
        Beyond this massive inefficiency and waste, reports have
    also found, unsurprisingly, that the ACP has had inflationary
    effects on the price of Internet. One of our witnesses, Dr.
    Paul Winfree, analyzed the data and found that in places where
    ACP enrollment is the highest, we see higher prices.
        A less technical, but no less telling report from the
    National Review used archive records from the Internet to show
    that companies treat the $30 subsidy now as the new price
    floor. Companies that used to offer broadband plans for $10 or
    $15 a month now charge $30 for the same or marginally upgraded
    service.
        History has shown that when the Federal Government starts
    subsidizing demand--in higher education and agriculture, the
    subsidy gets capitalized, and prices go up. After all, why
    would corporations ever leave free money on the table?
        While those who receive the subsidy may realize an
    immediate cost reduction, the market prices rise for everybody
    else.
        This rising price creates a call for more subsidies and
    higher taxes to fund those additional higher subsidies, and
    eventually a government takeover of the Internet to provide it
    for free.
        To the extent there are truly indigent people who cannot
    afford connectivity, there is a program already designed for
    them. It's called Lifeline. If it's not working well, we should
    look to improve it, not to impose higher taxes on millions of
    hardworking Americans to cover the Internet bills of their
    neighbors who are already willing and able to pay for it
    themselves. I'm open to a discussion on these reforms.
        The road to broadband as a publicly regulated utility is
    not one Americans can afford. To ensure that all Americans can
    access and benefit from high-speed connectivity, the
    administration should reverse course, abandon toxic regulatory
    mandates, remove unnecessary barriers to investment, and ensure
    Federal broadband subsidies are working as Congress intended.
    An innovative and affordable broadband future can only be
    achieved if the Federal Government puts Americans' prosperity
    over its urge to assert regulatory control.
        Thank you.
        Senator Lujan. Thank you, Senator Cruz.
        I now recognize the Ranking Member of the Subcommittee, Mr.
    Thune, for his opening statement.

                     STATEMENT OF HON. JOHN THUNE,
                     U.S. SENATOR FROM SOUTH DAKOTA

        Senator Thune. Thank you, Mr. Chairman, and I appreciate
    the opportunity to work with you on the working group. I think
    there are a number of areas in the Universal Service Fund
    programs that are--have been needed; oversight, and reform, and
    looking at ways that we can make those work more efficiently.
    And so I look forward to our continued efforts in that regard.
        And thank you for the--having the hearing this morning.
    Thank you to all our witnesses for being here.
        Let me start by saying that an Internet connection provides
    significant opportunities to run a business, provide health
    care, or do homework. And as a member who represents a rural
    state, I remain committed to the bipartisan principle of
    universal service and ensuring that Americans in all parts of
    the country have access to communication services comparable in
    quality and price to those in urban areas.
        Today, we are here to examine the state of broadband--
    broadband affordability programs. The FCC has a long history
    with broadband affordability through its Lifeline program, as
    has been mentioned, which, despite existing for nearly 40
    years, has not been a broad success story. A carefully
    designed, properly administered broadband affordability program
    to help those Americans who, without a subsidy, would be unable
    to afford reasonable level of connectivity, is an important
    part of universal service.
        But unfortunately, the FCC's Lifeline program, which is
    currently part of the Universal Service Fund, has not lived up
    to this promise. The rampant waste, fraud, and abuse within the
    Lifeline program has been well documented over the years.
        Unfortunately, much like the FCC's Lifeline program, the
    Affordable Connectivity Program, or ACP, seems to be plagued
    with similar inefficiencies.
        ACP, what initially began as a program to help consumers
    stay connected during the pandemic, was expanded, as many
    government programs tend to be, into a much broader and much
    more expensive program. As it's currently designed, ACP does a
    poor job of directing support to those who truly need it,
    namely those who would not get service without a subsidy.
        With overly broad eligibility criteria, ACP allows over 40
    percent of American households to receive a subsidy. If all of
    the eligible households were enabled or I should say were
    enrolled into ACP, the program would cost the taxpayer over $19
    billion annually.
        The inefficiencies in both Lifeline and ACP are in large
    part a direct result of the FCC's failure to set performance
    goals and address the fundamental question of whether or not
    either of these programs are an effective means of increasing
    adoption among low-income consumers. Without performance goals,
    we have no evidence to support that ACP or Lifeline are
    effective in connecting non-subscribers to the Internet.
        The FCC's own survey, as Senator Cruz pointed out,
    indicates that at least--or I should say at best, about 22
    percent of the current ACP subscribers did not have an Internet
    connection prior to ACP. It is imperative that the FCC conduct
    such an analysis so that we can make informed decisions on the
    future broadband affordability programs for truly low-income
    Americans. And simply saying 23 million households will lose
    broadband if ACP does not receive new funding is not
    undertaking a fundamental analysis.
        The American people deserve better, and we need an honest
    assessment of how to best deliver services to those actually in
    need. To that end, I appreciate Senator Lujan's work leading
    the USF Working Group with me and other members of this
    committee to address the needs and shortfalls of the USF
    programs.
        We also must recognize the Federal Government will not
    solve the digital divide on its own.
        The United States' light regulatory--or light-touch
    regulatory approach to broadband policy has resulted in
    telecommunications providers in South Dakota and the rest of
    the country making network reliability, affordability, and
    resiliency a priority. During the pandemic, when demand for
    reliable Internet soared, U.S. broadband providers were able to
    keep Americans connected, which was not the case in other
    countries.
        And now as ACP winds down, I appreciate how the private
    sector is stepping up, turning to low-income programs they
    offered prior to ACP.
        The White House and some in Congress have called on
    companies to continue offering free service to consumers
    despite ACP dollars running out. This, of course, is akin to
    rate regulation and demonstrates that Democrats--what Democrats
    have wanted all along.
        The efforts to promote quality and affordable broadband are
    under attack by the Biden FCC. Just last week, the FCC once
    again asserted broad new government powers over the Internet,
    using rules that were designed for telephone monopolies back
    during the Great Depression. The last time these heavy-handed
    regulations were imposed, as Senator Cruz pointed out,
    broadband investment declined. And there's good reason to
    believe this will happen again.
        These new rules would also imperil the United States'
    position at the forefront of Internet innovation. Biden's FCC
    should be focused on addressing real challenges, such as
    reducing regulatory burdens and thus the cost for broadband,
    not searching for a problem where one doesn't exist.
        Before I close, I'd also like to add that I hope we can
    hear from the FCC directly about their broadband affordability
    programs and many other important issues. It's unacceptable
    that this committee has not held an oversight hearing of the
    FCC for over 1,400 days.
        I appreciate each of our witnesses for being here today and
    I look forward to the discussion. Thank you, Mr. Chairman.
        And Dr. Winfree is our fourth witness. He's President and
    CEO of Economic Policy Innovation Center. He's an economist,
    trusted policy--public policy advisor, and served in top
    management policy roles in the White House, the U.S. Senate,
    and in think tanks.
        So it's great to have you here along with the rest of our
    panel of witnesses. We look forward to hearing from you all.
    Thank you.
        Senator Lujan. Thank you very much, Mr. Thune. And before I
    recognize myself for five minutes of questions, I want to wish
    Peter Welch a happy birthday. So if everyone might be able to
    just give him a round of applause, please, and show our
    appreciation to Senator Welch.
        [Applause.]
        Senator Welch. He's a pretty nice guy, but I appreciate the
    embarrassment.
        Senator Lujan. Thank you, my friend.
        Senator Welch. Thank you, Ben Ray.
        Senator Lujan. So before I recognize myself for questions,
    I want to make sure that we hear from our distinguished panel
    as well.
        So Ms. Nevarez, you'll begin, and each of you will be
    recognized for five minutes as well. You'll be able to submit
    your full testimony into the record as well. Ms. Nevarez,
    you're recognized.

    STATEMENT OF JENNIFER CASE NEVAREZ, DIRECTOR AND LEAD EDUCATOR,
      COMMUNITY LEARNING NETWORK (CLN) AND MEMBER, BROADBAND AND
       DIGITAL EQUITY SUPPORT TEAM, NEW MEXICO AND THE OFFICE OF
                               BROADBAND
                      ACCESS AND EXPANSION (OBAE)

        Ms. Nevarez. My name is Jennifer Nevarez. I live in Santa
    Fe, New Mexico.
        As Director of Community Learning Network, an educational
    non-profit dedicated to building stronger communities through
    real-life learning, and a member of the Broadband and Digital
    Equity Support Team for the New Mexico Office of Broadband, I
    have traversed the state, met with hundreds of constituents--
    and I'm here today to share community concerns and to highlight
    the urgent need for Congress to act now to extend ACP before it
    lapses completely.
        Though many think the Internet is all about technology, it
    is actually about connecting people. A Dine' Navajo elder I
    work with who lives on a fixed income on a farm in rural New
    Mexico, with the end of ACP and broadband access and
    affordability out of reach for many rural residents, she and
    many others like her will go without Internet connectivity at
    home. And in her case, will do what she has done before to get
    online: drive 52 miles to check her e-mail at the public
    library.
        With the end of ACP, more than 23 million households are
    now at risk of losing their Internet connectivity. Nearly half
    are military families. And 10 million are over the age of 50,
    with seniors reporting that they rely heavily on the Internet
    to coordinate and track medical services, overcome isolation,
    and deal with the fact that they may no longer be able to
    drive. 320,000 are households on tribal lands, where high-speed
    Internet is generally more expensive. In New Mexico, more than
    184,000 households face losing their ability to pay bills,
    purchase goods, check health portals, run small businesses, and
    do work or schoolwork online.
        In Congressional District 2, 28 percent of all households
    are enrolled in ACP, so one of every four households are now at
    risk of losing connectivity. This is a terrible blow to the
    local economy, and a terrible setback for local families and
    the counties where they live. With families facing hard
    decisions about what to cut, finding an affordable alternative
    is not easy, especially in rural areas where there may only be
    one provider, where costs can be much higher, and where low-
    cost options may be unreliable or inadequate for whole families
    working or learning from home.
        As the fifth-largest state and the sixth-lowest in
    population density, deploying fiber in New Mexico is extra
    costly. Subscriber pools are smaller and more scattered, and
    networks are difficult to maintain.
        For us in New Mexico, for our economy, for our health, for
    the well-being of our families, our communities, and our
    Internet service providers, every subscriber counts.
    Subscribers are especially critical for our small, tribal, and
    rural communities who have leveraged investments and built
    networks and companies to provide valuable Internet service in
    hard-to-reach areas where they are often the only option.
        These local providers often run on tight margins with
    higher expenses to serve low-density areas with lower-income
    customers. They are at a higher risk of bankruptcy without a
    reliable and consistent pool of active subscribers.
        Thanks to collaborative investment and ACP outreach, local
    networks and providers have been building relationships and
    trust while growing their customer base. The end of ACP now,
    after just over 2 years of getting going, and the loss of
    subscribers, puts the BEAD initiatives in jeopardy and some
    local networks at risk of failure, especially in areas that are
    most in need and serving some of the hardest-to-reach and
    traditionally undeserved, disconnected community members.
        We cannot overlook the massive investment and
    administrative burden of standing up ACP and coordinating more
    than 1,500 Internet service providers and 23 million
    subscribers through enrollment. To let ACP die now feels
    wasteful and irresponsible. To let it lapse feels short-sighted
    and irreverent of both its current success, 23 million
    subscribers in just over 2 years, and the massive investment of
    time, energy, and money by everyone.
        Right now, confusion abounds. Congress is losing
    credibility, and local service providers are losing customers
    and public trust.
        So what now? Are we really going to let 23 million
    households drop out of the Internet economy and disappear from
    the digital world? Mayors and Governors, both Republicans and
    Democrats, have publicly prioritized ACP and made it a part of
    their plan to close the digital divide. Affordable, reliable
    Internet is more than a bipartisan issue. It is a people issue
    with a real-world impact on health and wealth for Americans.
        Moreover, it is rare but inspiring when government,
    community, and industry align. So why align? As aptly noted by
    one of our leaders in the community, broadband is everybody's
    business. Broadband is an essential service for everyone.
        ACP was established and to address the critical needs to
    connect everyone, and 23 million enrollment was a monumental
    feat, and a success we should not waste. Meanwhile, ACP use is
    widespread and directly impacts our constituents. Urban,
    suburban, and rural communities rely on ACP to pay for the
    high-speed Internet service they need for school, work, health
    care, essential services, and more.
        Most importantly, we all lose when ACP ends. The end of ACP
    puts networks, local ISPs, and BEAD infrastructure investment
    at risk and erodes public trust. Since we just got started,
    quitting now would be a waste.
        In closing, I echo the understanding that people and places
    thrive when everyone can participate. Economies thrive when
    everyone can participate.
        So I ask everyone in this room, do you use a cell phone,
    computer, a laptop? Do you have Internet access right now? As
    we face the end of ACP, I would like you to join more than 23
    million households in an experiment. Turn off your devices and
    go without using Internet for the next 5 minutes, 5 hours, or 5
    days. Yes, give it a try while reflecting on how the rest of
    your day and life will be impacted.
        Let's let this sink in and then let's not let more than 23
    million households and families disappear from the digital
    economy. Congress has the power to act now to keep those
    constituents connected, and I am here to remind you today that
    the health and well-being of Americans, as well as the economic
    vitality and security of our nation, depend on it.
        [The prepared statement of Ms. Nevarez follows:]

        Prepared Statement of Jennifer Case Nevarez, Director and Lead
     Educator, Community Learning Network (CLN) and Member, Broadband and
      Digital Equity Support Team, New Mexico and the Office of Broadband
                          Access and Expansion (OBAE)
        My name is Jennifer Case Nevarez. I live in Santa Fe, New Mexico,
    and serve as Director and Lead Educator for an educational nonprofit
    called the Community Learning Network (CLN), which is dedicated to
    ``building stronger communities through real-life learning'' and
    grounded in the words of our Dine' (Navajo) co-founder who noted that
    ``well-being is nourished by being accountable to a people and a
    place.'' Over the years, CLN has supported powerful real-life learning
    experiences for thousands of community members of all ages and worked
    to build resiliency with communities and tribes throughout the state
    and nation. As a member of the Broadband and Digital Equity Support
    Team for New Mexico and the Office of Broadband Access and Expansion
    (OBAE), I have traversed the state, met with hundreds of constituents,
    and been deeply involved in stakeholder engagement. I am here today to
    speak to broadband affordability, to share community concerns about the
    end of the Affordable Connectivity Program (ACP), and to highlight the
    need for Congress to take action now to extend ACP before it lapses
    completely and permanently.
        First, I would like to start with the reminder that many think the
    Internet is all about technology, but it is actually about connecting
    people. A Dine' (Navajo) elder I worked with lives on fixed income on a
    farm in rural New Mexico. With the end of ACP and broadband access and
    affordability out of reach for many rural residents, she, and many
    others like her, will go without Internet connectivity at home, and in
    her case, will do what she has done before to get online . . . drive 52
    miles to check her e-mail at the public library (but only once in a
    while, since gas is expensive, too).
        As of April 30, 2024, just two days ago, more than 23 million
    households are now at risk of losing their Internet connectivity with
    the end of ACP. Nearly half are military families and 10 million are
    over the age of 50 (with Seniors reporting that they rely heavily on
    the Internet to coordinate and track medical services and overcome
    isolation). 320,000 are households on Tribal lands, where high-speed
    Internet is generally more expensive.
        In New Mexico, more than 184,000 households enrolled in ACP face
    losing their Internet connectivity and their ability to pay bills,
    purchase goods, check health portals, access essential services, run
    small businesses, and do work or schoolwork online. In Congressional
    District 2, 28 percent of all households are enrolled in ACP, which
    means 1 out of every 4 households in the District are now at risk of
    losing connectivity. This is a terrible blow to the local economy and a
    terrible setback for local families and the counties where they live,
    already burdened by economic, community development, and infrastructure
    challenges and serving large numbers of residents struggling with
    higher household, transportation, utility, and healthcare expenses on
    fixed or lower incomes. With families facing hard decisions about what
    to cut, finding an affordable alternative is not easy, especially in
    rural areas where there may only be one provider, where costs can be
    much higher, and where low-cost options may be unreliable or inadequate
    for families working or learning from home.
        As the 5th largest state (with 121, 298 square miles) and the 6th
    lowest in population density (with an average density of 17 people per
    square mile) (The District of Columbia has the highest population
    density with 11,131 people per square mile), deploying fiber is New
    Mexico is extra costly, subscriber pools are smaller and more
    scattered, and networks are difficult to maintain and sustain due to
    lower density, higher cost of deployment and maintenance, and the
    financial vulnerability of subscribers.
        For us in New Mexico, . . . for our economy, for our health, and
    for the well-being of our families, our communities, and our Internet
    Service Providers, . . . every subscriber counts.
        Subscribers are especially critical for our small tribal and rural
    communities who have leveraged investments and built networks and
    companies to provide valuable Internet services in hard to reach areas
    where they are often the only option. (There are 23 Tribal Nations in
    New Mexico and many have started and run their own networks). These
    local providers often run on tight margins with higher expenses to
    serve low-density areas with lower-income customers. They are at a
    higher risk of bankruptcy without a reliable and consistent pool of
    active subscribers. Thanks to collaborative federal, state, local, and
    non-profit investment in ACP outreach, local networks and providers
    have been building relationships and trust while growing their customer
    base. Amidst the massive investment in broadband infrastructure
    currently underway, the end of ACP now, after just over two years of
    getting it going, and the loss of ACP subscribers puts the BEAD
    initiatives in jeopardy and some local networks at risk of failure,
    especially in areas that are most in need and serving some of the
    hardest to reach and traditionally underserved, disconnected community
    members.
        We cannot overlook the massive investment and administrative burden
    of standing up the ACP program and coordinating more than 1500 Internet
    Service Providers and 23 million subscribers through the application,
    documentation, approval, authorization, and enrollment process. To let
    ACP, and the systems in place to manage it, die now, in the wake of
    that investment and effort, feels wasteful and irresponsible. To let it
    lapse and have to build another system later feels short-sighted and
    irreverent of both its current success (23 million subscribers in just
    over 2 years) and the massive investment of time, energy, and money in
    ACP by everyone . . . including federal, state, and local agencies, as
    well as trusted community organizations.
        Right now, confusion abounds, and Congress is losing credibility.
    Local service providers are losing customers and public trust.
    Providers and partners are now also burdened by the additional expense
    and effort of alerting ACP subscribers to the changes, navigating
    public confusion, and managing service down-grades and terminations.
        So what now?
        When connectivity is critical for progress and a matter of national
    security and economic vitality, are we really going to let ACP end? Are
    we really going to let 23 million households potentially drop out of
    the Internet economy and disappear from the digital world?
        I urge Congress to act now and extend ACP. I urge congress to
    consider the creative funding possibilities currently proposed.
    Governors from across the country, both Republicans and Democrats, have
    publicly prioritized the Affordable Connectivity Program, and made it a
    part of their plans to close the digital divide. Affordable, reliable
    Internet is more than just a bi-partisan issue. It is a people issue
    with real world impacts on health and wealth for Americans. Moreover,
    it is rare but inspiring when you have government, community, and
    industry aligned. Numerous community and industry partners have stepped
    up to voice their concerns, and in January 2024, an initial 174 Mayors
    from around the U.S. signed a bipartisan letter calling for legislators
    to extend ACP.
        Why?
        As aptly noted by one of our local community leaders: Broadband is
    everybody's business. Broadband is an essential service for everyone
    and opens a world of possibilities.
        The ACP was established to address the critical need to connect
    everyone. 23 million enrollment was a monumental feat and success we
    should not waste. Proving eligibility and enrolling was complicated and
    time-consuming. Terminating now would be wasteful, the robust
    eligibility verification and enrollment work would be lost, and
    starting over would demand so much more time, energy, and money.
        Meanwhile, ACP use is widespread and directly impacts constituents.
    Community members in more than 23 million households across the nation,
    including urban, suburban, and rural communities rely on ACP to pay for
    the high-speed Internet service they need for school, work, health
    care, essential services, and more. As a matter of fact, four of the
    seven states with the highest ACP enrollment are represented by members
    of the Senate Committee on Commerce, Science and Transportation, to
    which this subcommittee reports (Source: USAC, Feb. 2024).
        Most importantly, we all lose when ACP ends. Households and
    families lose. Students lose. Covered populations including seniors,
    veterans, low-income, and rural community members lose. Healthcare
    loses. Essential services lose. Local economies lose. Our national
    economy loses. Our national standing and global competitiveness loses,
    and we put the vitality and security of our Nation at risk. The end of
    ACP puts networks, local ISPs, and BEAD infrastructure investments at
    risk and erodes public trust. Since, we just got started. Quitting now
    would be a waste.
        In closing, I echo the understanding that ``People and places
    thrive when everyone can participate.'' Economies thrive when everyone
    can participate. So, I ask everyone in this room, Do you use a cell
    phone, computer or laptop? Do you have Internet access at home? Do you
    ever check e-mails from home? . . . correspond with staff or
    constituents online? . . . attend a group meeting online? . . . Review
    documents or do research online? . . . make payments or check accounts?
    . . . Purchase goods, food, or tickets online? . . . Access health
    information or make appointments online? The modern world is driving
    all of us online.
        As we face the potential but untimely and short-sighted end of ACP,
    I ask you to join more than 23 million households in an experiment:
    turn off your devices and go without using the Internet for the next
    five minutes, five hours, and five days. Yes, give it a try while
    reflecting on how the rest of your day will be impacted. How will loss
    of Internet access affect your professional life and personal life?
    What would be different for you without the Internet? Let's let this
    sink in for a moment. AND, then acknowledge again that as of April 30,
    2024, just two days ago, more than 23 million households are now at
    risk of losing their Internet connectivity with the end of ACP.
        Let's not let more than 23 million households and families
    disappear from the digital economy. Congress has the power to act now
    to keep those 23 million households of constituents connected, and I am
    here to remind you today, that the health and well-being of Americans,
    as well as the economic vitality and security of our nation, depend on
    it.

    STATEMENT OF KATHRYN de WIT, PROJECT DIRECTOR, BROADBAND ACCESS
                   INITIATIVE, PEW CHARITABLE TRUSTS

        Ms. de Wit. Ranking Member Cruz, Chairman Lujan, and
    Ranking Member Thune, as well as members of the Subcommittee,
    thank you very much for inviting me to testify in today's
    hearing. Also, a very happy birthday to Senator Welch.
        My name is Kathryn de Wit, and I am the Project Director
    for the Broadband Access Initiative at The Pew Charitable
    Trusts. Pew is a non-profit, non-partisan, evidence-based
    organization, and for more than 75 years we have used data to
    make a difference.
        My team works directly with broadband offices from 36
    states and territories to help them navigate this unprecedented
    moment: the largest Federal investment in affordable broadband
    access in our Nation's history. The Affordable Connectivity
    Program, also known as ACP, is essential to this work.
        Achieving universal broadband requires two things. First
    are supply side solutions, steps that reduce the cost of
    building networks and delivering service to American homes.
    Second are demand-side interventions that reduce the cost of
    broadband for consumers, particularly low-income and vulnerable
    households.
        We tried ``If you build it, they will come,'' but COVID--
    but the COVID-19 pandemic demonstrated why that approach will
    not get us to the finish line. We witnessed in real time how
    tens of millions of Americans struggled--struggled to work,
    learn, and access health care because they did not have
    reliable or high-quality Internet.
        Why? For some, it was too expensive. For others, it was
    simply unavailable. Congress took swift action to address this,
    including dedicating funding to immediately bring vulnerable
    households online, and it worked.
        Twenty-three million households participate in the ACP
    today, including almost half--and almost half of those families
    are military families, and 19 percent are 65 and older. In
    Texas alone, 1.7 million households benefit from the program.
    In Michigan, more than 410,000 households are enrolled. These
    numbers are a remarkable testament to the response from
    Internet service providers, the public sector, and community
    partners across the country.
        Second, Congress established two important deployment
    initiatives: the Capital Projects Fund, and the Broadband
    Equity Access and Deployment Program, also known as BEAD. But
    for the first time, Congress addressed those supply-and-demand
    barriers together, by conditioning eligibility for deployment
    grants on participation in an affordability program.
        In other words, Congress took steps to ensure that $52
    billion in taxpayer funds would support networks that would be
    available and affordable to consumers, whether they were rural,
    veterans, or aging Americans living on a fixed income. ACP is
    currently the best tool we have to bridge the digital divide,
    because it alleviates cost burden on households and increases
    certainty for the providers that we need to connect every
    American. In fact, all 50 states have incorporated ACP into
    their deployment strategies for capital projects and BEAD.
        States are actively administering these programs right now.
    But ACP's potential end is introducing risk to states,
    providers, and consumers at a critical moment in
    implementation.
        We all know that broadband is complicated. States have
    expressed concerns about a range of challenges, from permitting
    to workforce shortages. But for more than a year, state
    broadband offices have raised alarms about the end of ACP, and
    providers of all types have expressed hesitation about
    participating in BEAD if ACP goes away.
        That is why we ask Congress to act quickly and decisively
    to keep ACP funded. Ohio's digital equity plan notes that the
    end of ACP will abruptly disrupt access to affordable Internet
    that low-income Ohioans rely on for education, work, and health
    care.
        That concern is echoed by other program recipients. A
    recent survey found that 68 percent of enrolled military
    families were concerned about missing out on job opportunities.
    Seventy-two percent of enrolled Americans over 65 are worried
    about losing access to health care. Ninety-five percent of all
    participants said they would struggle with other household
    costs, including groceries, utilities, housing, and health
    care.
        ACP should be improved to better reach the households that
    need it and ensure that taxpayers are being protected from
    waste, fraud, and abuse. We must extend ACP at the next
    legislative opportunity if we want $52 billion in taxpayer
    money to support broadband that Americans can use for access to
    education, health care, job opportunities, and more.
        There is no time to waste. Thank you.
        [The prepared statement of Ms. de Wit follows:]

       Prepared Statement of Kathryn de Wit, Project Director, Broadband
                  Access Initiative, The Pew Charitable Trusts
        Chairwoman Cantwell, Ranking Member Cruz, Chairman Lujan, Ranking
    Member Thune, and other members of the Subcommittee on Communications,
    Media, and Broadband, thank you for inviting me to testify in today's
    hearing, ``The Future of Broadband Affordability.'' My name is Kathryn
    de Wit, and I am the project director for the broadband access
    initiative at The Pew Charitable Trusts.
        Pew is a nonprofit, nonpartisan, evidence-based organization. For
    more than 75 years, we have used data to make a difference--addressing
    the challenges of a changing world by illuminating issues, creating
    common ground, and advancing ambitious policies that lead to tangible
    progress. Pew's broadband access initiative was established in 2017,
    and we partner with state and Federal policymakers, researchers,
    industry, community organizations, and other stakeholders from across
    the broadband landscape to accelerate the Nation's progress toward
    universal, affordable high-speed Internet service. In addition to
    providing research, informing state and Federal policy, and educating
    stakeholders, my team is working directly with the broadband offices
    from 36 states and territories to help them navigate this unprecedented
    moment: the largest Federal investment in affordable broadband access
    in our Nation's history.
        These investments may finally put affordable, high-speed Internet
    within reach of every American in this country. Research is clear that
    achieving universal access requires interventions to address the high
    capital costs of deployment and the long-term cost of network
    operations, and the cost of broadband for low-income households, aging
    Americans living on a fixed income, veterans, and others. Closing the
    digital divide requires addressing these supply and demand side
    barriers simultaneously, thus decreasing risk for private sector
    investment and increasing consumer confidence in the service. The
    Affordable Connectivity Program (ACP) is the best tool we have to make
    broadband more accessible and affordable to all Americans. A lapse in
    funding would harm the 23 million households currently enrolled in the
    program and threaten the Federal deployment programs currently underway
    that will connect millions more unserved households and businesses. I
    implore Congress to act quickly and identify a short-term funding
    solution to save the ACP.
        I am grateful for the opportunity to share insights and learnings
    from our years of work on affordable broadband access, including state
    broadband programs. Like others, including private sector Internet
    service providers, we have concluded that millions of people across the
    country still lack sufficient access to broadband service, largely
    because they live in rural communities, which are the most difficult
    and expensive to serve. The challenges of deploying broadband network
    infrastructure in rural locations, particularly those with low
    population density and difficult terrain, create high costs and low
    returns on investment that discourage providers from expanding into
    those areas. Moreover, broadband deployment in the U.S. has been
    market-driven, with private-sector telephone and cable companies
    investing in infrastructure in areas that provide higher rates of
    return. This means, as rational economic actors, private Internet
    service providers (ISPs) tend to focus on areas with denser and higher-
    income populations.
        In addition to the economic challenges associated with broadband in
    rural areas, the cost of broadband negatively impacts the demand for
    broadband by low-income Americans. Last year, Pew Research Center found
    that, despite 87 percent of U.S. adults with annual household incomes
    of $30,000 or less saying they used the internet, just 57 percent of
    that same cohort had broadband at home. Comparatively, 98 percent of
    U.S. adults with annual household incomes of over $70,000 use the
    internet, 88 percent of which report having broadband at home. Further,
    although the research center found differences in broadband adoption by
    gender, race and ethnicity, and community type (urban, suburban, and
    rural), income is the only category for which this difference is
    statistically significant. Pew Research Center also found that 45
    percent of U.S. adults cite the high monthly cost of a connection as
    the reason they do not have broadband, and researchers at the R Street
    Institute have argued increased availability of service does not
    necessarily result in increased adoption. Price matters.
        Given the influence of cost on customer demand and the high capital
    costs of deploying broadband, internet service providers have little
    reason to upgrade existing networks or build new ones in low-income
    areas. That investment decision may also impact customers who can pay
    full price for a subscription. Although public funds such as loans or
    grants can help offset the cost of capital expenses, ISPs require
    additional funding to keep these high-cost communities online.
        Additionally, the prevailing argument for lack of expansion has
    been that most non-adopters do not perceive the Internet to be
    ``relevant'' to their lives and therefore will not purchase service.
    Yet the data shows us that broadband is still too expensive for
    households, even though they report it being relevant to their lives.
    Broadband Affordability and Deployment Investment Go Hand-in-Hand
        Many combine the two challenges of making broadband more affordable
    for all consumers and cost as a barrier to adoption for low-income
    Americans into one conversation about broadband affordability. However,
    we conclude that these issues require different policy interventions.
        Addressing affordability for all broadband consumers requires
    supply-side solutions--steps that reduce the cost of building networks
    and delivering service to American homes. It also requires more
    transparency to help customers understand the cost of the service they
    are purchasing. But these will not fully address the challenge of
    affordability as a barrier to adoption for low-income households. Doing
    so requires demand-side policy interventions that remove cost as a
    barrier, such as policies and programs that help cover the cost of both
    connections and devices, as well as efforts to help connect households
    with those programs.
        Those realities are reflected in a series of programs Congress
    authorized in response to the COVID-19 pandemic and ongoing efforts to
    invest in our Nation's infrastructure: the American Rescue Plan Act's
    Capital Project Fund (CPF), the Investment Infrastructure and Jobs
    Act's (IIJA), and the Broadband Equity Access and Deployment (BEAD)
    program. Specifically, these programs are designed to defray the
    capital costs of deployment to higher-cost areas like rural and low-
    income communities. However, unlike past grant programs, recipients
    must participate in a subsidy program targeted at vulnerable
    populations that may be unable to pay for regular service, including
    low-income households, veterans, and Pell Grant recipients. This
    requirement should expand the customer base for Internet service
    providers by increasing the number of customers who can afford and
    maintain subscriptions and decreasing turnover of those customers,
    defraying the cost for ISPs. The Affordable Connectivity Program
    currently helps ISPs meet this requirement.
    High Enrollment and Support for the ACP
        The ACP has been a success, demonstrating high rates of enrollment,
    a positive effect on individuals and networks, and assumed impact on
    the Nation's GDP. More than 23 million households are currently
    enrolled, far exceeding participation in programs like Lifeline. Of
    these participating households, approximately half are Americans over
    50 and military families or veterans. Enrollment is high across states.
    For example, 58 percent of eligible Ohioans are enrolled as are 48
    percent of Wisconsinites, 52 percent of eligible North Carolinians, and
    41 percent of Texans. Even in states with lower enrollment, South
    Dakota (19 percent) and Montana (29 percent), still had significantly
    higher participation in this program than they do in Lifeline, which is
    around 2 percent in each state. Data also show that ACP spending almost
    equally benefits districts represented by Republicans and Democrats.
    What's more, 62 percent of Republican, 78 percent of Independent, and
    96 percent of Democratic voters all support continuing ACP, according
    to the Digital Progress Institute.
        In a November 2023 letter, a bipartisan group of 26 governors
    including: Arizona Governor Katie Hobbs (D), Colorado Governor Jared
    Polis (D), Illinois Governor J.B. Pritzker (D), Kansas Governor Laura
    Kelly (D), Massachusetts Governor Maura Healey (D), Michigan Governor
    Gretchen Whitmer (D), North Carolina Governor Roy Cooper (D), New
    Mexico Governor Michelle Lujan Grisham (D), Nevada Governor Joe
    Lombardo (R), Vermont Governor Phil Scott (R), Wisconsin Governor Tony
    Evers (D), and, Wyoming Governor Mark Gordon (R), among several others,
    implored Congress to preserve ACP. Additionally, Mississippi Governor
    Tate Reeves (R), Missouri Governor Mike Parson (R), Ohio Governor Mike
    DeWine(R), Tennessee Governor Bill Lee (R), and Texas Governor Greg
    Abbott (R), among others, have individually voiced their support for
    the importance of ACP and the continuation of the program.
        A recent survey of participants from the Benenson Strategy Group in
    collaboration with Comcast allows me to add further clarification on
    who benefits from ACP:

       49 percent of participating households are military
            families.

       19 percent of participating households are 65 and older.

       26 percent live in rural areas.

       47 percent are white, 23 percent are Black, 23 percent are
            Latino, and 8 percent are Asian American Pacific Islander.

       41 percent live in the South, from Texas to Virginia.

        Researchers also asked the surveyed population how losing ACP could
    affect their lives and livelihoods. Reponses included:

       77 percent of military families and 73 percent of Americans
            65 and older said they were concerned about losing contact with
            their communities and loved ones.

       67 percent of rural residents were worried about losing
            their jobs or primary source of income and 68 percent of
            military families were concerned about missing out on job
            opportunities.

       95 percent of surveyed participants said they would struggle
            with other household costs, including groceries, utilities,
            housing, and health care.

        Recent research from Cox Communications found that newly connected
    residents in rural communities felt broadband service ``has improved
    their lives,'' with 70 percent of those under 30 surveyed reporting
    they are ``more likely to remain in their communities when there's a
    high-speed Internet connection at home.'' This sentiment is echoed by
    many organizations that represent the interest of rural communities and
    agricultural producers--from the Farm Bureau to Land `O Lakes to the
    U.S. Soybean Association--note the critical relationship between
    affordable broadband and rural prosperity.
        As former FCC Chair Michael O'Rielly noted in a February 2023 op-ed
    in The Hill, ``there is bi-partisan agreement that access to broadband
    can be a key tool for citizen self-sufficiency and upward social
    mobility,'' leading to greater access to services such as education and
    training that could ultimately lower participation in other social
    welfare programs. This is supported by research from other research
    institutions, such as the American Consumer Institute, that note the
    higher earning potential associated with digital skills. George Zuo, an
    economist at the University of Maryland, found that recipients of
    Comcast's Internet Essentials benefits--a subsidy program similar to
    ACP--had higher rates of employment and earnings, as well as decreased
    probability for unemployment. John Horrigan, publishing Pew-supported
    research at The Benton Institute, applied Zuo's methodology to ACP,
    concluding, ``every dollar of ACP subsidy returns nearly two dollars in
    impacts to those using the program.''
        Similarly, Sprintson and Oughton concluded that ACP could have a
    greater effect on the economy than BEAD, specifically due to the
    downstream effects on sectors such as retail, health care, and social
    assistance, which are ``more reliant on broadband as a production
    input.''
        The rapid growth of ACP is attributable to several factors,
    including the participation of ISPs across the country. Research has
    reinforced this, concluding that adoption has steadily increased since
    2020, due to both the increased availability of wired connections and
    pandemic relief efforts. This is observable in states such as Kentucky,
    New Mexico, and Ohio, where broadband access has steadily improved over
    the lifespan of ACP. All three states also exhibit high participation
    in ACP. In fact, a study on a public-private partnership between the
    Housing Authority of the City of Los Angeles (HACLA) and an Internet
    service provider, concluded that sufficient speeds and limited
    enrollment barriers can induce low-income customers to stay online
    after free service runs out. In this case, 2,071 residents--more than
    half of the residents in the 10 HACLA communities in the study--paid
    $15 per month for service. Although ACP recipients pay a median of $40
    a month after the benefit is applied, positive trends in adoption and
    retention paired with increasing speeds are important lessons to
    consider for future policy efforts, including BEAD, CPF, and the ACP.
    Room for Improvement--ACP Reforms
        Even with this success, there is room for improvement. An audit of
    the ACP released in January 2024 found that the program could benefit
    from several changes, such as setting specific programmatic targets.
    Other recommendations centered on improving the oversight of the
    program through activities such as publishing reports on ISP compliance
    and enhancing quality controls for verifying eligibility of consumer
    applications and ISP claims.
        Pew agrees that the ACP would benefit from such changes, adding
    needed transparency to this program. Additionally, it would enable
    policymakers, researchers, and other stakeholders to understand ACP's
    effect on consumer behavior and ISP market dynamics. Examples of
    improving program oversight include tracking new subscribers,
    subscriber retention over time, and customers using ACP to upgrade
    service. Policymakers at every level of government are increasingly
    interested in understanding how consumers benefit from these subsidies.
    As such, Congress could direct the FCC, in partnership with other
    agencies, to establish a framework to analyze the immediate and long-
    term effects of ACP or a similar subsidy program on factors of social
    vulnerability and economic opportunity. Another analysis could focus on
    how programs focused on low-income households can save money through
    the provision of digital services.
        Studying ACP, particularly paired with upcoming BEAD and the
    Digital Equity Act programs, will enable lawmakers to continue refining
    program requirements and estimating cost over time.
    Life Without the ACP--Threat to Federal Broadband Deployment Efforts
        ACP's lapse will call these gains into question. Failure to fund
    the program would undercut the success of other significant Federal
    programs, including the $14.2 billion previously spent on ACP and $66
    million in outreach grants to nonprofits, state, and local government,
    and other entities to establish trust in the program and encourage
    signups. Not to mention the approximately $52 billion committed to CPF
    and BEAD, where providers of different sizes, service delivery, and
    technologies have expressed hesitation about participating in those
    programs if ACP goes away. These numbers do not account for the
    investments in marketing and outreach from nonprofit organizations and
    for-profit companies inside and outside the telecommunications
    community. In fact, more than 400 organizations, representing a range
    of political, social, and industry interests, called on Congress to
    fund the ACP.
        All 56 states and territories have incorporated ACP or a similar
    success program into their deployment strategies for BEAD and their
    plans for Digital Equity Act funding. In their BEAD Initial Proposal
    Volume II, every state has proposed how an awarded provider would make
    a low-cost service option available to ACP eligible households. The
    National Telecommunications and Information Administration (NTIA) is
    actively reviewing these proposals, but as of April 30, 2024, four
    states are approved to move forward. These states--Kansas, Louisiana,
    Nevada, and West Virginia--all designed their low-cost service options
    to be between $30--$65 to ensure ACP eligible households can afford
    service on a BEAD-funded network. Not only is the ACP subsidy critical
    to the success of BEAD, but states are also relying on the
    administrative infrastructure of the National Verifier to determine
    which households are eligible for a low-cost service option.
        Further, nearly every state detailed in their statewide digital
    equity plans how they planned to leverage ACP and utilize their Digital
    Equity State Capacity Grant allocation to promote enrollment. In Texas,
    the broadband office planned to utilize these funds to ``increase the
    percentage of Texans who are aware of the Affordable Connectivity
    Program.'' Similarly, in Ohio, the broadband office planned to
    ``support ACP outreach and enrollment and other affordability efforts
    statewide'' by leveraging regional networks to increase ACP awareness
    and convene the recipients of FCC ACP Outreach grants to share best
    practices. The Ohio plan directly notes that, ``ACP has helped more
    than 1 million Ohioan households sign up for and maintain a home
    Internet subscription by offering a $30 monthly subsidy. Unfortunately,
    the program's funding is projected to run out by the spring of 2024.
    This would, in turn, abruptly disrupt access to affordable Internet
    that low-income Ohioans rely on for education, work, and healthcare.''
        ACP's dissolution is adding risk to these programs at a critical
    moment in project planning for state policymakers and private sector
    partners. Twenty-six states have launched their challenge processes to
    determine which areas will be eligible for BEAD and are preparing to
    begin the subgrantee selection process. As providers across the country
    have noted, the existence of ACP will factor into their decision to
    participate in the program.
    Conclusion
        Ambitious goals--such as connecting every American to high-speed,
    affordable internet--require a combination of public and private sector
    partners working together. The central responsibility in the public
    sector is the providing of secure and reliable funding. With millions
    of people lacking access to a service that has become essential for
    quality of life and economic well-being, there is no time to waste. Pew
    asks that Congress act swiftly to ensure the future of ACP and
    prioritize long-term policies that promote access to high-speed
    affordable Internet for all Americans.

        Senator Lujan. Thank you, Ms. de Wit.
        Mr. Levin, you're recognized for your opening statement.

    STATEMENT OF BLAIR LEVIN, POLICY ADVISOR, NEW STREET RESEARCH;
               NONRESIDENT SENIOR FELLOW, BROOKINGS METRO

        Mr. Levin. Thank you very much, Chair Lujan, Ranking Member
    Thune, Senator Welch, and other members of the Subcommittee,
    thank you for inviting me to today's hearing. My name is Blair
    Levin. I'm an equity analyst with New Street Research and a
    nonresident fellow at Brookings, but I'm speaking solely for
    myself.
        Today, I'd like to explain why ACP should be extended and
    then, as part of a larger Universal Service Fund reform, be
    maintained with whatever modifications Congress deems wise.
        First, the cost of digital exclusion is already large and
    growing, with AI certain to magnify those costs. In 2010, the
    National Broadband Plan documented how the cost of digital
    exclusion was large and growing. In March 2020, the United
    States, in an overwhelmingly bipartisan manner, saw that cost,
    and agreed it was unacceptable. The pandemic has largely ended,
    but the shift to online delivery of essential services and the
    need for connectivity to participate in the economy has not;
    and the coming wave of AI will magnify those costs.
        Second, despite that knowledge, our country is about to
    take the greatest step backward any country has ever taken to
    widen, not close, the digital divide.
        Third, the cost of that disconnection will be
    extraordinarily painful to individuals and families. My fellow
    witnesses have already testified to how ACP recipients would be
    harmed by the program's demise. I will not repeat their
    powerful testimony. Instead, I will focus on the cost to all of
    us.
        And that leads me to the fourth point. Digital
    disconnection will impose an immediate cost on our economy,
    shrinking economic growth. My written testimony cites studies
    demonstrating how the program increases earnings for low-income
    households and increases GDP. It is no surprise, therefore,
    that business groups overwhelmingly support the extension.
        Fifth, the loss of the ACP will raise the cost of
    government-provided health care and worsen health care
    options--outcomes. Numerous studies demonstrate that telehealth
    can lower costs and improve outcomes in many circumstances
    including cancer, maternal mortality, opioid treatment, and
    emergency room visits. ACP opens the door to improving health
    care outcomes while lowering costs for Medicaid, Medicare, and
    the VA. Alternatively, the end of ACP is likely to cause
    increased health care costs and worse health outcomes. Why
    would we want to do that?
        Sixth, the loss of ACP will raise the cost of government
    and diminish its performance in other areas as well. The story
    of broadband and health care is repeated in other areas where
    government is the key investor, including job training, job
    placement, education, and other social services.
        This is not surprising. Broadband is a general-purpose
    technology. It enables innovations and efficiencies in multiple
    areas. In 2013, Google's chief economist estimated that the
    Internet already generated $500 in consumer surplus per user
    annually, citing multiple different kinds of savings.
        And it logically follows that because many low-income
    households are so dependent on government programs, the
    consumer surplus that ACP recipients obtain also creates a
    surplus for those--for the government through those programs.
    So again, why would we want our investments to be less
    effective and more expensive?
        Seventh, the loss of ACP will particularly hurt rural areas
    and military families. As others have noted, rural areas in
    particular benefit from ACP. I cite several in my written
    testimony.
        Let me illustrate with one more: rural areas are suffering
    from a growing epidemic of hospital closures, and that makes
    telehealth even more essential.
        As Ms. de Wit noted, losing ACP would reduce the value of
    BEAD deployment dollars, meaning that communities that could
    have been connected to fiber will end up connected with fixed
    wireless or even satellites.
        Eighth, every negative consequence I've mentioned will be
    made worse as AI becomes embedded in our economy and society.
        Ninth, the administrative cost of shutting down and
    starting up again is high. It would be a huge waste to shut ACP
    down and incur, as we would inevitably do, the startup costs
    again.
        In sum, losing ACP will result in slower economic growth,
    increases in the cost of health care, education, job training
    and placement, and other social services, while decreasing the
    effectiveness of those services.
        I know I'm a Democratic witness, but let me just close by
    endorsing the letter 20 House Republicans sent Speaker Johnson
    asking for action on ACP, saying, ``Bipartisan solutions are
    within reach to ensure uninterrupted access to the ACP, while
    concurrently pursuing long-term funding strategies.''
        I completely agree. Let's adopt a clean extension, and then
    reform the entire Universal Service Fund to put it and ACP on a
    sustainable basis. Thank you.
        [The prepared statement of Mr. Levin follows:]

     Prepared Statement of Blair Levin, Policy Analyst, New Street Research
        Chairwoman Cantwell, Ranking Member Cruz, Chair Lujan, Ranking
    Member Thune, and other members of the Subcommittee on Communications,
    Media, and Broadband, thank you for inviting me to testify in today's
    hearing, ``The Future of Broadband Affordability.''
        My name is Blair Levin. I am the policy analyst with New Street
    Research, an equity research firm, a Senior Non-Residential Fellow at
    the Metropolitan Policy Project of the Brookings Institution. In 2009-
    2010 I led the team that wrote the United States National Broadband
    Plan. From 1993-1997 I served as Chief of Staff to FCC Chairman Reed
    Hundt. I am here speaking on behalf of myself, and my views are not
    intended to represent the views of any organization with which I am
    affiliated.
        Today, I would like to explain why the ACP should be extended and
    then, as part of a larger Universal Service Fund reform effort, be
    maintained with whatever modifications Congress deems wise.
    First, the cost of digital exclusion is already large and growing, with
            Artificial Intelligence (AI) certain to magnify the cost.
        In 2010, the National Broadband Plan documented how the cost of
    digital exclusion was large and growing. In March of 2020, the United
    States, in an overwhelming bi-partisan manner saw and understood that
    cost and agreed that the cost was unacceptable. In 2021, Congress found
    that ``Access to affordable, reliable, high-speed broadband is
    essential to full participation in modern life in the United States;''
    and that ``(t)he persistent `digital divide' in the United States is a
    barrier to the economic competitiveness of the United States and
    equitable distribution of essential public services, including health
    care and education.'' It then funded programs to close that divide.
        The pandemic has largely ended but the shift to online delivery of
    essential services and need for connectivity to participate in the
    economy has not. And it will likely accelerate again. AI will not be as
    dramatic an evangelist for universal broadband as was COVID. It will
    not make the case in a single March weekend. Nonetheless, in the last
    part of this decade, we are going to discover that the cost of digital
    exclusion will be even greater than it was during COVID, as Artificial
    Intelligence magnifies those barriers and costs.\1\
    ---------------------------------------------------------------------------
        \1\ As Bill Gates noted in his 2024 letter, ``we are 18-24 months
    away from significant levels of AI use by the general population.''
    https://www.gatesnotes.com/The-Year-Ahead-2024
    ---------------------------------------------------------------------------
        In short, we already know the cost of disconnection is unacceptable
    and the cost will inevitably get much worse.
    Second, despite that knowledge, our country is about to take the
            greatest step backwards any country has ever taken to widen,
            not close, the digital divide.
        You all know the reason. Early this month, the Affordable
    Connectivity Program (ACP), which provides a monthly subsidy sufficient
    to purchase broadband for over 23 million households, nearly 60 million
    people, will run out of funds.
        We can't know how many persons will be disconnected as a result.
        But we do know 53 percent rural survey respondents and 47 percent
    of all respondents reported having either zero Internet connectivity or
    relying solely on mobile Internet service prior to receiving their ACP
    benefit.\2\ Nearly 70 percent of survey respondents reported they had
    inconsistent connectivity or zero connectivity at all before ACP.\3\
    More than three-quarters of respondents say losing their ACP benefit
    would disrupt their service by making them change their plan or drop
    Internet service entirely.\4\
    ---------------------------------------------------------------------------
        \2\ https://www.fcc.gov/sites/default/files/Measuring-Impact-ACP-
    Survey-Fact-Sheet.pdf
        \3\ https://www.fcc.gov/sites/default/files/Measuring-Impact-ACP-
    Survey-Fact-Sheet.pdf
        \4\ https://www.fcc.gov/sites/default/files/Measuring-Impact-ACP-
    Survey-Fact-Sheet.pdf
    ---------------------------------------------------------------------------
        So, the number of Americans disconnected from a permanent broadband
    connection if ACP disappears is likely to number in the tens of
    millions.
    Third, the cost of that disconnection will be extraordinarily painful
            to individuals and families.
        A recent study\5\ showed that
    ---------------------------------------------------------------------------
        \5\ https://www.bsgco.com/acp-fact-sheet

       65 percent of ACP participants fear that losing broadband
            would result in losing their job or their household's primary
    ---------------------------------------------------------------------------
            source of income;

       75 percent fear losing access to health care; and

       81 percent of ACP parents worry about their children falling
            behind in school.

        I would hope that we could agree that government should act to
    alleviate, not exacerbate, such fears.
    Fourth, that is not the only cost. Digital disconnection will also
            impose an immediate cost on our economy, shrinking economic
            growth.
        A 2021 study showed that in areas where discount Internet plans
    were available, there was a positive impact on employment rates and
    earnings of eligible households. With greater labor force participation
    and decreased probability of unemployment, low-income households saw a
    $2,200 annual earning boost from subsidized Internet programs. As the
    study showed increased broadband affordability for low-income people
    leads to ``increased employment rates and earnings of eligible
    individuals, driven by greater labor force participation and decreased
    probability of unemployment''--providing further savings to government
    unemployment insurance programs.\6\
    ---------------------------------------------------------------------------
        \6\ https://www.aeaweb.org/articles?id=10.1257/pol.20190648
    ---------------------------------------------------------------------------
        Another study found that ``every dollar of ACP subsidy returns
    nearly two dollars in impacts to those using the program'' due to
    ``employment effects that boost household income; and convenience
    effects, e.g., time saved from shopping online as well as having access
    to a greater variety (or quality) of goods.'' \7\
    ---------------------------------------------------------------------------
        \7\ https://www.benton.org/publications/affordable-connectivity-
    program-benefits-outweigh-costs
    ---------------------------------------------------------------------------
        Further, a recent economics working paper estimated that for every
    dollar spent on the ACP, the Nation's GDP increases by $3.89--nearly
    twice the multiplier of the far larger Broadband Equity Access and
    Deployment (BEAD) Program, which builds new digital infrastructure in
    unserved locations.\8\
    ---------------------------------------------------------------------------
        \8\ https://arxiv.org/ftp/arxiv/papers/2311/2311.02431.pdf
    ---------------------------------------------------------------------------
        Thus, it is no surprise that business groups overwhelmingly support
    the extension. Not only is an ACP extension endorsed by enterprises in
    the communications market but also by Chambers of Commerce across the
    country.
    Fifth, and too often ignored, the loss of the ACP program will raise
            the cost of government provided health care services and
            diminish health care outcomes.
        It should not be surprising that as a 2021 medical paper found that
    ``Digital literacies and Internet connectivity have been called the
    `super social determinants of health' because they address all other
    social determinants of health (SDOH). For example, applications for
    employment, housing, and other assistance programs, each of which
    influences an individual's health, are increasingly, and sometimes
    exclusively, accessible online. The costs of equipping a person to use
    the Internet are substantially lower than treating health conditions
    and the benefits are persistent and significant, making the efforts to
    improve digital literacy skills and access valuable tools to reduce
    disparities.'' \9\
    ---------------------------------------------------------------------------
        \9\ https://www.nature.com/articles/s41746-021-00413-8
    ---------------------------------------------------------------------------
        But it is not just good for the patient; it is also good for the
    patient's insurance company. As the largest health care insurer, the
    Federal government should want to take advantage of savings such as
    those seen in a recent study\10\ finding the cost savings of using
    telehealth for patients with cancer ranged from $147 to $186 per visit,
    or the University of Pennsylvania study\11\ showing that telemedicine
    was 23 percent less expensive than in-person visits. Similarly, a 2023
    study\12\ by the Department of Veterans Affairs found that ``veterans
    who utilized a new tele-emergency service were nearly half as likely to
    visit an emergency department in-person and showed reduced short-term
    Veteran visits to emergency departments outside of VA.''
    ---------------------------------------------------------------------------
        \10\ https://jamanetwork.com/journals/ jamanetworkopen/fullarticle/
    2800164
        \11\ https://www.pennmedicine.org/news/news-releases/2023/june/
    employee-telemed-visits-25-percent-less-costly-for-health-system
        \12\ https://www.va.gov/ann-arbor-health-care/stories/new-research-
    telehealth-emergency-care-
    leads-to-decreased-emergency-department-visits-hospitalizations-
    reduced-health/#::text=Health
    %20Care%20Costs-
    ,New%20Research:%20Telehealth%20Emergency%20Care%20Leads%20to%20
    Decreased%20Emergency%20Department,Hospitalizations%2C%20Reduced%20Healt
    h%20Care
    %20Costs
    ---------------------------------------------------------------------------
        Another area where telehealth can improve both costs and outcomes
    is with maternal mortality rates. The United States has alarming trend
    lines in this arena, with an increase of 60 percent in maternal
    mortality between 2019 and 2021.\13\ At the behest of Congress, the
    Federal Communications Commission mapped where maternal mortality is
    highest--and the maps of places where new mothers die at the highest
    rates look a lot like maps of where household Internet subscription
    rates are low.\14\
    ---------------------------------------------------------------------------
        \13\ https://healthcare.rti.org/insights/digital-health-maternal-
    outcomes
        \14\ https://www.fcc.gov/reports-research/maps/connect2health/
    maternal-health-map.html?bb
    Sel=Broadband+Access&mhSel=Maternal+Deaths&bbThresh=90.25&mhThresh=1&md=
    2
    ---------------------------------------------------------------------------
        Of course, there are many factors that influence maternal
    mortality, but it is worth noting that there are promising ways to
    address maternal mortality that rely on home broadband for new mothers.
    In Louisiana, Ochsner Health has had success in using digital tools to
    monitor at-home blood pressure and other risk factors for pregnant
    women, resulting in fewer hospital admissions and caesarean section
    procedures. Such remote maternity online monitoring has reduced
    unexpected neonatal intensive-care unit admissions by 27 percent.\15\
    ---------------------------------------------------------------------------
        \15\ https://www.ama-assn.org/practice-management/digital/how-
    digitally-enabled-care-can-improve-postpartum-outcomes
    ---------------------------------------------------------------------------
        The healthcare benefits of using digital tools extend beyond
    maternal mortality. Telehealth is associated with people maintaining
    their participation in opioid treatment programs\16\ and telehealth can
    reduce the cost of healthcare service delivery with only marginal
    increases in in-person visits.\17\ Given the amount the United States
    spends on Medicare and Medicaid, universal, sustainable broadband
    should be seen as a huge opportunity to improve health outcomes while
    lowering costs.
    ---------------------------------------------------------------------------
        \16\ https://jamanetwork.com/journals/jamanetworkopen/fullarticle/
    2810828
        \17\ https://www.ajmc.com/view/economics-of-a-health-system-s-
    direct-to-consumer-telemedicine-for-its-employees
    ---------------------------------------------------------------------------
        In short, the end of ACP is likely to cause increased health care
    costs and worse health outcomes. Why would we want to do that?
    Sixth, the loss of the ACP program will raise the cost of government
            and diminish its performance in other areas as well.
        One such area is job training. As noted above, access to broadband
    leads to ``greater labor force participation and decreased probability
    of unemployment'' in part because connections enable access to online
    job training courses that can be tailored to an individual's
    background, geography, and ambitions. This reduces the costs of our
    unemployment system.
        A similar story involves job placement. In 2016, the Dallas Fed
    found that already 60-70 percent of job opportunities were posted
    online.\18\ By now that number has no doubt increased. So, if we want
    to reduce the financial costs of our unemployment system, we need
    everyone online.
    ---------------------------------------------------------------------------
        \18\ https://www.dallasfed.org/-/media/Documents/cd/pubs/
    digitaldivide.pdf
    ---------------------------------------------------------------------------
        Education offers a similar picture. Students without home Internet
    access have lower grades, complete homework less often and are less
    likely to attend college. They score about three points lower on a 64-
    point digital skills scale compared to those with home internet. There
    is also a significant ``homework gap'' with 64 percent of students with
    no home Internet often leaving homework unfinished, compared to 17
    percent with home access.\19\
    ---------------------------------------------------------------------------
        \19\ https://www.pewtrusts.org/en/research-and-analysis/articles/
    2020/12/08/what-covid-19-underscores-about-how-broadband-connectivity-
    affects-educational-attainment
    ---------------------------------------------------------------------------
        The same story--reduced costs and improved performance--can be
    found for other social services. ACP creates benefits for social
    service suppliers. Greater certainty in at-home service for clients
    makes it more attractive to invest in solutions in health care and job
    training. The ACP is helping to create and is now part of an emerging
    innovation system where the value of investing in social solutions is
    greater due, in part, to more consistent connectivity for low-income
    people. The ACP has brought stability to the last mile of service
    delivery for these new solutions.
        Seventh, the loss of the ACP program will particularly hurt rural
    areas and military families.
        As a starting point, nearly half (49 percent) of rural households
    qualify for ACP compared with 40 percent of non-rural households. This
    gap largely results from more lower income households in rural parts of
    the country. Some 36 percent of rural households have annual incomes at
    or below 200 percent of the Federal poverty level compared to 28
    percent for households in non-rural areas.\20\
    ---------------------------------------------------------------------------
        \20\ https://www.benton.org/blog/affordable-connectivity-program-
    and-rural-america#::text=
    15%25%20of%20all%20rural%20households,have%20enrolled%20in%20the%20benef
    it
    ---------------------------------------------------------------------------
        Further, as noted above, more rural than non-rural residents
    reported having either zero Internet connectivity or relying solely on
    mobile Internet service prior to receiving their ACP benefit.\21\
    ---------------------------------------------------------------------------
        \21\ https://www.fcc.gov/sites/default/files/ Measuring-Impact-ACP-
    Survey-Fact-Sheet.pdf
    ---------------------------------------------------------------------------
        The statistics I cited earlier on the benefits of telehealth are
    even more important to rural areas, as they are suffering from an
    epidemic of hospital closures, an epidemic that is likely to get much
    worse, making telehealth even more essential.\22\
    ---------------------------------------------------------------------------
        \22\ https://www.beckershospitalreview.com/finance/states-with-the-
    most-rural-hospital-closures.html
    ---------------------------------------------------------------------------
        But the biggest problem may be the impact of losing ACP on BEAD and
    rural broadband deployment. As the consulting group BCG found, ACP
    reduces the subsidy needed to incentivize providers to build in rural
    areas by 25 percent per household, writing ``the existence of ACP,
    which subsidizes subscriber service fees up to $360 per year, reduces
    the per-household subsidy required to incentive ISP investment by $500,
    generating benefit for the government and increasing the market
    attractiveness for new entrants and incumbent providers.'' \23\
    ---------------------------------------------------------------------------
        \23\ https://www.commonsensemedia.org/sites/default/files/research/
    report/2022-cs-bcg-closing-digital-divide_final-release-3-for-web.pdf
    ---------------------------------------------------------------------------
        But of course, if ACP goes away, those savings will also go away
    and to put a fine point on it, it is a mathematical certainty that
    there will be communities in, for example, Texas that instead of
    getting fiber will end up with fixed wireless or even satellite.
        As to military families, according to a White House study, they
    make up nearly half of the households that benefit from ACP.\24\ The
    ACP provides veterans a cost-effective way to access Department of
    Veterans Affairs services, such as telemedicine, job training, and VA
    benefits.
    ---------------------------------------------------------------------------
        \24\ https://www.whitehouse.gov/briefing-room/statements-releases/
    2024/02/06/fact-sheet-as-affordable-connectivity-program-hits-
    milestone-of-providing-affordable-high-speed-internet-to-23-million-
    households-nationwide-biden-harris-administration-calls-on-congress-t/
    ---------------------------------------------------------------------------
    Eighth, every negative consequence that I have mentioned will be made
            worse, as AI becomes embedded in our economy and society.
        I have no doubt that later this decade we will view the
    implications of AI similarly to how we saw the implications of Covid in
    how both vividly demonstrate the unacceptability of digital exclusion.
        Whether we are discussing the skill sets needed, the jobs we need
    to fill, education\25\ and health care\26\ trends in artificial
    intelligence will exacerbate the negative consequences of any remaining
    digital divide. And those consequences in turn will make the United
    States less competitive as AI defines the new parameters of
    competition.
    ---------------------------------------------------------------------------
        \25\ https://www.govtech.com/education/will-ai-in-schools-widen-
    the-digital-divide?utm_source=
    sendgrid&utm_medium=e-mail&utm_campaign=Newsletters
        \26\ https://a16z.com/how-to-democratize-healthcare-ai-gives-
    everyone-the-very-best-doctor/
    ---------------------------------------------------------------------------
        But I would urge you to consider not just the downside but also the
    upside in terms of the problems we can address if we have both
    universal adoption and artificial intelligence.
        For example, our young people remain behind in reading, a deficit
    that if not corrected, will cost our country billions in years to come
    due to such things as lost economic productivity\27\ and increases in
    crime.\28\ Recent data demonstrates that just 32 percent of fourth
    graders read at or above a fourth-grade level.\29\
    ---------------------------------------------------------------------------
        \27\ A 2020 study evaluating literacy and numeracy in OECD
    countries found that many adults with low literacy can find jobs, but
    that higher literacy and skill levels give workers more opportunities
    for career and income growth. Cherry, G., & Vignoles, A. (2020). What
    is the economic value of literacy and numeracy? IZA World of Labor 229
    https://doi.org/10.15185/izawol.229.v2 Similarly, Research indicates
    that education quality--measured by test scores in international
    student surveys--predicts economic growth. https://www.tandfonline.com/
    doi/full/10.1080/13504851.2023.2168604. For example, the study cited
    above concludes ``test scores appear to be a good measure of both
    cognitive and non-cognitive skills of importance for growth.''
        \28\ The data is clear that there is ``a strong connection between
    early low literacy skills and our country's exploding incarceration
    rates.'' https://www.literacymidsouth.org/news/the-relationship-
    between-incarceration-and-low-literacy.
        \29\ In 2022, the percentage of fourth-grade public school students
    performing at or above the NAEP Proficient level in reading was 32
    percent nationally. https://www.nationsreport
    card.gov/reading/states/achievement/?grade=4.
    ---------------------------------------------------------------------------
        We can, and we must, fix that. With the tools of technology,
    particularly AI,\30\ we should make sure no future generations fall
    behind.\31\ As Bill Gates noted in his most recent letter, AI can bring
    personalized tutors to every student. ``The AI education tools being
    piloted today are mind-blowing because they are tailored to each
    individual learner. Some . . . are already remarkable, and they'll only
    get better in the years ahead.'' \32\ We should make sure that no one
    is denied full use of these ``mind-blowing'' technologies, particularly
    those students who need it the most.
    ---------------------------------------------------------------------------
        \30\ There are numerous AI programs that claim to assist young
    people improve their reading skills. A small sample includes:

           Khanmigo. The Khan Academy AI tutor.

           Amira. An AI-powered reading tutor that provides
    personalized help for struggling readers. Amira listens to students
    read out loud, assesses their reading, and provides feedback and
    support when they struggle.

           Giffie. An AI-powered reading tutor that helps kids
    practice by chatting with them, helping them pronounce words, and read
    sentences.

           Ello. An AI reading coach that supports parents in
    creating the best learning environment for their child.
        \31\ Research shows that certain interventions--such as frequent,
    small group tutoring and extra learning time on school breaks--can
    produce significant gains. AI provides a tutor equivalent for families
    that cannot afford tutors, who make up a significant portion of the
    families with underperforming readers.
        \32\ https://www.gatesnotes.com/The-Year-Ahead-2024
    ---------------------------------------------------------------------------
    Ninth, the administrative cost of shutting down and starting up again
            is high.
        The Federal government spent tens of millions to start up the
    program, as did the states, community groups and the Internet Service
    Providers (ISPs.) This includes $66 million in outreach grants to
    nonprofits, state, and local government, and others to assist in the
    sign-up process, a process that would have to be repeated if the
    program were to end and then in the future be brought back.
        To shut down will create massive confusion, a loss of trust, and
    other costs that are hard to pinpoint in terms of exact dollars.
        And there are certain elements of the program, such as having a
    national verifier, that cannot be duplicated easily in a world of
    voluntary ISP programs.
        And we can project that the biggest waste this program could have
    would be shutting it down now and then restarting in the future. For if
    there is one thing we should all be certain of it is that we will have
    to do this in the future, as connectivity becomes even more important
    for participating in the economy and society.
        In summary, losing the ACP will result in slower economic growth,
    increases in the cost of healthcare, education, job training and
    placement, and other social services, while decreasing the
    effectiveness of those services.
        Those trends are going to be felt even more in rural areas and in
    military families. And those trends will be exacerbated as AI becomes
    embedded in our economy and society.
    Let us not take the greatest step backwards any country has ever taken
            in terms of closing the digital divide.
        Let's adopt a clean ACP extension and then work hard to reform the
    entire Universal Service Program to put it on a sustainable basis.\33\
    Let's grab the opportunity broadband creates to improve our economy,
    our society, and our future by making sure, as Congress wrote, that all
    Americans have the broadband access they need to fully participate in
    the economy and the society.
    ---------------------------------------------------------------------------
        \33\ In this regard, I am in complete agreement with the 20 House
    Republicans who wrote to Speaker Johnson last month asking for action
    on ACP, writing that ``We believe that bipartisan solutions are within
    reach to ensure uninterrupted access to the ACP while concurrently
    pursuing long-term funding strategies.'' https://
    brandonwilliams.house.gov/news/documentsingle
    .aspx?DocumentID=1787

        Senator Lujan. I appreciate that, Mr. Levin. Thank you very
    much.
        Dr. Winfree, you're recognized for five minutes.

     STATEMENT OF PAUL WINFREE, Ph.D., PRESIDENT AND CEO, ECONOMIC
                        POLICY INNOVATION CENTER

        Dr. Winfree. Thank you very much, Chairman Lujan, Ranking
    Member Thune, members of the Committee. I was thinking about
    using my 5 minutes to sing ``Happy Birthday'' to Senator Welch,
    but I don't think anybody wants that, so.
        [Laughter.]
        Dr. Winfree. Like the development of canals and railroads
    in the 19th century and highways in the 20th century, access to
    affordable high-speed Internet will determine regional
    development, as well as America's ability to continue to grow
    by leading the world in innovation.
        Fortunately, policymakers have paid an incredible amount of
    attention to the issue of broadband affordability over the past
    decade. This has led to many new policies that we can use as
    guidance. These policies include deregulation, as well as
    subsidizing the demand for high-speed Internet and the supply
    of Internet service providers or ISPs.
        We have learned that deregulation and competition have
    reduced prices. We have also learned that policies subsidizing
    demand can increase prices if they do not fundamentally change
    the demand for high-speed Internet or the supply of ISPs.
    Experience has demonstrated that deregulation can produce
    significant gains for consumers, especially when it enhances
    transparency by increasing the scale on which providers can
    compete on price and the quality of services.
        One recent case of how deregulation reduced prices was in
    2017, when Congress nullified a rule enacted by the FCC
    regarding consumer data sharing. Before the FCC's 2016 rule,
    companies designed plans that allowed consumers to opt in or
    out of data sharing at different subscription rates. Those who
    chose to opt in paid lower rates than those who decided to opt
    out.
        But in 2016, the FCC enacted a rule requiring consumers to
    opt in.
        Congress nullified this rule using the Congressional Review
    Act process. The results created more options at different
    price points for consumers. The 2020 Economic Report of the
    President found that the CRA reduced wireless prices by more
    than 10 percent and wired prices by as much as 2 percent.
        At the same time, subsidizing demand can increase prices,
    especially when the unemployment rate is high and the
    underlying inflation rate is high as well--or excuse me,
    unemployment rate is low and the interval--and inflation rate
    is high.
        There are several ways that the Federal Government
    subsidizes the demand for broadband. One such program is the
    Affordable Connectivity Program, or ACP, which provides a
    monthly subsidy of $30 to low-income households, as well as a
    $100 one-time subsidy to buy a tablet, laptop, or desktop
    computer. Economic theory, as Senator Cruz mentioned earlier,
    would predict that a demand subsidy can act as a price floor,
    especially in a market where the demand and supply of a product
    remain relatively fixed. In this environment, the producer, in
    this case the ISPs, will caption a portion, if not all, of the
    subsidy.
        In a recent paper, I found that there is a positive
    relationship between the percentage of households receiving ACP
    subsidies and the increase in the average total monthly price
    for broadband. Importantly, I do not find any statistically
    meaningful association between ACP subsidies and prices when
    the level of households receiving subsidies is under 7 percent,
    but today about 15 percent of households across the country
    receive an ACP subsidy. That corresponds with an average
    increase of about 7 percent in the total cost of a monthly
    broadband subscription.
        These estimates do not change, even when factoring in the
    market concentration of ISPs. Based on the estimates in this
    paper, the average cost of broadband is about $5.48 per month
    higher because of ACP, implying that ISPs are capturing about
    18 percent of the total subsidy. If 40 percent of households
    were enrolled in ACP, as would be the case under the Biden
    administration's enrollment proposal, the average change in
    prices for plans would be about $9.39.
        We've seen how ISPs can offer choices to consumers and pass
    along savings through lower prices in a competitive market,
    when they are not heavily regulated.
        The same could be true under a more competitive market
    post-ACP. Subsidizing demand through ACP also makes consumers
    less sensitive to prices and quality. This advantages large
    existing ISPs who are more likely to have had existing market
    share when the program was created.
        If ACP funding were to become exhausted, companies would be
    encouraged to compete for consumers shopping for better plans.
    In fact, according to Communications Daily, most ISPs have
    already told their investors that when ACP ends, they don't
    plan to lose any money, because they will be competing on price
    and quality to attract consumers who are coming off of
    subsidized coverage. Just in the last week alone, we saw a
    major ISP offer a $9.95 plan that wasn't being offered again,
    before the exhaustion of ACP funding was on the horizon.
    Ultimately, this will benefit everyone by creating a more
    sustainable, affordable marketplace for high-speed Internet.
        Thank you very much, and I look forward to your questions.
        [The prepared statement of Dr. Winfree follows:]

    Prepared Statement of Paul Winfree, Ph.D., President and CEO, Economic
                            Policy Innovation Center
        Chairman Lujan, Ranking Member Thune, and Members of the Committee,
    thank you for inviting me to testify today.
        The issue of broadband affordability is critical to the success of
    the American economy. Like the development of canals and railroads in
    the 19th century or highways in the 20th century, access to affordable
    high-speed Internet will determine regional development as well as
    America's ability to continue to grow by leading the world in
    innovation.
        Fortunately, policymakers have paid an incredible amount of
    attention to the issue of broadband affordability over the past decade.
    This has led to many new policies that we can use as guidance on how to
    increase broadband affordability. These policies include deregulation,
    new regulations, as well as subsidizing demand for high-speed Internet
    and the supply of Internet service providers (ISPs).
        What we have learned from those different policies is that
    deregulation and competition have reduced prices. We have also learned
    that policies that subsidize demand, such as the Affordable
    Connectivity Program, tend to increase prices. This is especially true
    if they do not fundamentally change the demand for high-speed Internet
    or the supply of ISPs.
    Deregulation Reduces Prices of High-Speed Internet
        Experience has demonstrated that deregulation can produce
    significant gains for consumers, especially when it enhances
    transparency, by increasing the scale on which providers can compete on
    the price and quality of services. One recent case of how deregulation
    reduced prices was in 2017 when Congress nullified a rule enacted by
    the Federal Communication Commission (FCC) regarding consumer data
    sharing.
        Before the enactment of the FCC's 2016 rule, ISPs could share
    consumer data with companies unless the consumer ``opted out'' of the
    data-sharing arrangement. Companies designed plans that allowed
    consumers to opt in or out of data sharing at different subscription
    rates. In essence, those who chose to opt-in paid lower rates than
    those who decided to opt out of data sharing. This is because companies
    would sell that consumer data and use it to reduce the price of
    Internet service.

        The FCC enacted a rule in 2016 that required ``opt-in'' to a data-
    sharing model. However, Congress used the Congressional Review Act
    (CRA) process to cancel this rule in 2017. The 2020 Economic Report of
    the President, written by the White House's Council of Economic
    Advisers, found that the CRA overturning the FCC's rule requiring
    consumers to ``opt-in'' to data sharing reduced wireless prices by more
    than 10 percent and wired prices by as much as 2 percent (see Figure 3-
    4 above from the 2020 ERP).
    Subsidizing Demand Can Increase Prices for High-Speed Internet
        In December 2020, Congress passed the Consolidated Appropriations
    Act of 2021 (P.L. 116-260) that established the Emergency Broadband
    Benefit Program (EBB). EBB was a temporary subsidy of up to $50 per
    month. EBB was intended to help low-income households afford broadband
    Internet services amid the COVID-19 pandemic when most students were
    still engaged in remote learning. The initial appropriation for the
    program was $3.2 billion.
        In November 2021, the Infrastructure Investment and Jobs Act (IIJA
    or P.L. 117-58) made three significant changes to EBB. First, it
    eliminated the sunset of the program, which was set to coincide with
    the expiration of the COVID-19 pandemic. Second, it provided another
    $14.2 billion for the program. Third, it renamed EBB as the Affordable
    Connectivity Program (ACP).
        Like its predecessor, ACP provides a monthly subsidy of $30 per
    month to low-income households that purchase services from
    participating ISPs. ACP also provides a $100 one-time subsidy to buy a
    tablet, laptop, or desktop computer. There are currently 23.3 million
    households enrolled in ACP (based on data from February 2024).\1\ In
    other words, about 15 percent of all households in the U.S. receive a
    subsidy.
    ---------------------------------------------------------------------------
        \1\ Federal Communications Commission, ``Affordable Connectivity
    Program Enrollment and Claims Tracker,'' https://www.usac.org/about/
    affordable-connectivity-program/acp-enrollment-and-claims-tracker/,
    (accessed January 3, 2024).
    ---------------------------------------------------------------------------
    Why Might Have ACP Increased Prices?
        Economic theory would predict that a demand subsidy can act as a
    price floor, especially in a market where the demand and supply of a
    product remain relatively fixed. In this environment, the producer (in
    this case, ISPs) will capture a portion (or even all) of the subsidy.
        The FCC has said that a goal of ACP is to close the digital divide
    for low-income consumers. However, most ACP subsidies are going to
    households who already have broadband. FCC surveys have found that
    around 80 percent of ACP recipients already had broadband before the
    subsidy.\2\
    ---------------------------------------------------------------------------
        \2\ Federal Communications Commission reported to GAO that survey
    data showed ``. . .approximately 16 percent of respondents indicated
    they had no Internet access prior to enrollment in the ACP''; see GAO,
    Affordable Broadband: FCC Could Improve Performance Goals and Measures,
    Consumer Outreach and Fraud Risk Management, GAO-23-105399, https://
    www.gao.gov/assets/d23105399.pdf. Also, see FCC's 2024 survey data
    which shows that 21.8 percent said they had no Internet service, and
    the remaining 78 percent had either home, mobile, or both services
    before ACP; see FCC, Measuring The Impact of the ACP: Survey Results
    Question 1, published Feb. 29, 2024, https://www.fcc.gov/sites/default/
    files/ACP-Survey-Results.pdf
    ---------------------------------------------------------------------------
        The FCC has also tried to study the effect of losing ACP on
    Internet service. In a survey conducted earlier this year, the FCC
    reports that ``more than three-quarters (77 percent) of survey
    respondents say losing their ACP benefit would disrupt their service by
    making them change their plans or drop Internet service entirely.''
    However, this is an inaccurate reading of the survey.\3\
    ---------------------------------------------------------------------------
        \3\ Federal Communications Commission, Measuring The Impact of the
    ACP: Survey Results Question 1, published Feb. 29, 2024, https://
    www.fcc.gov/sites/default/files/ACP-Survey-Results.pdf
    ---------------------------------------------------------------------------
        The 77 percent referenced by FCC is derived by adding two responses
    together including the 29.3 percent of respondents who said that they
    would choose a different service and the 47.6 percent who said that
    they would choose a lower cost service. Only 15.7 percent said that
    they would drop their service with no alternative. This 15.7 percent
    that would lose coverage in the absence of ACP is very similar to the
    rate of new take-up in Internet service after the adoption of ACP based
    on other FCC data.
        One reason why it may not have increased demand is that the program
    is duplicative of other programs. For example, the FCC's Universal
    Service Fund Lifeline Program already provided a subsidy to low-income
    consumers for broadband services (i.e., the Lifeline subsidy is $9.25
    per month).
        There has also not been a significant increase in the number of
    ISPs that are associated with the ACP subsidy.\4\ This is not
    surprising given that ACP is a relatively small program, and providing
    Internet service requires significant fixed investments in capital and
    labor.
    ---------------------------------------------------------------------------
        \4\ According to IBIS data, the average growth rate in the number
    of ISPs has been relatively constant over the past several years.
    ---------------------------------------------------------------------------
    The Potential Effect of ACP on Prices
        In a recent paper, I estimate the relationship between ACP
    enrollment in regional prices for high-speed internet.\5\ I find that
    there is a positive relationship between the percentage of households
    receiving ACP subsidies and the increase in the average total monthly
    price for broadband since 2022.\6\
    ---------------------------------------------------------------------------
        \5\ Paul Winfree, ``Bidenomics Goes Online: Increasing the Costs of
    High-Speed Internet,'' Economic Policy Innovation Center, January 8,
    2024, https://epicforamerica.org/publications/bidenomics-goes-online-
    increasing-the-costs-of-high-speed-internet/.
        \6\ This is measured as the change in prices as a function of the
    percentage of households receiving an ACP subsidy.
    ---------------------------------------------------------------------------
        However, there is no statistically meaningful association between
    ACP subsidies and prices when the level of households receiving the
    subsidies is under 7 percent (see Figure 1). Today, about 15 percent of
    households across the country receive an ACP subsidy. That corresponds
    with an average increase of about 7 percent in the total cost of a
    monthly broadband subscription. These estimates do not change even when
    factoring in the market concentration of ISPs.
        The FCC finds that there is a nonlinear relationship between
    broadband speed and the price paid for different speeds. Figure 2 shows
    the relationship between ACP subsidies and prices for lower broadband
    speeds (measured as less than 20 Mbps in download speed). Here you can
    see that the proportion of households receiving an ACP subsidy is
    positively associated with prices for lower-speed plans. The change in
    prices is higher in states with a greater percentage of households
    receiving ACP subsidies relative to the price change for all plans. One
    possible explanation is that broadband service providers are marketing
    their lower-speed plans to those eligible to receive the ACP subsidy
    while raising the cost of these basic plans to capture larger
    proportions of the subsidy.

        Table 1 shows the average change in price for broadband plans that
    is associated with a percent of households receiving an ACP subsidy.
    Based on estimates in Winfree (2024), the average cost of broadband is
    about $5.48 higher because of ACP while broadband service providers are
    capturing about 18 percent of the total subsidy. If 40 percent of
    households were enrolled in ACP, as would be the case under the Biden
    Administration's enrollment proposal, the average change in prices for
    plans would increase by about $9.39 and 31 percent of the subsidy would
    be pocketed by broadband service providers.

        Table 2 shows the same estimates for lower-speed plans. Under
    higher levels of ACP enrollment, lower-speed plans will become more
    expensive with the broadband service providers able to capture larger
    portions of the total subsidy. This makes sense given that the ACP
    subsidy essentially operates as a floor for the prices of broadband.

        The Biden Administration has posited that ACP helps households save
    about $500 million per month on Internet bills. However, that
    calculation does not include the effects of ACP on prices for broadband
    services. Based on the estimates provided in this report, ACP likely
    reduces the monthly net cost of broadband by about $380 million for
    households who qualify for the subsidies after adjusting for the
    increase in prices. Once we factor in the price increase for all
    households (including ACP beneficiaries), ACP likely increases the net
    out-of-pocket cost of broadband that households pay by about $185
    million per month or $2.2 billion per year.\7\
    ---------------------------------------------------------------------------
        \7\ This is calculated using estimates from this report as well as
    data from the FCC and the U.S. Census Bureau.
    ---------------------------------------------------------------------------
    Competition Will Make Broadband More Affordable
        In the case study on deregulation referenced above, we saw that
    when providers can compete on prices and services, they offer choices
    to consumers and pass along savings through lower prices in a
    competitive market. The same could be true under a more competitive
    market post-ACP.
        Today, a large portion of the ACP subsidies go to a fraction of the
    ISPs and are slightly more likely to serve urban areas. According to
    the FCC, for every rural household that receives an ACP subsidy, six
    urban households receive a subsidy.\8\ In other words, urban consumers
    were disproportionately served by ACP given 16 percent of the subsidies
    are going to rural households who make up nearly 20 percent of the
    population.
    ---------------------------------------------------------------------------
        \8\ https://www.fcc.gov/sites/default/files/%5b08-14-2023-
    39%5dFCC_ACP_Infographic_v10
    .pdf
    ---------------------------------------------------------------------------
        Subsidizing demand through ACP also makes consumers less sensitive
    to prices and quality. This advantages large existing ISPs who are more
    likely to have had market share when EBB and ACP were created. If ACP
    funding were to become exhausted, many companies would be encouraged to
    compete for consumers who would be shopping for better plans (as the
    FCC survey data referenced above shows). Most ISPs have told their
    investors that when ACP ends, they don't plan to lose any money.\9\
    Other ISPs have reported to Communications Daily that they explicitly
    plan to compete on price and quality to attract consumers who are
    coming off subsidized coverage.\10\
    ---------------------------------------------------------------------------
        \9\ Matt Daneman, ``ACP's End Could Bring New Subscribers,
    Providers Tell Wall Street,'' Communications Daily, March 5, 2024.
        \10\ Ibid.
    ---------------------------------------------------------------------------
        There are also much better ways to subsidize demand than to provide
    payments through ACP which go directly to ISPs. For example, subsidies
    could be provided directly to households to be used on Internet service
    or other household items. Also, policymakers could look to the tax
    code. Some provisions are scheduled to expire at the end of 2025. These
    expiring provisions reduce the cost of capital (and increase domestic
    investment) and allowing the expirations to take effect would raise the
    tax liability for the average household qualifying for ACP by more than
    three times the amount of the ACP subsidy.\11\
    ---------------------------------------------------------------------------
        \11\ Author's calculations based on population making less than 200
    percent of the Federal poverty level using the Tax Foundation's 2026
    Tax Reform Calculator, found here: https://taxfoundation.org/data/all/
    federal/tax-calculator-tcja-expiration/.
    ---------------------------------------------------------------------------
        The results in this testimony, along with data on how ACP is
    failing to close the digital divide, suggest that governments at all
    levels should focus on increasing the supply of Internet services to
    provide consumers with more access to lower cost services. Focusing on
    deregulation and competition avoids the costs associated with ACP which
    can raise prices for all consumers without meaningfully closing the
    digital divide. Deregulation and competition can also avoid the hidden
    costs of subsidizing demand with additional inflation fueled by deficit
    spending.

        Senator Lujan. Thank you, Dr. Winfree.
        I'm now going to recognize myself for five minutes of
    questions, and Ms. Nevarez, I'm going to begin with you. Again,
    thank you for traveling from New Mexico to be with us today,
    and for your work over many years to connect every New Mexican
    to broadband.
        Now Ms. Nevarez, yes or no, from what you have seen and who
    you have worked with on the ground, would students be
    negatively impacted by a lapse in the Affordable connectivity
    program?
        Ms. Nevarez. Absolutely, yes. I'll add in all capital
    letters.
        Senator Lujan. Would----
        Ms. Nevarez. Being a teacher at heart.
        Senator Lujan. Would veterans be negatively impacted?
        Ms. Nevarez. Yes.
        Senator Lujan. Would seniors be negatively impacted?
        Ms. Nevarez. Yes.
        Senator Lujan. Would those who live in our tribal
    communities be negatively impacted?
        Ms. Nevarez. Yes.
        Senator Lujan. Would those who live in rural areas be
    negatively impacted?
        Ms. Nevarez. Yes.
        Senator Lujan. I appreciate those responses.
        Now Ms. de Wit, can you please briefly provide a
    perspective from your research on which populations will be the
    most affected?
        Ms. de Wit. At this point, the--at this point, we know that
    nearly one-fifth of ACP households include seniors age 65 and
    older. And based on the research that we can do, we know that
    any changes to the program will have an adverse effect on
    Americans over 50 as well as veterans.
        What I would add is that we need better data and more
    transparency on enrollment, and about the trends in population,
    in order to fully understand how changes to the program would
    have a negative effect on the vulnerable households that it's
    attempting to serve.
        Senator Lujan. Appreciate that.
        Mr. Levin, you noted in your testimony that the digital
    divide puts strain on our health care system. You also noted
    that the Affordable Connectivity Program not only helps people
    access their health care online, but also the increased use of
    telemedicine creates enormous cost savings for our health
    system.
        You referenced a study by the University of Pennsylvania
    that telemedicine was 23 percent less expensive for health
    systems to deliver, compared to in-person visits. Many of the
    most vulnerable populations who utilize the Affordable
    Connectivity Program are also participants in Medicare or
    Medicaid, or are veterans who receive their health care through
    the VA. So that 23 percent savings is a significant cost
    savings for the government.
        Mr. Levin, from your research, from what you've seen, is it
    possible that the economic benefit of the Affordable
    Connectivity Program to the health care system are greater than
    the cost of the government--of administering to the government,
    than administering the program?
        Mr. Levin. I'm not a health care economist, but I believe
    the answer to be yes. And if it's not true today, it's going to
    be true sometime in the very near future.
        What we saw immediately in the wake of the pandemic was
    that health care started accelerating its movement to
    telehealth. I believe in February 2020, one percent of Medicare
    care visits were over telehealth. In April, it was like 70
    percent.
        That was inevitable, but it started to accelerate, and then
    efficiencies grow in. So it's almost inevitable that if not
    today, at some time in the near future, Internet access can
    actually save money for those programs.
        Senator Lujan. So on that same note, do you believe that
    between health care, employment, and education, investing in
    the Affordable Connectivity Program may actually result in a
    cost savings, a net cost savings to the government?
        Mr. Levin. Yes. And for example, in the job training and
    job placement, we find that people who have Internet access get
    jobs faster, as you would expect. And then they spend less time
    on unemployment. Besides savings to the government.
        Senator Lujan. I appreciate that.
        Now, Ms. Nevarez, you noted in your testimony that without
    the reliable customer base that the Affordable Connectivity
    Program also provides, some of New Mexico's small local
    Internet service providers or ISPs are at risk of going
    bankrupt. When a small local provider in a rural area in New
    Mexico goes bankrupt, what happens to their customer base? And
    can--can they just find a new provider?
        Ms. Nevarez. Actually, it depends, but generally, the
    customers lose service. And in rural New Mexico, finding an
    alternate provider is very difficult.
        Actually, these networks didn't exist. If they were easy,
    we would have built them already. So when a small rural
    community builds a network, there's often no competition, or
    little to no competition. So for those small providers, if they
    go bankrupt or fail, those customers lose service. And
    oftentimes, the small government offices, the local regional
    government offices, and community anchor institutions that also
    use that network fail.
        And I would add as well, in New Mexico, we have 22 tribes
    that are building their own networks. Not only do they build
    them, they are running them. And they have trained local
    community members.
        So the local workforce also loses out. Because those
    community members who've been trained as fiber technicians,
    those jobs go away, and those community members either have to
    find an alternate job, and rural New Mexico, it's not always
    easy. They have to travel further or move to the city.
        Just a shout-out, our state has been tenaciously working on
    that. And we're proud to report over 200 fiber optic
    technicians, with 80 percent of them being Native or Hispanic,
    have been trained in the last 2 years to run their own
    networks. 70 percent of those had some college but no college
    degree. It's very exciting.
        Senator Lujan. I appreciate that.
        Next, we will hear from Senator Vance. Senator Vance,
    you're recognized for five minutes for your questions.

                    STATEMENT OF HON. J. D. VANCE,
                         U.S. SENATOR FROM OHIO

        Senator Vance. Great. Thank you, Mr. Acting Chair. I
    appreciate you.
        And I appreciate all of you for being here. I wanted to
    sort of focus my questions on, you know, the--the sort of
    economic impacts from the consumer's perspective, but also from
    the government's, and also the sort of the businesses that are
    investing in broadband infrastructure.
        And Mr. Levin, I'd like to direct my questions to you. So,
    you know, I--in your written testimony, you described the
    positive impact on employment rates from discount Internet
    plans. And you sort of explained how greater labor force
    participation and so forth comes from, you know, having access
    to high quality broadband.
        And I know that's an issue, especially in our rural
    communities. But of course, it's--it's an issue in a lot of
    different communities as well. I'd like to sort of understand,
    how do you think about the cost savings? Right? The--one of the
    biggest challenges that we have when it comes to re-funding the
    ACP program and reauthorizing it, which I--I support, is, you
    know, of course, the pushback that we are in sort of tight
    budgetary times. We have to think about how to save money in
    this town, which is something we do far too little of.
        Could you just help me think about the economic upsides of
    the ACP program, as you understand it? What--what do we gain
    from investing in this program?
        [Technical issue.]
        Mr. Levin. There are multiple different ways of thinking
    about it. I cited in my oral testimony a study by a Google
    economist who talked about consumer surpluses in 2013 being
    $500 per user. That number undoubtedly has gone up. And if you
    look at the study, there are just all kinds of different ways
    in which savings of time. I think all of us have experienced
    the Internet is able to do certain things to speed up--able to
    shop, able to determine the most--the cheapest option for a
    product that we want. There are those kinds of savings that
    accrue directly to an individual.
        But what we also see is, particularly in terms of the
    government, which is in a way sharing in those costs, in the--
    in the case of telehealth, there are very direct savings.
    Because if you save one emergency room visit by having the
    person come on broadband and talk to someone, and if--and if
    they turn out not to go to the emergency room because they
    don't really need to, I believe that's like a $3,000 savings.
    And in terms of time.
        I mentioned earlier, in terms of job training and
    placement, there's direct benefit to the government, not just
    to the person, but to the government.
        I think if we look at education, and my God, what AI is
    going to do to education, I'm very excited about it, I think
    it's going to be great. But if the very people we most want to
    be able to use those tools to learn how to read, and reading
    scores in fourth grade are a great predictor of economic
    success later on in life, that's another version of those kinds
    of savings.
        Senator Vance. So Mr. Levin, have you ever done any sort of
    analysis of the--of the net benefit? So if you take, for
    example, a dollar spent on the ACP, you know, what is--what is
    the benefit in terms of government savings from things like,
    you know, Medicare, diverting people into telehealth, which
    saves a lot of money, but also consumer upside? Have you ever
    sort of tried to understand the net effect of, you know, the
    given amount that we spend on the ACP?
        Mr. Levin. Yes. Others are much better than that, better--
    better than me at that. My--my friend and probably the leading
    expert on that kind of data is a guy named John Horrigan, who
    estimated that for every dollar spent, there's $2 of gain to
    the individual.
        There was a study that said for every dollar spent on ACP,
    we get a $3.89 increase in GDP.
        I have not done a comprehensive, nor do I believe there is
    a comprehensive study on----
        Senator Vance. Sure.
        Mr. Levin.--health care. I sure wish there was.
        Senator Vance. Yes.
        Mr. Levin. I think it's something which the government
    should do.
        But it's really about a kind of a larger trend in which we
    take advantage of this incredible opportunity to rethink how we
    deliver services.
        Senator Vance. Yes.
        Mr. Levin. And there's almost no doubt----
        Senator Vance. Yes.
        Mr. Levin.--when--that particularly when we come to health
    care, you'd see a benefit.
        Senator Vance. Great. Yes, I'd--I'd of course be very
    interested in that too.
        So--one just final question is, you know, when I talk to,
    you know, obviously we talked about the consumer side of this
    and the government side of this. When I've talked to a number
    of businesses who invest in rural broadband, and obviously
    it's, you know, very expensive to lay a mile of fiber----
        Mr. Levin. Right.
        Senator Vance.--in southeastern Ohio----
        Mr. Levin. Mm-hmm.
        Senator Vance.--compared to central Ohio, where it's a lot
    more densely populated, the terrain's a little bit, you know--
    --
        Mr. Levin. Mm-hmm.
        Senator Vance.--less tough and so forth. You know, one of
    the things that sort of justifies the very large capital
    expenditure of that infrastructure is knowing that there are
    going to be customers on the other end. And that's something
    that the ACP program ensures. Could you speak to sort of that
    economic benefit a little bit?
        Mr. Levin. Yes. BCG did a study which suggests that the
    BEAD dollars go 25 percent further if you have ACP, for
    precisely the reason you just said. That if you have a
    guaranteed population that you know is going to pay, and
    they're going to pay on a regular basis, and one of the
    mistakes people make is they say only 22 percent had--didn't
    have broadband. Actually, there were a lot of people who were
    on broadband and off broadband. That's the largest group.
        Senator Vance. Sure.
        Mr. Levin. But if you know you're going to have that
    population, you need less of a government subsidy to build out
    that network.
        Senator Vance. Yes, and I'm--I'm mindful of my time here,
    so--so I'll yield. But just one observation, you know,
    anecdotally, which is not always data, but I do think it's
    useful, is I talk to a number of folks who have invested a lot
    in rural broadband infrastructure in the state of Ohio who have
    told me straightforwardly they would not have made that
    investment if not for the existence of the ACP program. So I
    think something important for us to keep in mind as we think
    about how to build out the 21st century digital infrastructure
    for our country.
        So thanks, Mr. Chair. I appreciate it.
        Senator Lujan. Thank you very much.
        Next, we'll hear from Senator Klobuchar. You're recognized
    for five minutes.

                   STATEMENT OF HON. AMY KLOBUCHAR,
                      U.S. SENATOR FROM MINNESOTA

        Senator Klobuchar. Thank you very much, Chair, and thank
    you for the work.
        Happy birthday to Senator Welch. Nice day for a birthday. I
    want to actually thank him and, to Senator Vance for their work
    on making sure that we continue getting funding for the
    Affordable Connectivity Program Extension Act. And we all know
    this is an ongoing problem right now, and that Chair Cantwell
    has been working to include this funding for ACP.
        So I think it's really important to make the case that I
    know you have all been doing throughout this hearing about what
    this means. And I want to focus especially on some of the
    issues in rural America in my state right now.
        So we know that rural communities are particularly in need
    of support to make broadband available at affordable prices.
    I've heard from first grade teachers, we had during the
    pandemic, some of the numbers were 20, 30, 40 percent in some
    of our counties that while some of the kids were able to
    access, including community college classes via the Internet,
    other ones just were given paper and pencil and their, like,
    workbooks every single day. It was a complete disconnect.
        Mr. Levin, do you agree that programs like ACP can help
    incentivize providers to serve high-cost areas?
        [Technical issue.]
        Mr. Levin. Five percent differential.
        Senator Klobuchar. And Ms. de Wit, you note that the
    challenge of building out broadband networks is distinct from
    making sure consumers can afford to access those networks. Can
    you discuss how the expiration of ACP could impact the
    investments that we're making in broadband infrastructure?
        Ms. de Wit. Absolutely. And what we know to be true is that
    right now, households that are unserved are currently the most
    expensive and difficult to serve. For example, the cost per
    passing in Minnesota using capital project dollars is $7,300
    per location.
        Without ACP, our BEAD connections will be even more
    expensive, so we will see the increase of those costs per
    passing move up without that ACP support. Rural providers,
    particularly those in Minnesota who have been the backbone of
    ensuring robust and affordable connectivity throughout the
    state, simply may not be able to shoulder the cost, both of the
    capital deployment as well as the operations without that
    subsidy.
        Senator Klobuchar. Exactly. Thank you.
        The--I mentioned education. There was one mom in Sibley
    County, Minnesota, who told us that she's worried her kids
    aren't going to be able to complete their homework if she can't
    get the access.
        And Mr. Levin, you note that students without home Internet
    have lower grades and complete homework less often. Talk about
    why ACP is important to get at that?
        Mr. Levin. That was a study that came to that conclusion,
    but it makes total intuitive sense that--my sister actually was
    a school teacher, and many years ago she kind of blamed me for
    the fact that half of her students had Internet and half of her
    students didn't, and it was a really big problem for her. And
    that's a problem we're going to see if ACP goes away.
        It's just that as all of us do, when we are writing various
    things or trying to solve various problems, we now depend on
    the Internet to give us the information we need. It also helps
    in writing in a variety of ways. So the students are no
    different than the rest of us in that regard.
        Senator Klobuchar. Thank you.
        Ms. Nevarez, can you discuss how you've seen affordable
    Internet open up educational opportunities in your work leading
    the community learning network?
        Ms. Nevarez. I am actually a certificated teacher, so
    learning is important. In our state, when COVID hit, many
    students were struggling. We actually had students, like you
    mentioned, on--on paper and pen or trying to do homework with a
    cell phone.
        In our case, many of----
        Senator Klobuchar. It sounds like a lot of the senators,
    but----
        Ms. Nevarez. It's----
        Senator Klobuchar. --continue on.
        Ms. Nevarez. Yes.
        [Laughter.]
        Ms. Nevarez. I think the--the best thing is to share the
    example, would you want your own children, whether they're in
    middle school, high school, college, to have to do their term
    papers with old-fashioned encyclopedias, or be able to compete
    by accessing information and participating online?
        Every one of us use these tools daily. We're used to it,
    and we don't realize how difficult it is. In our state, without
    home access, and for many of our communities, without the
    income to afford it and to have reliable and affordable
    Internet, they can't do a class online. Zoom calls take
    broadband strength. And they're driving to the community anchor
    institutions to sit in a hot car, or a cold car if it's
    snowing, to try to compete with their fellow classmates and to
    complete assignments.
        Senator Klobuchar. OK. Thank you.
        And thank you, Mr. Chair, for all your work in this area as
    well, and leadership.
        Senator Lujan. Thank you, Senator Klobuchar.
        Next, we're going to hear from the Ranking Member of the
    Full Committee, Senator Cruz.
        Senator Cruz. Thank you, Mr. Chairman.
        Dr. Winfree, you note in your testimony that one proven way
    to promote broadband affordability is through competition.
    According to a recent study by Econ One, competition from 5G
    fixed wireless service and home broadband markets was shown to
    produce billions per year in consumer savings.
        These are precisely the competitive benefits that the
    Spectrum Pipeline Act, which I introduced in partnership with
    Senators Thune and Blackburn, would provide. Unfortunately,
    instead of expanding access to mid-band spectrum and promoting
    competition from wireless services, the Biden administration
    has engaged in anti-competitive technology bias while stalling
    out on spectrum.
        Dr. Winfree, in your judgment, how would my Spectrum
    Pipeline legislation compare to the ACP in promoting long-term
    broadband affordability?
        Dr. Winfree. Spectrum auctions would increase competition
    and bring more folks into the market. We would have more ISPs
    doing more cool things with them, which would ultimately reduce
    prices.
        Senator Cruz. And lower prices, in turn, benefits
    consumers.
        Dr. Winfree. That's right. Benefits everybody.
        Senator Cruz. And higher prices, which the ACP has
    produced, that's hurting consumers. Is that right?
        Dr. Winfree. That's right. I mean, one of the issues with
    ACP is that it's a one-size-fits-all policy. It's a $30 monthly
    subsidy regardless of where that person sits.
        And one of the things that we've seen is that ACP has
    predominantly covered folks living in urban areas relative to
    rural areas. So ACP is not a solution for rural areas, assuming
    that--that rural broadband connectivity is an issue, which I
    think that it is. And I think that there's a lot that we can
    ultimately do there.
        Which begs the question, well, why don't we use this as an
    opportunity to reform ACP?
        Senator Cruz. Well, and I'll--millions of people across
    Texas and across the country are hurting from inflation.
    Inflation that has been galloping in the last three-and-a-half
    years, particularly when Democrats had unified control of
    Congress and the White House, where they spent trillions of
    dollars we didn't have. They printed money we didn't have. They
    borrowed money from China we didn't have. They're producing
    inflation that is hurting working families across the country.
    And we now have Democrats coming back saying we want to spend
    billions more, even though it will fuel inflation and it will
    drive up the cost for consumers across the board. Is that
    right?
        Dr. Winfree. That's right. So there are two ways that ACP
    affects prices. The first way that it affects prices is by
    setting, essentially, a price floor for plans.
        What my research shows is that that predominantly hits,
    again, urban areas. So what we saw before ACP is a bunch of
    plans that were, say, 20 up, 20 down, $10 a month. Those went
    away during ACP. Right?
        So the--the speed levels went up moderately, but the price
    level went from $10 to $30, because that's where the ACP
    benchmark is. So all those cheap plans went away.
        And then the second way that ACP affects inflation is
    through government--through government spending. I mean, right
    now we've seen, you know, we're--we live in an economic
    environment where the Fed is having a really difficult time
    getting inflation under control. Interest rates on short-term
    debt are five-and-a-half percent. And so every dollar that is
    spent by the Federal Government is ultimately inflationary
    right now.
        Senator Cruz. So and are consumers better off at being able
    to get broadband at $10 or $30?
        Dr. Winfree. $10.
        Senator Cruz. It's pretty remarkable. All right, let's
    shift to another topic.
        Dr. Winfree, in your testimony, you raised that there are
    other low-income broadband subsidies in addition to ACP. In
    fact, as we've heard, there are multiple taxpayer subsidies for
    Internet connectivity. GAO recently identified over 130 of
    them.
        The longest standing of these are the Universal Service
    Funds programs at the FCC.
        Dr. Winfree. Mm-hmm.
        Senator Cruz. I don't think we would be having this
    conversation about broadband affordability if the FCC were
    properly managing the Universal Service Fund programs.
        Dr. Winfree, aren't some of these FCC programs demand-side
    subsidies? And--and what do these programs spend on a yearly
    basis?
        Dr. Winfree. Sure. They're both demand-side subsidies, and
    then they're also supply-side subsidies. So there are four main
    programs. There's Lifeline; the High Cost Program; Schools and
    Libraries, or--or E-Rate; and then Rural Health Care. And
    together, those four programs spend about $9 billion a year.
        Senator Cruz. And yet, according to at least some members
    of this committee, the FCC needs yet another program. Why not
    fix the current programs and take the lessons the ACP has
    learned and apply them to making sure the funding we actually
    have works? This is what I proposed in my blueprint for
    Universal Service Fund reform.
        In your view, Dr. Winfree, what changes should Congress
    consider making to ACP and the Universal Service Fund before
    adding additional funding to any of these programs?
        Dr. Winfree. Sure. I think there are a number of reforms
    that can be added. I mean, we can learn from the experience of
    the Affordable Care Act, Obamacare. Premium tax credits went to
    low-income individuals, and we learned that folks who were
    receiving those tax credits shouldn't have actually been
    receiving those tax credits.
        And so one of the things that--that Congress can do is it
    can--can learn from that experience to actually recapture ACP
    funds that should be used for low-income populations. It's
    probably going to folks who are making much more than two times
    the Federal poverty line.
        Another option that the FCC IG has explored is requiring
    Social Security numbers for the receipt of ACP benefits to make
    sure that, again, folks who are entitled to the program are
    actually receiving the benefit, and that the benefits are not
    going to folks who--who shouldn't--who shouldn't be receiving--
    receiving those benefits.
        But, you know, as I mentioned before, ACP's--one of ACP's
    main problems is that it's this universal program. It's a one-
    size-fits-all issue. And if ACP funding should expire and
    Congress should begin thinking about how to reform some of
    these underlying programs, it needs to take those regional
    differences into account, right? The issues that we see in New
    Mexico versus Minnesota versus Texas are--are all different,
    and these one-size-approaches just don't work. We've learned
    that time and time again.
        Senator Cruz. Thank you.
        Senator Lujan. Thanks, Senator Cruz.
        Next, we'll hear from Senator Peters. You're recognized for
    questions.

                    STATEMENT OF HON. GARY PETERS,
                       U.S. SENATOR FROM MICHIGAN

        Senator Peters. Well, first off, I just want to thank our
    witnesses. Thank you for being here today.
        And I also want to thank Chair Lujan. Thank you for holding
    this hearing.
        And I think this hearing is extremely timely, because
    almost one million Michigan households are on the precipice of
    losing the Affordable Connectivity Program, which was passed by
    Congress two years ago, and as we all know, it helps eligible
    families afford the Internet.
        And in today's world, the Internet is--is not a luxury,
    it's--it's a necessity. And it's one that should be affordable
    to all Americans. And I believe that Congress must do its job
    and fund this critical program as soon as possible, or 16
    percent of American households are going to face Internet
    shutoff or rate hikes.
        And as a supporter of the Affordable Connectivity Program
    Extension Act, I'm going to keep fighting for funding, and I
    challenge all my colleagues, including those on the other side
    of the aisle, to--to do the same.
        Ms. de Wit, my first question is for you. In your
    testimony, you mentioned how the Affordable Connectivity
    Program is closely linked to the state's ongoing plans for BEAD
    deployment. My state of Michigan received nearly $1.6 billion
    in BEAD funding, the fourth-highest allocation in the nation,
    to close the digital divide and to bring high-speed Internet to
    every corner of Michigan, which is both urban, suburban, and
    vast tracts of rural areas as well.
        Ms. de Wit, can you speak to how it would impact the BEAD's
    program ability to reach every underserved and unserved
    location if ACP is lapsed? And--and additionally, do you think
    that ACP's lapse could impact BEAD participants' decisions as
    to where to apply for funding, and how far they can reach with
    their proposed projects?
        Ms. de Wit. I'll answer your second question first, which
    is, yes. I do believe that ACP's lapse would affect an Internet
    service provider's decision to participate in BEAD, because
    they have said that. And that's why it's important to ensure
    that we provide Internet service providers with that certainty.
        With respect to the BEAD program writ large, in short, we
    need every single dollar to connect unserved and underserved
    Americans across this country. As you outlined, Michigan is one
    of the states that has a complicated problem ahead of them. And
    thankfully, it has a very well-run broadband office and a
    strong strategy.
        But I think that the important consideration is that BEAD
    and ACP were designed to work together. They are designed to
    work in tandem to defray the costs of building networks,
    whether we are looking at urban, rural, or suburban
    communities. And because Congress requires ACP to participate
    in--requires ISPs to participate in ACP to receive BEAD
    funding, this means that we are providing them with a surety of
    a guaranteed customer base, decreased churn, and long-term
    retention.
        Senator Peters. Very good. Ms. De Wit, as you well know,
    the Universal Service Fund has long been a tool for connecting
    Americans to voice service and to broadband access. However,
    the USF has not been modernized to account for today's needs
    related to universal broadband service.
        And I'm a--I'm a proud member of the bipartisan USF working
    group, led by Senators Lujan and Thune. And we have made
    progress toward a long-term bipartisan solution that will
    enable the USF to support broadband accessibility and
    affordability for all consumers.
        And one of my top priorities as a member of this working
    group with Chair Lujan is to find a long-term sustainable
    funding mechanism for ACP so Americans never have to face
    another program cliff like the one that we have right now. We
    have enough cliffs that we have to deal with. We don't need
    this one as well.
        So my question for you is, can you speak to the importance
    of finding a way to sustainably fund ACP in the long term, such
    as through modernizing the Universal Service Fund?
        Ms. de Wit. Well, Pew does not have research on solutions
    for the modernization of the Universal Service Fund at this
    time. We do know that it is needed, and it is needed for all of
    the reasons that you just outlined, which is why we appreciate
    the work of you and others on that bipartisan and bicameral
    working group to identify one, including incorporating the ACP
    into that program.
        However, Universal Service reform will take time. It will
    take time to come to agreement, and moreover, it will take time
    to implement. We don't have the luxury of time at this moment.
    ACP is running out of money, and BEAD--potential BEAD
    participants, states, ISPs, communities, we are putting their
    connectivity solutions at risk by delaying, which is why we ask
    that you provide the bridge to ACP today and continue work on
    USF in the future.
        Senator Peters. All right. Well, thank you for your
    answers.
        Chair Lujan, thank you so much.
        Senator Lujan. Thank you very much, Senator Peters, and I
    want to thank Senator Capito as well.
        Mr. Welch, you'll be recognized next for five minutes.
    Thanks for getting here early.

                    STATEMENT OF HON. PETER WELCH,
                       U.S. SENATOR FROM VERMONT

        Senator Welch. Thank you very much.
        You know, we have got an urgent, immediate situation that
    has to be addressed, and that's the expiration of the ACP. And
    there are two points that I want to make.
        Number one, every witness here has acknowledged that the
    debate about whether everybody needs the Internet is over. It
    is over. And a lot of us, Ben Ray, you and I, were arguing pre-
    COVID for rural America to get Internet. just like rural
    America got electricity in the 1930s.
        That was not an economic decision that was made, because it
    didn't have business sense to have our companies extending
    electricity in rural areas where there wasn't a big return, but
    it was a social decision. And we made that, and a lot of us
    were pushing for it.
        When COVID came, it made the case for us, because you
    couldn't go to work, your kids couldn't do homework, you
    couldn't get a medical appointment. And this Congress, on a
    bipartisan basis, really put enormous money into building it
    out.
        That doesn't do any good for folks if they can't get
    connected to it. And I've listened to the--so that's number
    one. We've got to have it. We've got to have it, and we all
    know that. And that's a red state or blue state. It just
    doesn't matter. The citizens we represent need it.
        Second, there are a lot of folks who are on the margin,.
    And the ACP, if it goes out now, a lot of those folks are going
    to have to make very tough decisions. You know, example in
    Vermont, some woman making $15,000 with two kids, single
    parent, she has got a hard job trying to figure out how to make
    ends meet, and has to make real sacrifices, sometimes in the
    food budget. But she'll do it, because she wants her kid to be
    able to do the homework.
        Or a grandparent who wants to stay in touch with
    grandchildren or their kids. And we've heard very compelling
    arguments about some of the reforms that we should make.
    Senator Capito has been a big advocate of that. And I agree
    that those of us who advocate for a program have an obligation
    to kick the tires, check it out, make reforms, so that the
    intended purpose is what's being served, and it's not being
    gamed.
        So I, for one, who am a strong proponent of the Affordable
    Connectivity Program, pledge to work with my colleagues,
    Republican and Democrat, to make it better.
        But we're not there yet. And what we can't do, Mr.
    Chairman, as you so assertively state, is let this expire.
    Because there are four million veterans who depend on this,
    there are a lot of seniors who depend on it, and the economic
    arguments that we're having back and forth, they're real, we've
    got to deal with them, and some of those, Dr. Winfree, we can--
    I can accept. But we can't let this expire. And that's what's
    happening.
        So my hope, Mr. Chairman, is that all of us work hard
    together to try to get at least the short-term fix, while the
    work you're doing, leading the universal--the--the working
    group, comes up with a longer-term solution.
        So I just want to express my gratitude to the witnesses
    here. But I also want to express my enormous apprehension that
    this Congress may fail by letting this expire, rather than
    continue it while we work out the change--the long-term changes
    that are needed for sustainable access.
        Thank you. I yield back.
        Senator Lujan. Thank you, Senator Welch.
        Senator Capito, you're recognized for your questions.

                STATEMENT OF HON. SHELLEY MOORE CAPITO,
                    U.S. SENATOR FROM WEST VIRGINIA

        Senator Capito. Thank you. Thank you, Mr. Chair.
        I--before I ask the questions, I would like to take a
    moment to express my disappointment with how the markup went,
    or should I say more accurately, did not go yesterday.
        I have worked with my colleague, Senator Klobuchar, on my
    Rural Broadband Protection Act beginning last Congress. It's a
    common-sense bill that will help USF High Cost projects across
    our country. It has been sitting in this committee since the
    beginning of this Congress, and after working to improve the
    bill, my substitute amendment was cleared to be marked up both
    by the majority and the minority back in November.
        I urge the Chair, through you, to schedule a legislative
    markup this work period so that my top broadband policy
    priority can be considered. I would appreciate you--we'll--
    we'll talk to the Chair and Ranking Member about that.
        So moving to my questions, Ms. De Wit, I know that many
    states, and I think you've gone through this, and I caught the
    tail end of you mentioning it to Senator Peters. West Virginia
    was the second state that actually got their Part 2 BEAD plan
    Okayed, and we're very excited about that. But can you describe
    the impact on BEAD programs, because we have part of the
    Affordable Connectivity Plan as part of our deployment plan,
    how this will affect if the ACP does not get affected--or
    funded?
        Ms. de Wit. Yes, and thank you for the question, Senator
    Capito, and for your ongoing work to continue supporting the
    program, including for robust discussions about potential
    reforms.
        Right now, let me just draw attention to the current costs
    per passing that were shared from West Virginia's Capital
    Projects funds, and that's $4,200 per location. What research
    from the Boston Consulting Group has found that without the
    BEAD subsidy, we will see a $500 per location differential on--
    --
        Mr. Levin. Without the ACP?
        Ms. de Wit. Sorry, yes. Without ACP. Sorry, excuse me.
        So the Boston Consulting Group study found that without
    ACP, the cost per passing may increase by $500 per location. So
    what we can assume from this is that the cost for deployment in
    West Virginia will increase without ACP available.
        Senator Capito. Does the--is that--what did you say,
    $4,200?
        Ms. de Wit. Yes, ma'am, that--but that's with the Capital
    Projects Fund, what the state has spent, and that includes
    significant matching funds from Internet service providers as
    well, so.
        Senator Capito. Right. I've been told, and I can see,
    living in such a beautiful state with lovely mountains, but
    hard rocks in between, that that--that the cost to build in our
    state, obviously, for fiber is--is much greater. How does that
    $4,200 stack up? I'm just curious to know. Is that high as High
    Cost?
        Ms. de Wit. I would need to get back to you to quote the
    specific numbers, but yes. That is--the numbers are high, and
    of course, the cost per location passing is going to depend on
    a number of factors, including the topography, as we are----
        Senator Capito. Right.
        Ms. de Wit.--all familiar with West Virginia----
        Senator Capito. Right.
        Ms. de Wit.--but also density of population.
        Senator Capito. OK. Dr. Winfree, one of--I mean, I've been
    alluded to as the one who wants to be the reformer, and I--I
    couldn't be more passionate about this. I mean, just--I think
    it was this week, earlier this week, the president of a local
    Internet service provider said that he was informed that he's
    eligible for the $30 a month because of the way it's--the
    school lunch program in our state makes everybody eligible.
        I mean, it cannot possibly be true that 23 million people
    really need this. We've got to narrow it down to the need. I'm
    supportive of the program. Could you respond to that?
        Dr. Winfree. I think that's exactly right. I mean, as I
    mentioned earlier, ACP is fundamentally not a--not a program
    for rural areas. It is a program for urban areas. Most ACP
    recipients live in urban areas, even after you adjust for the
    fact that most people live in urban areas. And the challenges
    that people have in both urban versus rural areas are very
    different, as you are an expert on representing the great state
    of West Virginia.
        That said, like other government programs as well, I mean,
    I referenced in my responses to Senator Cruz, we had a similar
    challenge with the Affordable Care Act. There are premium tax
    credits that people get to help them afford private health
    insurance, and we--we learned very quickly that there were
    millionaires who were receiving those premium tax credits----
        Senator Capito. Right.
        Dr. Winfree.--for lots of different reasons.
        And so there needs to be a reconciliation process to make
    sure that the--the funds are targeted in the best way and that
    both urban--there's an urban versus rural adjustment.
        Senator Capito. Well, yes, I would be interested in the
    urban and rural adjustment. I just think that--I understand the
    urgency and the--and the expiration, and instead of $30, I
    understand it's $14. I don't know how long that's going to
    last. Does anybody know what the long--yes?
        [Audience interruption.]
        Senator Capito. One month. So, you know, ostensibly not
    long, not long at all. We've known this was coming. We've been
    talking about reform for a year. I don't know why we have to be
    pressed now to move forward to a way over-expansive program
    that is being, is going toward people that, some people that
    don't need it, so--because it just, it's not fair to the people
    that do need it. Because it calls into question what's going to
    happen with the entire program.
        So I would--I would ask my colleagues to listen to experts
    on the panel here to figure out a way that we can do both of
    these things. And I think we can and meet the challenges.
    Obviously, I'm in a state that has economic challenges. We have
    some of the lowest broadband deployment in the entire country,
    you know, and I think it's--the digital divide, you can see it
    all over our state with economic development, education
    progress, health care outcomes.
        And so I am very passionate about getting to the last house
    and to make sure that everybody has equal access, but that they
    can afford it at the same time. So I thank you all for what
    you're doing.
        I appreciate, Mr. Chairman, the chance to address the
    panel. Thank you.
        Senator Lujan. Thank you, Senator Capito.
        Senator Warnock, you're recognized for questions.

                  STATEMENT OF HON. RAPHAEL WARNOCK,
                       U.S. SENATOR FROM GEORGIA

        Senator Warnock. Thank you so very much, Chairman Lujan.
        I'm extremely disappointed that politicians in Washington
    allowed the Affordable Connectivity Program to completely run
    out of funding this week. This program is critical for helping
    720,000 Georgians afford the Internet, particularly rural
    Georgians and older Georgians often say that broadband is to
    the 21st century what electrification was to the 20th century.
    And as you watch Washington dally around something so
    important, one way of thinking about it is, it's as if we were
    wondering whether or not people need electricity. Is it that
    fundamental or is it something extra?
        So hundreds of thousands of Georgians are about to start
    seeing their Internet bills shoot up this month because some of
    my colleagues refused to fund this important program.
        But the Affordable Connectivity Program is not just a tool
    to close the digital divide, as important as that is, and
    increase our global connectivity. It's also a health care
    lifeline for hundreds of thousands of Georgians, particularly
    rural residents, veterans, service members, and seniors across
    the country. This is especially true in a state like Georgia.
    According to a recent study, military families make up nearly
    half of the households that benefit from the ACP.
        Mr. Levin, does the ACP help veterans and military families
    access critical health care services?
        Mr. Levin. There have been a number of studies to
    demonstrate that.
        Senator Warnock. Absolutely. And in your testimony, Mr.
    Levin, you cite two studies, one from the Department of
    Veterans Affairs, showing that veterans who use telehealth
    emergency services were half as likely to make a costly trip to
    an emergency department. So----
        Mr. Levin. That's right.
        Senator Warnock.--as is often the case, the right thing to
    do here is also the smart thing to do. We know that veterans or
    anybody having to go to get emergency health care for routine
    care, something that could have been arrested earlier, is a
    problem not only for that person, but it's not a cost-effective
    way for us to manage our affairs.
        The other study showed that telehealth access helps save
    patients and the Federal Government money, as I point out. It
    sounds like the ACP can help both increase access to health
    care, while reducing costs, and saving the government money. Is
    that correct?
        Mr. Levin. That's correct.
        Senator Warnock. And so, in that sense, it's a win-win. The
    right thing to do is a smart thing to do.
        Mr. Levin. Absolutely.
        Senator Warnock. That's why I've spent years fighting to
    expand access to health care and to reduce costs. And that's
    why I continue to fight to cap the cost of insulin at $35 for
    everybody. And it's why I will continue to champion the ACP.
    All of these things are connected. When people can't stay
    connected, it impacts their health care, their overall quality
    of life.
        Now Mr. Levin, your testimony also notes the similarities
    between where Internet subscription rates are low, and where
    maternal mortality rates are high. When Internet subscription
    rates are low and where maternal mortality rates are high--can
    you speak more about the connection between broadband
    affordability and maternal mortality? I think that's not
    something that people think about every day.
        Mr. Levin. Yes.
        Senator Warnock. Tell us about that.
        Mr. Levin. So I think it's important to remember
    correlation does not imply causation. But the FCC mapping
    demonstrated, and if you look at the map of maternal mortality
    and you look at the map of where not as many people are
    connected, there does seem to be a correlation. But that's not
    necessarily, again, a causality.
        But what's also true is you--and I put this in the
    testimony, what people have been able to do, and this is the
    innovation cycle we really want to encourage, they have been
    using that broadband connection to help pregnant women identify
    things before they're really a big problem, to engage in
    certain practices that make the birthing safer, and things like
    that.
        Preventative--this goes to what you were saying earlier,
    preventative care is a win-win. But a lot of times people don't
    have time to go to the hospital, and therefore a broadband
    connection saves them that time, and they're more able, and
    there's a greater incentive to do that preventative care.
        Senator Warnock. Right, and I appreciate the care with
    which you approach this as a scientist that causation and
    correlation are not necessarily connected. But it's--but in a
    state like Georgia where, again, all these things are
    connected, there's connectivity in a whole--in a different way.
    In a state like Georgia where we're seeing hospitals close,
    some 10 hospitals in a decade, as we've refused to expand
    Medicaid, this access, it seems, for people's overall health
    care would be critically important.
        Mr. Levin. Absolutely.
        Senator Warnock. Thank you so very much, and I hope that we
    can get this program the funding that it needs to operate.
        Mr. Levin. Thank you.
        Senator Lujan. Thank you, Senator Warnock.
        Next we'll hear from our Ranking Member, Mr. Thune, for
    questions.
        Senator Thune. Thank you, Mr. Chairman.
        Dr. Winfree, in your testimony you discuss the impact that
    deregulation has on broadband prices. The current FCC seems
    intent on increasing its control and regulating every aspect of
    the Internet, most recently with its so-called net neutrality
    order. In your experience, what is the impact of highly
    regulated sectors of our economy, and what are the practical
    effects of the FCC's regulations on broadband prices?
        [Technical issue.]
        Dr. Winfree. One instance where the Congress stepped in and
    nullified a FCC rule, and we saw prices for both wired and
    wireless drop pretty significantly. For wireless, dropped 10
    percent and for wired, dropped 2 percent.
        But, you know, taking a step back and asking what
    regulation generally does to prices, I mean, where we see
    highly regulated marketplaces, education, health care,
    transportation, we tend to see higher prices. So there is a
    direct connection between more regulation and higher prices.
    And there's a direct connection typically between more
    government involvement, even on the subsidy side, and higher
    prices.
        Senator Thune. So testimony before the Committee today
    references data that for every dollar invested in ACP, GDP sees
    an almost fourfold increase. How do you respond to the findings
    presented in that white paper?
        Dr. Winfree. I have looked at the white paper. The co-
    authors of the white paper were a geographer at George Mason
    University and a high school senior in Fairfax County. And as
    a--as an economist, I mean, quite frankly, it's a very
    impressive paper by a high school senior. I would love to have
    them as my student.
        The problem with the analysis is that it relies on what's
    called input-output analysis, which assumes that there is no
    change in a policy response on behavior. This is something that
    economists have known has been a suboptimal way to model things
    since the late 1970s.
        As a matter of fact, there was an economist at the
    University of Chicago, Bob Lucas, who won the Nobel Prize in
    1995 for suggesting and showing that this kind of analysis has
    major, major challenges.
        So you know, I think that there are better ways to do this,
    but I would take the one-dollar-for-four-dollars with a grain
    of salt.
        Senator Thune. And that--they used a static model? Is that
    essentially what you're saying?
        Dr. Winfree. It does use a static model, but the--again,
    sort of taking a step back, one of the main assumptions that it
    makes is that ACP doesn't actually exist. And all we're doing
    is adding ACP on top of an economy without modeling any of the
    behavioral impacts that ACP might have, including on prices,
    which is one of the main components of my research, looking at
    the effect that ACP has on prices.
        The other thing that it doesn't do that's important, and I
    mentioned this earlier, is that for every dollar that we're
    spending right now--so since the beginning of 2020, 76 percent
    of all new spending since the first quarter of 2020 has been
    funded by a debt. By new bonds, treasury bonds. Fourteen
    percent through money creation. Only 7 percent has been paid
    for with revenue.
        That's one of the reasons why we're seeing interest
    payments on the debt skyrocket, and interest rates skyrocket.
    So for every dollar that you borrow to spend on something,
    you're paying 5.5 percent interest that rolls over on a 3-month
    basis, just given how Treasury has had to manage its debt
    management over the last couple of years.
        So that's one of the reasons why we're seeing inflation,
    and you need to take something like that into account if you're
    projecting the impacts of any program, ACP or any program, on
    economic growth.
        Senator Thune. Right. And it is a dynamic economy, which is
    why there are a lot of interactions, and----
        Dr. Winfree. That's right.
        Senator Thune.--those have to be mapped out as well. It
    seems like this was a fairly isolated study.
        Similarly, Chair Rosenworcel has been pushing an ACP,
    quote, ``Fact Sheet'' that states that, and I quote, ``More
    than three-quarters of respondents say losing their ACP benefit
    would disrupt their service by making them change their plan or
    drop Internet service entirely,'' end quote. Is this actually
    what the FCC's survey data reveals, in your view?
        Dr. Winfree. So I think there are two issues here. The
    first issue is, what does the survey data show?
        And then the second issue is, is this survey something that
    we can rely upon? And this is actually following up on
    something that Ms. De Wit mentioned a few moments ago with in
    regards to making sure that we're getting the right information
    out of FCC to make policy decisions.
        So if you take the FCC's data as gospel, then it shows that
    only 15.7 percent of folks will lose broadband coverage if ACP
    goes away. Now the problem is, is that the way the survey was
    conducted is they went out to 110 households, and only 5,300-
    and-some households responded to the survey.
        Now OMB says that when your survey response rate is under
    70 percent, which is much higher in this case than the 5,300-
    and-some-odd households, you have to have a methodology, a new
    methodology, for addressing that non-response rate.
        And so FCC didn't do that. And that's one of the challenges
    that I have as an economist and somebody who looks at
    government survey data on a regular basis. I don't even know
    how to read this survey. Like I--you know, it might be
    representative, it might not be representative.
        The reality is that we just don't know, and we shouldn't be
    passing it along as if it is representative. Rather, we should
    ask FCC, and potentially fund them, to go collect more and
    better data on the program.
        Senator Thune. Thank you.
        Mr. Chairman, my time has expired. Let me just close by
    saying there has been some discussion today, too, about the
    BEAD program. Our telecom producers--or telecom providers were
    in town this week, and this is the co-ops, the independents,
    those that serve the most rural areas of South Dakota.
        And there isn't a single one of them that can use the BEAD
    program. And the reason is because of all the conditions and
    rules and regulations that the administration attaches to the
    program, many of which are completely unrealistic for the kind
    of service that these folks provide in rural areas of the
    country.
        So sometimes getting more government involved in some of
    these issues ends up not being a good solution. It ends up
    making matters worse. Thank you.
        Senator Lujan. Thank you, Mr. Thune.
        Mr. Tester, you're recognized for your questions.

                     STATEMENT OF HON. JON TESTER,
                       U.S. SENATOR FROM MONTANA

        Senator Tester. Thank you, Mr. Chairman.
        I want to thank all the folks who testified for being here.
        I'm going to start with you, Dr. Winfree. I believe in
    capitalism. I'm sure you do. I believe in competition in the
    marketplace. Broadband is kind of a little different situation
    in that, number one, if we--and maybe this is--you can disagree
    with me if you want.
        I think the private sector doesn't necessarily interested
    in laying broadband into rural America and places like I live
    where the nearest neighbor's a mile away. And I live in a place
    that isn't the end of the earth, truthfully.
        But the question is, is that so we put money into an
    infrastructure bill to help these companies lay broadband. We
    didn't want broadband to be laid over existing broadband
    because then that's a waste of money. So that competition, that
    competition issue goes away.
        The question I have is it doesn't do any money to lay
    broadband if people can't afford it. Just doesn't do any good.
        How do we make it affordable? If not with this program, how
    do we make it affordable when especially in rural areas where I
    still have folks that don't have any Internet service
    whatsoever, they don't have fiber, they ain't got nothing. They
    got a phone. That's it. And they probably like it that way, by
    the way.
        But how do we make it affordable? If not with this program,
    how do we make it affordable, when in fact there isn't the
    competition in the marketplace that there normally would be to
    help drive down prices and give the consumer an honest value
    for their product?
        Dr. Winfree. I mean, that's a great question. I mean, as I
    mentioned earlier, given the state of the economy that we're
    in, I think that there are major problems with subsidizing
    demand. I don't think that those same problems exist in
    subsidizing supply.
        And so take BEAD, right? So we've talked a little bit about
    BEAD today. You've got 20 states that have already come out and
    said that they want to use their BEAD funds for non-deployment,
    right?
        Which tells me, given that broadband deployment was sort of
    central to the BEAD program, that those initial allocations
    might not have been exactly right. Right?
        Senator Tester. Yes.
        Dr. Winfree. So I think, you know, we need to think about
    like what to do on that side.
        I would also encourage folks to go look at the State and
    Local Fiscal Recovery Funds. So in ARPA, there were $350
    billion in state and local funds. Of the $350 billion, there's
    still $70 billion remaining that has not been obligated by
    states and local governments. The Biden administration has been
    pushing this on states and locals. They've been pushing it on
    nonprofits to go try to encourage people to think outside the
    box.
        One of the problems with the SLFRF money is that in order
    to spend it, you have to allocate it to one of seven
    categories. If one of those categories are infrastructure or
    broadband or housing or anything where you're actually building
    something----
        Senator Tester. Yup.
        Dr. Winfree.--you have to fill out more paperwork.
        And so what the states and locals are doing, is that
    they're channeling it all into what's called revenue
    replacement, or negative economic impact. Right? Which I think
    has led to an overspending on those categories, and an
    underspending on critical infrastructure.
        And so that's--I would think sort of creatively about how
    to get some of those capital investments involved.
        Senator Tester. OK. So we do a lot of things here.
    Military, for example, we give an increase for housing
    allowance. OK? BAH, they call it. And what happens many times
    when we announce we're giving an increase for housing
    allowance, guess what happens to people who are renting the
    hood? Yep, they jack it up before they even get it.
        So it's a net zero, and sometimes even worse.
        Is there any way--and I'll stick with you, Dr. Winfree, not
    that the other guys aren't a lot of fun because you are, but is
    there any way when we have a subsidy program, and I'm in
    agriculture so I know what subsidies are all about, is there
    any way when we have a subsidy program to hold--particularly
    the big companies. I really--I'm a rural guy, and I don't think
    the rural co-ops are doing this as much, but the big companies
    tend to get what you can get out of the marketplace, and if
    that subsidy goes up, they'll jack their rates. Is there any
    way to stop that?
        Dr. Winfree. That's exactly what my research finds, right?
    And part of the reason why my research finds this is that ACP
    is, as I mentioned earlier, is predominantly a program that
    serves urban areas relative to rural areas, when rural areas
    have a completely different challenge.
        Senator Tester. Yes, they do.
        Dr. Winfree. Yes. And I mean, I'll just--I'll give sort of
    my own example. I have a--my sister lives in the Middle
    Peninsula in Virginia, which is a really rural farming
    community between the peninsula and the Northern Neck, and they
    don't have many options there. Mobile doesn't work very well
    because you're close to the Bay. Fixed wireless doesn't work
    very well. And they've received a lot of money from the state,
    that region, to build fixed wire, and it's--it's now there. And
    it's--it's actually fairly, fairly cheap, right?
        But they have one option. And it's fairly cheap for the
    buy-in. At some point, those folks who have then bought into
    those plans are going to have their rates increased if there
    isn't competition.
        And so I think what we need to do is ultimately focus on
    supply, ultimately focus on competition, and that's what will
    bring those rates down in a sustainable way at some point into
    the future.
        Senator Tester. I--and I'm over time, and excuse me if I
    might.
        I understand----
        Dr. Winfree. It was my fault.
        Senator Tester.--and I--no, no, no. I agree with you
    fundamentally, except it is so damn expensive to lay broadband,
    and in rural America, I don't know how you're ever going to get
    competition. I just don't know, unless we're willing to lay
    several lines or--God, I don't know, you guys probably make
    rules that force other companies to be able to use the lines or
    whatever. There are all sorts of stuff out there.
        But I just don't know how we--in, you know, in a grocery
    store, yes, we get more food manufacturers. In energy, we'll
    get more people that are creating energy, whether it's, whether
    it's carbon-based or--or renewable. There are things we can do
    in those.
        In this one, it's just a different marketplace that
    somewhat holds the consumer at a big disadvantage.
        You don't have to say anything, but I had to get that off
    my chest. Thanks.
        Senator Lujan. Thank you very much, Senator Tester.
        Senator Markey, you're recognized for questions.

                   STATEMENT OF HON. EDWARD MARKEY,
                    U.S. SENATOR FROM MASSACHUSETTS

        Senator Markey. Yep. Thank you, Mr. Chairman.
        I agree with everything Senator Tester just said.
        I also want to take a moment to celebrate the FCC's vote
    last week to reinstate critical net neutrality rules. The new
    rules are important to protect the free and open Internet, and
    the evidence shows clearly that the rules do have no impact on
    broadband investment in the country. So just congratulations to
    the FCC.
        As everyone knows, we're at a crisis point for the
    Affordable Connectivity Program. May is the first month when
    ACP households will not receive the full $30 discount on their
    monthly broadband bill. Instead, that discount will only be
    $14, which is less than half of the subsidy. For households on
    tribal lands, the May benefit is just $35, down from $75
    previously.
        And I'm deeply concerned that faced with this cost
    increase, many ACP beneficiaries will drop their Internet
    service, and that would be a huge loss. That is why last week I
    led my colleagues in a letter to the trade associations of the
    major ACP corporations and urged them to cover the shortfall in
    the May benefit.
        Given that the $14 billion in ACP benefits ultimately
    returns to the corporations, who are the providers, this money
    is a small price to pay for ensuring that ACP households
    receive a full discount in May.
        Mr. Levin, do you agree that providers should ensure that
    ACP households receive the full $30 benefit in May?
        Mr. Levin. I certainly hope that they follow your advice
    and do that.
        I would only add to that that voluntary efforts are not a
    long-term solution. We need a long-term solution. I was very
    supportive, as you know, for issues--for initiatives like
    Comcast Internet Essentials and other kinds of things, very
    helpful. But it was not a solution to get everybody on, which
    is what we really need.
        Senator Markey. Yes. So the corporations should help us to
    create a bridge here to combine a solution.
        Mr. Levin. Bridges are good.
        Senator Markey. They get the primary benefit financially
    out of this. And we just have a short window to get these--to
    get this solved, and we just don't want these households to
    lose their critical benefits.
        And as we consider proposals to reform the Universal
    Service Fund, we must make sure to protect existing programs
    that have been instrumental in closing the digital divide.
        At the top of that list is the Universal Service Program
    for Schools and Libraries, better known as E-Rate. So I was the
    Democratic author of the E-Rate program. I actually named it
    the E-Rate program. I was going to call it the Ed-Rate----
        [Audience interruption.]
        Senator Markey.--but then my staff said, ``Nah''----
        Mr. Levin. I remember that.
        Senator Markey. --``We can't do that.''
        OK, we'll just call it the ``E-Rate,'' for ``education.''
    So I did that in 1996. Named it, created it.
        And so the program has delivered over $60 billion to
    connect schools and libraries to the Internet, including $900
    million for Massachusetts. And that money has primarily flowed
    to disadvantaged and low-income communities across the country.
        So Mr. Levin, you were there in 1996----
        Mr. Levin. As were you. Yes.
        Senator Markey.--at the FCC to implement it. Do you agree
    that any changes to the Universal Service Fund must protect E-
    Rate?
        Mr. Levin. I certainly agree that it should protect E-Rate
    and the mission of E-Rate. I would just note, because I think
    it's important, you know, you and I have both aged a little
    bit. I think we may be the only people in this room who were
    there----
        Senator Markey. Speak for yourself.
        Mr. Levin.--in 1996.
        [Laughter.]
        Mr. Levin. I was going to say, you have aged much more
    gracefully and much more beautifully than I have. But the E-
    Rate program has also aged extremely well.
        But we did have to do some reforms, and I think the FCC's
    reforms were in 2014. And those reforms were great. And if you
    look at the Education SuperHighway report in 2019, you can see
    that the reforms led to a number of tremendous improvements for
    the state.
        So I--we should absolutely protect E-Rate. We should
    absolutely protect its mission. But I would be open to, you
    know, things that make it even better.
        So that is the challenge.
        Senator Markey. Right.
        Mr. Levin. ACP is part of a broader mission to make sure
    that everybody is connected to the tools they need, as Congress
    said, to fully participate in the economy and society.
        Senator Markey. Yes. So it's actually--it's not your age,
    it's the age of your ideas. So I like to think of myself as
    still the youngest guy in the room.
        So E-Rate has stood the test of time. You know, if it can
    be improved, that's fine, but it's survived the test of time.
        Mr. Levin. Yes.
        Senator Markey. So any changes must be carefully calibrated
    to elicit a solution that actually improves it and doesn't
    undermine it.
        And ACP is exactly the kind of program that does show how
    government and industry and community organizations can all
    work together.
        Mr. Levin. Mm-hmm.
        Senator Markey. And we just have to continue that tradition
    and ensure that as we move forward, we do so with a consensus.
    And we just want to keep this program going, because if it
    fails, it just will undermine public trust, because it will
    just be a failure on the part of the government and the private
    sector to come to a solution that helps community organizations
    provide that service.
        And thank you, Mr. Chairman and Ranking Member, for all of
    your great work on this program. Thank you.
        Senator Lujan. Thank you, Senator Markey.
        Senator Rosen, you're recognized for questions.

                    STATEMENT OF HON. JACKY ROSEN,
                        U.S. SENATOR FROM NEVADA

        Senator Rosen. Well, thank you, Chairman Lujan, of course,
    Ranking Member Thune. It's really important we hold this
    hearing today.
        And I thank all the witnesses for being here.
        Because earlier this week, we crossed a new threshold. The
    end of April marked the last month that households will see, of
    course, as everyone has stated, the full $30 ACP benefit on
    their internet bills.
        I was proud to help write and pass the broadband section of
    the Bipartisan Infrastructure Law, which created the Affordable
    Connectivity Program to lower Internet costs for Nevadans and
    people across the country.
        But due to congressional inaction, there are people today
    already seeing higher costs because the program's funding has
    run out. I remain committed to finding a path forward to save
    ACP to ensure high speed Internet is not only accessible, but
    affordable to working families in Nevada. And the time has run
    out. And that means the time to act is now.
        And so I want to talk a little bit on some of the impact
    for my Nevada seniors and my Nevada veterans. I want to hone in
    on one of the points Senator Vance made earlier. Losing access
    to Internet due to high costs can also raise costs, like I
    said, for seniors, for veterans, and even the Federal
    Government.
        Federal agencies like the VA and Medicare use telehealth
    and online services to save taxpayer funds and provide more
    timely assistance to veterans and seniors.
        Telehealth. I can't tell you how important it is to people
    in our rural communities in rural Nevada. It matters. It makes
    a difference. They're getting their care this way. It's saving
    lives.
        But sometimes the nearest in-person service is hundreds of
    miles away.
        So Mr. Levin, on my ACP lapsing, they get harder for
    veterans to access their benefits, and especially when they go
    through the VA.
        Mr. Levin. It does it in a variety of ways. One of the
    interesting things that's been developing in the last few years
    is because of ACP, there are a lot of social service providers,
    both in the government but also in the non-profit communities,
    that are restructuring the way--they now have an incentive to
    restructure how they deliver those services to make it more
    effective, more efficient, to allow people to get help 24/7
    instead of 9 5.
        So it can affect veterans who depend on a variety of
    government services, not just with health care, though health
    care is probably the number one way.
        But if they get cut off, if they can't afford Internet
    connectivity, then everything they do to try to make their
    lives better will become more difficult.
        Senator Rosen. Yes. I think the same thing would go for our
    seniors and for many of our social service agencies that work
    all around our state.
        So Mr. Chairman, I'd like to enter into the record a letter
    from health plans across the U.S. in support of continuing to
    fund the ACP.
        Senator Lujan. With no objection.
        [The information referred to follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Rosen. Thank you. I'm going to move on and talk a
    little bit in the time left about broadband multipliers. So
    research has identified broadband adoption as a super
    multiplier.
        What does that mean? Just like we talked about, it
    increases access to health care, creating more opportunities
    for tele-education and for jobs and--well, I would say in
    Nevada for tourism as well.
        And so Mr. Levin, how can you talk about the downstream
    effects of broadband affordability? How is affordable access to
    the Internet connection as for better educational outcomes,
    health outcomes, better jobs, just increase all of our
    connections and our ability to move all around our state,
    particularly in our underserved and rural areas? And this lapse
    in ACP, how does it reverse those benefits?
        Mr. Levin. Yes. I think you've hit upon a key point here,
    which is, as I mentioned in the oral testimony, broadband
    Internet access is really a general-purpose technology. It is
    like electricity, as Senator Tester was saying, in the sense
    that it doesn't enable one thing. It enables lots of things.
        And so all of those things that you mentioned are improved.
    Earlier we were talking about job training and job placement.
    Now by the way, again, artificial intelligence is going to
    change the way people do jobs, change the way that they have to
    keep learning and learning.
        You're not going to do that by, you know, going to
    community colleges live all the time. You're going to do it at
    home at night. You're going to keep upgrading your skills.
        And then how do you find that job? The majority of jobs,
    the vast majority of jobs, are now posted only online.
        Senator Rosen. Mm-hmm.
        Mr. Levin. So that's a benefit to everybody. But that's
    just one of a thousand examples we could use.
        Senator Rosen. Well, thank you. I have so much more to talk
    about our impact in rural communities and infrastructure
    investments that--how we're going to expand the digital divide
    if we don't fund ACP, and just create more and more inequities.
    I will submit those questions for the record. I see my time is
    up.
        Thank you.
        Senator Lujan. Thank you, Senator Rosen.
        And before I close with no other speakers expected, I have
    a couple other questions. Ms. de Wit, in your work at Pew,
    you've assisted states in determining what constitutes
    reasonable prices for broadband for a middle class family,
    correct?
        Ms. de Wit. Yes, that is correct.
        Senator Lujan. Now, it's my understanding that your work
    found that affordability can vary widely across regions,
    states, and counties. For example, the median affordability
    price for Texas is listed at $92.80. In Dimmit County in South
    Texas, the affordable baseline was $41.67. And in Rockwell
    County, located in the Dallas-Fort Worth Metroplex,
    affordability was $185.99.
        Ms. de Wit, what are some of the reasons for such wide
    pricing differences in different states and counties?
        Ms. de Wit. Simply put, more research is needed to confirm
    that. What we know at this point are that there are a range of
    factors that do influence affordability, including the type of
    service that is available, as well as, simply put, what a
    customer can afford.
        And further, that research, which I should point out, is
    based on a 2 percent valuation of middle income. And sorry, I
    won't go down on methodology. You don't need to hear about
    that.
        But I think what's important to note is that what we found,
    even with those ranges, are that that middle, that 2 percent
    number of what could be affordable for a middle class, is still
    more expensive than what many families can afford.
        But fundamentally, there are a range of economic, social,
    and educational factors that influence affordability for
    households.
        Senator Lujan. Appreciate it.
        Senator Hickenlooper, you are recognized for your
    questions.

                 STATEMENT OF HON. JOHN HICKENLOOPER,
                       U.S. SENATOR FROM COLORADO

        Senator Hickenlooper. Thank you, Mr. Chair.
        Thanks to all of you. I've caught bits of this through the
    morning.
        Let me start with a question for Ms. Case Nevarez. During
    the pandemic, students nationwide had to adapt to learning
    remotely. Many had limited experience beforehand. Students
    without any broadband connection, or a device, were
    disadvantaged, could not keep up with their peers. I think the
    digital divide is not just about broadband access, but about
    broadband adoption and use.
        So can you describe how you've seen this relationship
    between broadband adoption and education evolve over the last
    couple of years?
        Ms. Nevarez. Sure. In our state in particular, it has been
    a critical issue that the Nation is watching. Community
    members, particularly our tribal community members, Hispanic
    community members, some of our disabled community members, have
    actually gone to the state to address equality of education.
    And a tech order came out to note the importance of technology
    and the critical need for our students to actually have both
    connectivity and a device.
        Our state is rallying now to address those needs, and it is
    not easy. The cost of devices, the cost of maintenance of
    devices, and of course, as we've mentioned here today,
    connecting many of our rural students--some of which actually
    in Navajo Nation, believe it or not, ride the bus 2 hours to
    get to school every day.
        So as we've noted, in our state, getting fiber to a home
    that far away over canyons and mountains is expensive, and the
    cost, if there even is a choice, is expensive. We sit here in
    D.C., there's 11,000--more than 11,000 people per square mile.
    In the state of New Mexico, it's an average of 17.
        So even if a family wants their student or wanted their
    student to be able to connect, it's often not an option, or
    it's an expense they can't handle.
        It has cost our students, many of them returning to school
    post-pandemic, the challenge of catching up and the challenge
    of proceeding forward as we as a state look at how are we going
    to ensure all students, all the time, have technology and
    access as a tool for learning and advancing. It's a heavy lift
    for us, and a heavy lift for every state, but a lift we cannot
    delay and we cannot avoid.
        Senator Hickenlooper. Right. Thank you. And I've got two
    more questions, so hopefully we'll get them. I'll be concise in
    asking and--because you can get concise answers.
        Ms. de Wit, the E-Rate Program, the LifeLine Program, the
    Rural Health Care Program to support hospitals and clinics,
    the--what they call the High-Cost Program to help expand access
    in rural America, during the pandemic, Congress authorized
    these programs to get to the same goals as the Universal
    Service Fund through direct appropriations and unique
    appropriation rules.
        How would you advise Congress to combine these pandemic-era
    programs with the Universal Service Fund to be sustainable
    long-term?
        Ms. de Wit. At this point, we don't have research on that
    issue to provide an informed answer. What we do know is that
    USF reform is needed. That's also a question that is worthy of
    debate and further research, and which we would be happy to
    participate in as time moves forward.
        But I think the critical point for us is that ACP is the
    cornerstone of BEAD. And without ACP, without a bridge for
    funding ACP, we threaten billions in deployment grants across
    the country. So we hope that we find a short-term solution for
    ACP and a longer one for USF reform.
        Senator Hickenlooper. We'll get you back to work. Full-time
    employment for researchers, this issue.
        Mr. ``L'vin''--or ``Levvin,'' I missed the beginning
    introductions. It's like ``Hickenlooper,'' ``Hickenlopper,''
    either way.
        That same question. We're looking at--I mean, the issue of,
    as I grew up, everyone paid in a little bit into a fund to make
    sure that everybody had telephone coverage and was connected.
    We've introduced something called Reforming Broadband
    Connectivity with Senators Klobuchar and Thune, finally trying
    to get the FCC to take action, you know, by basically expanding
    the contribution base to make sure that we have sufficient
    resources.
        So in your view, what is currently within the FCC's
    authority to expand the contribution base to, like broadband
    providers? And what is not within their authority without
    congressional legislation?
        Mr. Levin. I think they could expand it to broadband
    providers. I don't think they could expand it to certain kinds
    of big tech operations, as has been proposed by a number of
    different people.
        And I would be happy to also participate in any further
    discussions. I was involved in the 1990s. I was involved 10, 15
    years ago in terms of various reforms. There's no question that
    there's a broader reform necessary.
        But the single most important point that I think this
    hearing demonstrates is, we need to keep everybody on. The
    government actually saves money by keeping people on. So let's
    have a short-term extension, and let's get to the work. This is
    not the Middle East. We can solve this problem. And we can
    solve it in a reasonably short period of time. And we should
    look at a lot of different options for how to do it.
        I might note there are some court cases pending that may
    affect those options.
        Senator Hickenlooper. Sure.
        Mr. Levin. But I think fundamentally, this is a
    congressional decision. And it should be a congressional
    decision. And let's make that decision. Let's move on. And then
    15 years later, there'll be another hearing, and we'll have to
    reform it all over again. But that's fine. Because that's the
    truth of every program that's ever occurred.
        Senator Hickenlooper. Well, I appreciate that. And I look
    forward to keeping you all busy in the years to come, because
    it is important. And it--I have not had a single citizen while
    the 8 years I was Governor of Colorado, who when explained the
    theory behind everyone paying a little bit more to make sure
    that everyone had some access, no one ever complained about
    that.
        So it is befuddling, to say the least, that we can't seem
    to find out that that solution is sitting there right in front
    of our face.
        Anyway, I yield back to the Chair.
        Thank you all.
        Senator Lujan. Thank you, Senator Hickenlooper.
        And I'm asking the Committee to submit a statement for the
    record from R Street, which is a self-described ``center-right
    think tank'' that engages in policy research in support of free
    markets and limited effective government without objection.
        [The information referred to follows:]

                                             R Street Institute
                                           May 1, 2024, Washington, DC.
    Hon. Ben Ray Lujan,
    Chair
    Subcommittee on Communications, Media and Broadband,
    Committee on Commerce, Science, and Transportation,
    United States Senate,
    Washington, DC.

    Hon. John Thune,
    Ranking Member,
    Subcommittee on Communications, Media and Broadband,
    Committee on Commerce, Science, and Transportation,
    United States Senate,
    Washington, DC.

    Dear Chair Lujan, Ranking Member Thune, and members of the
                subcommittee:

        Thank you for your decision to hold a hearing on May 2, 2024,
    titled ``The Future of Broadband Affordability.'' My name is Jonathan
    Cannon, and I am Policy Counsel on the Technology and Innovation team
    at the R Street Institute. The R Street Institute is a non-partisan
    think tank dedicated to free markets and limited, effective government.
    One of our priorities is to seek solutions to address broadband
    challenges and to lower barriers to help Americans seize the
    opportunity of the digital economy. To that end, we would like to
    reiterate our support for the Affordable Connectivity Program and work
    with this subcommittee to find a long-term sustainable path for the
    extension of this important program.
        Prior to joining the R Street Institute, I was an attorney advisor
    in the Office of Legislative Affairs at the Federal Communications
    Commission (FCC) in 2020 when the Emergency Broadband Benefit Program
    was started by the CARES Act.\1\ I saw how quickly and effectively
    Congress and the FCC mobilized to implement this program and connect
    those left on the wrong side of the digital divide during the COVID-19
    pandemic. The program's success was so evident that it was extended as
    the Affordable Connectivity Program (ACP). This has been a bipartisan
    program since its inception, and it should remain so moving forward.
    ---------------------------------------------------------------------------
        \1\ H.R. 133, 116th Cong.
    ---------------------------------------------------------------------------
        The ACP is a light-touch, market-friendly broadband affordability
    program that has enabled 23 million households to connect and stay
    connected online. The program can be updated and modified by Congress
    to account for changes to both customer needs and market demands.
    Ultimately, the goal of the program is to help families get off of ACP
    and become an integral part of our digital economy. So far, the data to
    that effect looks promising.
        As R Street analysis has highlighted on several occasions, the ACP
    is ``a model of success.'' \2\ The ACP addresses the affordability gap
    enabling existing customers to remain connected, while also helping
    customers connect to the digital economy for the first time. There are
    currently over 23,000,000 households in the U.S. enrolled in ACP.\3\
    These households are using the technology-neutral voucher to receive a
    $30-per-month discount for either mobile, fixed, fixed wireless, or
    even satellite.\4\
    ---------------------------------------------------------------------------
        \2\ Jonathan Cannon, The Affordable Connectivity Program: When
    Government Spending is Good, R Street Institute (Apr 19, 2023), https:/
    /www.rstreet.org/commentary/the-affordable-connectivity-program-when-
    government-spending-is-good/
        \3\ Additional ACP Data, Universal Service Administrative Company,
    https://www.usac.org/about/affordable-connectivity-program/acp-
    enrollment-and-claims-tracker/additional-acp-data/ (last visited Apr.
    30, 2024)
        \4\ Id.
    ---------------------------------------------------------------------------
        Although we recognize that there are genuine concerns with the ACP,
    we do not see these as fatal flaws of the program. Instead, we see
    these concerns as an opportunity to further refine and improve it. Some
    have raised concerns about the ACP's negative impact on the
    marketplace, but all evidence demonstrates the opposite. According to
    recent studies, the most popular broadband speed tier plan prices
    dropped by 18.1 percent during ACP implementation.\5\ ACP is a
    bootstrap program that connects families to the digital economy and its
    results speak for itself.
    ---------------------------------------------------------------------------
        \5\ Arthur Menko, 2023 Broadband Pricing Index Broadband Prices
    Continue to Decline, USTelecom https://ustelecom.org/wp-content/
    uploads/2023/10/USTelecom-2023-BPI-Report-final.pdf (last visited Apr.
    30, 2024).
    ---------------------------------------------------------------------------
        A prevailing concern raised by critics of the ACP is that the
    program is subsidizing providers, and providing limited, if any,
    benefits to customers. Fortunately, studies disprove that notion.
    Recently-published research found that not only do Internet Service
    Providers (ISPs) pass cost savings on to their customers, but they also
    are ``not inflating prices to appropriate government subsidies, and the
    ACP is successfully reducing the cost of Internet plans for eligible
    households.'' \6\
    ---------------------------------------------------------------------------
        \6\ Schieberl, River and Ahmadi, Nikki, Measuring the Success of
    the Affordable Connectivity Program (July 31, 2023) https://ssrn.com/
    abstract=458690 or https://dx.doi.org/10.2139/ssrn.4528690
    ---------------------------------------------------------------------------
        The purpose of the study was to determine ``if there is a
    statistically significant difference in the price of an Internet plan
    when the ISP offers enrollment into the Affordable Connectivity
    Program.'' \7\ The study revealed that the cost of an Internet plan
    when offering enrollment into the ACP decreased by $3.27, not including
    the $30/$75 discount offered by the program.\8\ Notably, the study
    concludes that providers ``are passing on cost savings to their
    customers . . . and the prices are not being artificially raised to
    appropriate government subsidies.'' \9\
    ---------------------------------------------------------------------------
        \7\ Id. at 4
        \8\ Id. at 5
        \9\ Id. at 7
    ---------------------------------------------------------------------------
        Some have written critiques of the program that appear at first
    blush to contradict the results of this paper and study.\10\ However,
    this analysis fails to compare the price of both fixed and wireless
    broadband services. With the majority of ACP recipients utilizing the
    benefit for mobile broadband, the data looks at only fixed broadband
    when making the determinations about costs. It further admits to using
    a small dataset and it is not clear whether the results hold as the
    percent of the population receiving ACP benefits increases. This
    critique does not examine the ACP program in comparison to alternative
    efforts to expand broadband access. The ACP program fares well by
    comparison and is less intrusive, and less likely to distort the
    broadband marketplace.
    ---------------------------------------------------------------------------
        \10\ Bidenomics Goes Online: Increasing the Cost of High-Speed
    Internet, Paul Winfree, Economic Policy Innovation Center, https://
    epicforamerica.org/publications/bidenomics-goes-online-increasing-the-
    costs-of-high-speed-internet/
    ---------------------------------------------------------------------------
        With the large variability of service price offerings and prices
    across the country, a small sample is hardly a good predictor of the
    cost of services. Another critique of the program in the paper is the
    lack of new subscribers. This further undercuts the argument. If the
    program were only supplementing existing customers with a neutral
    voucher, it is unlikely that would have any impact on the market or the
    cost of broadband services.
        During the COVID-19 pandemic Internet demand exploded, and
    providers not only met that demand, but were able to reduce prices,
    offer faster speeds, and keep Americans connected.\11\ Broadband prices
    have decreased by 42 percent since 2016, including by as much as 60
    percent on the highest-speed plans. And that's to say nothing of the
    increase in speeds available to customers.\12\ With the overall trend
    of broadband prices decreasing over time, as noted in several studies,
    there is stronger evidence to suggest that ACP has at least done little
    to manipulate the market broadband prices. If anything it has done
    little to effect the trend of faster speeds at lower price points.
    ---------------------------------------------------------------------------
        \11\ COVID-19 Overview, NCTA, https://www.ncta.com/covid-19-
    overview, (last visited, apr. 30, 2023)
        \12\ New Study: U.S. Broadband Prices Fell 42 percent Since 2016,
    Roslyn Layton, Forbes (Feb 28, 2022), https://www.forbes.com/sites/
    roslynlayton/2022/02/28/new-study-us-broad
    band-prices-fell-42-since-2016/
    ---------------------------------------------------------------------------
        Unfortunately, the ACP, like many Federal programs, has been the
    victim of arbitrage and subject to waste, fraud, and abuse.\13\
    However, the FCC's Office of Inspector General has readily identified
    and addressed these issues. For example, in September of last year, the
    IG completed an investigation that led to providers voluntarily
    repaying $49.4 million that was improperly used.\14\ As Congress looks
    to extend and reform the ACP program, they are well suited to continue
    to refine and strengthen it to reduce opportunities for waste, fraud,
    and abuse.
    ---------------------------------------------------------------------------
        \13\ John Thune, Thune Cruz Statment on the FCC's Mismanagement of
    a Taxpayer Funded Broadband Subsidy Program (Jan 25, 2023), https://
    thune.senate.gov/public/index.cfm/2023/1/thune-cruz-statement-on-the-
    fcc-s-mismanagement-of-a-taxpayer-funded-broadband-subsidy-program
        \14\ FCC Inspector General Announces Major ACP Provider Voluntarily
    Repaid Nearly $50 Million and Issues Advisory Regarding ACP Provider
    Compliance with Program Usage Rules, Federal Communications Commission
    (Sept. 28, 2023), https://docs.fcc.gov/public/attachments/DOC-
    397332A1.pdf
    ---------------------------------------------------------------------------
        As we highlighted in comments submitted before the Universal
    Service Working Group, ``Before any long-term solution is considered,
    Congress should at least ensure a short-term extension of the ACP,''
    which would provide Congress an adequate opportunity ``to examine the
    program's eligibility criteria to potentially lower the cost of the
    benefit and ensure that the ACP targets customers who depend on it to
    remain connected.'' \15\ Congress is in the perfect position to ``make
    meaningful changes to ensure [ACPs] longevity and sustainability.''
    \16\ As Congress looks to extend the ACP, Congress should consider
    rolling it into the future Universal Service Fund (USF) programs.
    ---------------------------------------------------------------------------
        \15\ Jonathan Cannon, Comments to the Senate Universal Service
    Working Group (Aug. 15, 2023) https://www.rstreet.org/outreach/r-
    street-submits-comments-to-senate-universal-service-fund-working-group/
        \16\ Id.
    ---------------------------------------------------------------------------
        Senator Cruz, in a recent whitepaper, noted that ACP and Lifeline
    ``should be streamlined and reformed to target subsidies to those who
    truly need them to get online.'' \17\ As his paper highlighted, the
    Government Affairs Office has identified 133 broadband programs across
    15 agencies.\18\ There is an enormous mission creep across government
    agencies that needs to be addressed to ensure that we are maximizing
    every dollar spent on broadband and taking steps to close the digital
    divide. While both Republicans and Democrats are rightfully frustrated
    by the significant cost and duplicity of Federal broadband programs,
    they are in a perfect position to meet these challenges head-on,
    consolidate existing broadband programs, and prioritize ACP as ``one
    broadband program to rule them all.'' \19\
    ---------------------------------------------------------------------------
        \17\ Ranking Member Ted Cruz, Protecting Americans From Hidden FCC
    Tax Hikes, Blueprint for Universal Service Fund Reform https://
    www.commerce.senate.gov/services/files/5CA218F4-384D-4DCA-8678-
    6885885209DC (Last visited Apr. 30, 2024).
        \18\ Government Accountability Office, Broadband: A National
    Strategy Needed to Coordinate Fragmented, Overlapping Federal Programs,
    GAO-23-106818 (2023).
        \19\ Jonathan Cannon, The Conservative Case for the Affordable
    Connectivity Program, R Street (Sept. 2023) https://www.rstreet.org/
    events/the-conservative-case-for-the-affordable-connectivity-program/
    ---------------------------------------------------------------------------
        Thank you again for holding this important hearing and for your
    consideration of my views. Should you have any questions or wish to
    have further discussion, please do not hesitate to contact me.
                Sincerely,
                             /s/ Jonathan Myles Laurier Cannon,
                                    Policy Counsel Tech and Innovation,
                                                        R Street Institute.

        Senator Lujan. The study also state something that I agree
    with, which is R Street states that the Affordable Connectivity
    Program is, quote, ``a model of success,'' and that, quote, has
    been a bright--pardon me, quote, ``has been a bipartisan
    program since its inception, and it should remain so moving
    forward.''
        I would also like to highlight research that R Street
    Institute statements mentions, which takes a look at the effect
    ACP has had on the price of broadband, by comparing broadband
    price offerings by companies who participate in ACP with
    similar offerings by companies who do not participate in ACP.
        The study demonstrates that ACP is successfully reducing
    the cost of Internet plans for eligible households. The study
    also finds that ISPs are passing on cost savings to their
    customers.
        Mr. Levin, yes or no, in any of your research, have you
    seen evidence that the ACP itself is driving broadband prices
    higher? I appreciate that very much.
        Mr. Levin. On Wall Street right.
        Senator Lujan. I appreciate that.
        And look, I hope that these programs will eliminate slow
    speeds across America. I live in a rural community. I represent
    a very rural state. Most access to the Internet is still over
    twisted copper. I was a former utility commissioner before I
    came to the Congress.
        So doing something about POTS, and that's not what
    everyone's trying to legalize now, that's Plain Old Telephone
    Service----
        [Laughter.]
        Mr. Levin. Right.
        Senator Lujan.--which was delivered over twisted copper,
    and then some really smart engineers figured out, well, we can
    increase capacity on twisted copper. And then the world said,
    and all these corporations said, ``Oh, that's how people living
    in rural America will get faster speeds.'' You know, ``We're
    going to boost them up from a dial-up tone,'' and some of you
    in the room may remember it, but you don't have the same color
    of hair as I do.
        But you used to go to download an e-mail, not all your e-
    mail, an e-mail, and you would log in to AOL or whatever
    account you had, and you would hit enter, and the phone would
    start, ``buzz, buzz, buzz,'' you know, and everything would
    start talking to one another, and you'd leave. For the day. And
    you would come home to watch it maybe finally downloading the
    one e-mail.
        Unfortunately, that's how broadband providers across the
    world said, ``Rural America, that's what they get.''
        We're going to solve this problem. Building a bipartisan
    deployment plan to rural America said, ``Well, not anymore.''
    In the same way that my colleagues asked about electricity, and
    roads, and this revolution across America to say that everyone
    matters, we're going to make sure that we get this done all
    across the country, we're finally doing the same thing with
    broadband.
        Dr. Winfree, the one area that I disagree--well, there may
    be a few areas. The one area that I'll highlight, ACP does help
    rural America. Things in rural America are expensive too. I
    hope more programs look to rural America, where most of our
    food is grown.
        There's an effort now to be smarter with the use of
    tractors, like the ones that my colleagues that farm on large
    acreage, to modernize them. You know, I still use the ones that
    you have to putter around in because it's small acreage. It
    doesn't make sense for me.
        Rural electric co-ops are a present service to us across
    the country, because people believed that rural Americans
    deserved electricity too.
        And I'm certainly hopeful that with these programs that we
    can eliminate slower speeds, that we can finally get higher
    speed connectivity to people living all across America.
        And where competition doesn't exist, well, then what? I
    don't know if I'm hearing that we should overbuild. I'm
    surprised I used those terms, because I don't use those terms.
    I don't know what ``overbuild'' means.
        In order to get competition for broadband, you need a few
    pipes, or you need a lot of fiber in a pipe, so that other
    people can be able to get that service to you.
        Well, that's called overbuilding. They used to call it
    ``gold plating'' when I was on the Public Utility Commission.
    And it was all the rural telephone cooperatives who would get
    called out for gold plating.
        And now we applaud them for being smart and innovative and
    making these investments. Where you had innovative boards, they
    had some of the fastest connections in America. We should model
    after them. We should look after what they've been able to
    achieve.
        So I'm just going on and on here. I hope that we can find a
    way to work together as the bipartisan working group with USF
    has come up with really strong ideas. Democratic ideas,
    Republican ideas, thoughts that have come out of studies from
    the right and the left, from the center.
        And it's a good methodology that I'm hoping that going
    forward programs will work better. That they touch the people
    that they are intended to reach out to. That whether we're in
    rural settings, urban settings, that where we have a hole and a
    flaw in American policy, that we can do something about that as
    well.
        So thank you to each of the witnesses for being available
    today, for traveling, for the preparation it takes to be able
    to come together and have a good conversation.
        I appreciate all my colleagues who participated today.
    There's a lot of interest in this particular space.
        And before I wrap up, I want to enter a few more things
    into the record, and I ask unanimous consent to enter a
    statement from February 8, 2024 from the Wireless
    Infrastructure Association in support of extending ACP; a
    January 10, 2024 statement from NCTA, the Internet & Television
    Association in support of extending ACP; a January 10, 2024
    statement from CTIA in support of extending ACP; a January 10,
    2024 statement from NTCA, the Rural Broadband Association, in
    support of extending ACP; an April 15, 2024 statement from T-
    Mobile in support of extending the ACP; and a statement for the
    record from AARP in support of ACP and sharing research
    findings about the importance of the programs for older
    Americans.
        [The information referred to follows:]

    ``On behalf of the undersigned organizations representing the United
    States' information and communications industry, we urge you to support
    S. Amdt. 2024 to the Securing Growth and Robust Leadership in American
    Aviation Act (H.R. 3935), offered by Senators Lujan, Daines, Vance,
    Welch, Rosen, and Wicker, to fully fund the Secure and Trusted
    Communications Networks Reimbursement Program (Rip & Replace Program)
    and extend funding for the Affordable Connectivity Program (ACP) at the
    Federal Communications Commission (FCC). This amendment will provide
    full and immediate funding for the Rip & Replace Program's current
    $3.08 billion shortfall as well as $6 billion to extend the ACP, which
    would be fully offset by future spectrum auction proceeds. Fully and
    immediately funding the removal, destruction, and replacement of
    untrusted network equipment via the Rip & Replace Program and
    sustaining the ACP are both critical for supporting and maintaining
    connectivity across the country, especially in rural areas and low-
    income communities.''
    Excerpt from letter undersigned by the following organizations:

    Competitive Carriers Association
    CTIA
    INCOMPAS
    NATE: The Communications Infrastructure Contractors Association
    NCTA--The Internet & Television Association
    NTCA--The Rural Broadband Association
    Rural Wireless Association
    Telecommunications Industry Association
    USTelecom--The Broadband Association
    Wireless Infrastructure Association
    WISPA--Broadband Without Boundaries
    WTA--Advocates for Rural Broadband

    ``In modern society, broadband is every bit as essential as food,
    water, electric, and housing. Without it, families will struggle to
    access school, work, healthcare, government benefits, the news, or even
    a social life. There simply isn't time to wait--without immediate
    action, more than 23 million households could find themselves
    disconnected from the Internet in just weeks. The ACLU is grateful for
    the efforts of the bipartisan group of Senators who are pushing to
    ensure American households stay connected.''
    Jenna Leventoff, Senior Policy Counsel, ACLU

    ``The Affordable Connectivity Program is essential for millions of
    families across the country. We wholeheartedly support this impactful
    bipartisan amendment and thank Senators Lujan, Vance, Welch, Wicker,
    Daines, and Rosen for their steadfast commitment to funding this
    critical program.''
    Chip Pickering, CEO, Incompas

    ``UCC Media Justice congratulates Senators Lujan, Daines, Welch, Vance,
    Rosen and Wicker on their proposed amendment to extend funding for the
    critically important Affordable Connectivity Program through the end of
    2024. If this amendment becomes law, the 23 million low-income families
    relying on the ACP will have their trust in the program vindicated.
    This critical bridge funding will pave the way for permanent ACP
    funding which would mean Congress' $42 billion investment in broadband
    deployment will go farther and be more likely to achieve its goals. The
    bi-partisan proposal wisely relies on the auction of valuable spectrum
    by the Federal Communications Commission to support affordable access
    to high-speed internet--an equitable approach to digital inclusion long
    supported by the civil rights community.''
    Cheryl A. Leanza, Policy advisor for the United Church of Christ Media
    Justice Ministry

    ``OTI is grateful for the efforts of the bipartisan group of Senators
    who are pushing to ensure American households stay connected.
    Preserving the ACP will help the millions of low-income American
    households who without the program would risk being unable to pay their
    Internet bills. The Internet is essential to American life, and as we
    face persistent fears of inflation, the uncertainty of AI's impact on
    our workforce, and continuously rising levels of disinformation and
    polarization, we should not leave Americans behind.''
    Lilian Coral, Head of OTI and Vice President for Technology and
    Democracy programs at New America

    ``We at Connected Nation fully support this bipartisan amendment to
    preserve the Affordable Connectivity Program (ACP). Losing this benefit
    would impact the daily lives of the most vulnerable among us--the 23.3
    million people who rely on Internet access for their jobs, healthcare,
    education, and so much more. Internet access isn't just a luxury; it's
    the lifeblood of our society. We ask Congress to preserve this benefit
    for those who have come to rely upon it.''
    Tom Ferree, Chairman & CEO of Connected Nation

    ``EducationSuperHighway thanks the bipartisan group of Senators for
    their work to preserve the Affordable Connectivity Program, which has
    helped more than 23 million households get online and stay connected to
    the digital economy, education, healthcare, the social safety net, and
    critical government services. This amendment provides critical bridge
    funding to support the millions of Americans who are unable to access
    vital online resources without affordable home broadband. We look
    forward to working with Congress to create a permanent broadband
    benefit that closes the broadband affordability gap, which accounts for
    two-thirds of our Nation's digital divide.''
    Adeyinka Ogunlegan, Vice President, Government Affairs and Policy,
    EducationSuperHighway

    ``The Affordable Connectivity Program has helped 23 million households
    stay connected to education, work, health care and opportunity. The
    National Consumer Law Center, on behalf of its low-income clients,
    urges the passage of this bi-partisan amendment to the FAA to ensure
    continuation of this essential program.''
    Olivia Wein, Senior Attorney, National Consumer Law Center

    ``Fully funding the Rip and Replace Program is critical to securing our
    Nation's networks, including those serving rural areas, military bases,
    airports, and other areas of strategic importance,'' said Tim Donovan,
    CCA's President and CEO. ``Absent full funding, millions of Americans
    face complete loss of connectivity and jeopardized access to emergency
    services. Additionally, the ACP helps bridge the digital divide,
    benefiting 23 million households, including seniors and veterans, many
    in the same areas affected by the potential loss of service due to the
    Rip and Replace shortfall. Addressing both of these issues immediately
    is critical for supporting and maintaining connectivity across the
    country, especially in rural areas and low-income communities.''
    Tim Donovan, CCA's President and CEO

    ``The Affordable Connectivity Program is America's promise that
    opportunity will remain available, no matter a household's financial
    circumstance. This amendment is a $6 billion bipartisan commitment to
    keep that promise. The Benton Institute for Broadband & Society urges
    its swift passage so that 23 million households do not experience
    disruptions in their essential connectivity.''
    Drew Garner, Director of Policy Engagement, Benton Institute for
    Broadband & Society

    ``Common Sense Media appreciates the steadfast support of this
    bipartisan group of Senators to ensure the continuation of the
    Affordable Connectivity Program. More than 23 million households rely
    on ACP to learn, work, and access healthcare. This amendment will
    ensure that our students will have consistent access to the Internet at
    home as they finish their end of term projects and study for finals.''
    Amina Fazlullah, Head of Tech Policy Advocacy, Common Sense Media

    ``The National Digital Inclusion Alliance and our community of 1700+
    affiliates thanks the bipartisan group of Senators for their work to
    extend the Affordable Connectivity Program. This act and the ongoing
    work to find a permanent solution for funding a broadband benefit gets
    our country a step closer to students doing their homework at home
    rather than in parking lots, to veterans receiving health support
    online, and job seekers matching with employers.''
    Angela Siefer, Executive Director of the National Digital Inclusion
    Alliance

    ``The National Lifeline Association (NaLA) thanks Senators Lujan,
    Welch, Vance, Wicker, Rosen, and Daines for their amendment to the FAA
    bill that would fund and reform the Affordable Connectivity Program
    (ACP). Internet access in our digital era is absolutely essential,
    particularly for seniors, rural communities, and veterans who
    participate in and depend on the ACP every day to connect to
    telehealth, education, jobs, and community. This is a critically
    important amendment and we urge Congress to include this amendment in
    the must-pass FAA reauthorization.''
    David B. Dorwart, Chair, National Lifeline Association (NaLA)

    ``We applaud the bipartisan amendment in the Senate to extend the ACP.
    We call on the Senate to move quickly to add this amendment to the FAA
    Reauthorization legislation to ensure that 23 million families don't
    lose Internet access. This amendment demonstrates that Congress can put
    politics aside. The Senate should move quickly so this extremely
    popular program can continue. By doing so, Congress would give
    themselves and the FCC time to start the process of reforming the
    Universal Service Fund so it can provide a permanent funding mechanism
    for low-income families to get and stay connected.''
    Gigi Sohn, Spokesperson for the Affordable Broadband Campaign

    ``Millions of low-income Americans are at risk of losing Internet
    access as the Affordable Connectivity Program runs out of funding. As
    we argued at our rally just last week, broadband is an essential
    communications network for all. The ACP is critical for providing
    access to broadband and the education, healthcare, and economic
    opportunities that it provides. Our ultimate goal then and now remains
    to save the program so we do not disrupt service for any enrollees--the
    families who need the ACP most. We support this compromise, bipartisan
    amendment for its ability to bridge the funding gap while Congress
    continues working on a long-term solution. Congress must pass this
    amendment immediately. After that vote, the work is not done until we
    have a sustainable long-term fund for broadband affordability and other
    solutions to the digital divide.''
    Chris Lewis, President and CEO of Public Knowledge

    ``I am very pleased to see this bipartisan amendment submitted to the
    FAA Reauthorization Act. The amendment would provide much needed
    funding to ensure that American families and veterans stay connected,
    our networks remain safe and secure from foreign adversaries, and we
    continue to use every usable spectrum band to fuel our wireless
    networks. These measures are all necessary to promote the U.S.'s
    competitiveness and close the digital divide for good.''
    Joel Thayer, President of the Digital Progress Institute

    ``Extending the Affordable Connectivity Program is critical to
    connecting every American to high-speed, affordable internet. It is
    currently the best tool we have to bridge the digital divide. Pew
    applauds Congress' collaboration and encourages lawmakers to support
    this bipartisan amendment. With millions of people lacking access to a
    service that has become essential for quality of life and economic
    well-being, the time to act is now.''
    Kathryn de Wit | project director, The Pew Charitable Trusts' broadband
    access initiative

    ``CWA members strongly support the continuation of the Affordable
    Connectivity Program which enables critical Internet access for
    millions of American families and supports good jobs in our
    communities. We are encouraged that a bipartisan group of Senators is
    working to prevent the ACP from completely shutting down and on a
    permanent funding solution.''
    Shane Larson, Communications Workers of America Senior Director for
    Government Affairs and Policy

    ``The SHLB Coalition strongly supports the Lujan/Vance amendment to
    preserve funding for the Affordable Connectivity Program (ACP). The
    Senate should move quickly so this extremely popular program can
    continue. Broadband access is essential for education, healthcare, and
    economic opportunity. The ACP plays a crucial role in bridging the
    digital divide and ensuring that all Americans have a fair shot at
    success.''
    John Windhausen, Executive Director at SHLB

    ``The R Street Institute is proud to support this important proposal to
    extend both Rip and Replace and the Affordable Connectivity Program
    (ACP) with an appropriate pay-for. This proposal makes meaningful
    reforms to target customers most in need and streamline eligibility
    requirements, which R Street has long supported achieving in a revenue-
    neutral way. While this will only temporarily extend the ACP, R Street
    hopes the efforts of the Universal Service Fund (USF) working group
    continues to find a solution and permanent home for this program within
    USF.''
    Jonathan Cannon, Policy Counsel Technology & Innovation at the R Street
    Institute

    ``The Center for Civil Rights and Technology commends the amendment
    from Senators Lujan, Daines, Welch, Vance, Rosen, and Wicker that
    provides $6 billion in funding for the FCC's Affordable Connectivity
    Program (ACP). Lack of high-speed Internet access among low-income
    people, communities of color, and other marginalized communities is
    concerning, especially at a time when millions need the Internet to
    further their education, earn a living, and access essential goods and
    services. The strength and continuation of the ACP is essential to our
    mission to ensure digital equity. With the number of days ticking down
    for ACP solvency, the Center believes this is the only viable path
    forward to ensuring more than 23 million families are not disconnected.
    The Center also urges lawmakers to secure permanent funding for this
    critical program.''
    Koustubh ``K.J.'' Bagchi, Vice President of the Center for Civil Rights
    and Technology

    ``WIA is proud to join the collective support for S. Amdt. 2024 to the
    Securing Growth and Robust Leadership in American Aviation Act (H.R.
    3935). This critical bipartisan amendment, offered by Senators Lujan,
    Daines, Vance, Welch, Rosen, and Wicker, seeks to address the urgent
    need for full funding of the Secure and Trusted Communications Networks
    Reimbursement Program, known as the Rip & Replace Program, which
    currently faces a significant shortfall of $3.08 billion. In addition,
    the amendment extends funding for the Affordable Connectivity Program
    (ACP) by allocating $6 billion, ensuring that crucial connectivity
    services remain accessible to underserved communities across the United
    States.
    These measures are essential to safeguarding our Nation's
    communications infrastructure while promoting digital equity and
    inclusion. The Rip & Replace Program will enhance the security and
    resilience of our telecommunications networks, while the extension of
    ACP funding will enable millions of Americans to stay connected. WIA
    stands with our industry partners in urging support for this important
    amendment to bolster our communications networks and enhance
    connectivity for everyone.''
    Wireless Industry Association

        Senator Lujan. I think we can get there. We can find a way
    to work together. We can address concerns to ensure that we're
    going to have real broadband connectivity across the country
    that's fast and that's affordable.
        Now we know the stakes are simply too high, especially with
    our veterans and students, families, rural, and older
    Americans. So over the next week, I'm committed to continue
    working with my colleagues to extend this program, and once we
    do that, I look forward to bringing forth this long-term
    solution to permanently fund these programs with reforms with
    the work of the Universal Service Fund Working Group.
        Now with that, I will close the hearing. Should members
    have additional questions for the witnesses for the record, I
    ask that they submit them to the Committee within two weeks,
    and witnesses will have an additional two weeks to respond.
        So everyone, thank you so very much for your time. I thank
    the staff for helping us get this done. This hearing is closed.
        [Whereupon, at 12:15 p.m., the hearing was adjourned.]

                                A P P E N D I X

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                     ______

       Response to Written Question Submitted by Hon. Tammy Duckworth to
                                 Kathryn de Wit
    Affordable Connective Program Impact on Military Families and Veterans
        In 2018, the Federal Communications Commission released a report on
    the state of broadband access and adoption by veterans in which it
    determined a key barrier to broadband adoption for veterans was due to
    the monthly cost of an Internet subscription. More recently, in an
    April CNET article, Department of Veterans Affairs Press Secretary
    Terrence Hayes commented about the Affordable Connectivity Program,
    ``If the program ends, then some veterans will have to pay $30 to $75
    more for access to the Internet every month--and others may lose access
    to the internet entirely. That's unacceptable, especially at a time
    when telehealth has become such an important tool.''

        Question. How has the digital divide uniquely impacted military
    families and veterans? What impact has the Affordable Connectivity
    Program had on our servicemember and our veterans? Why do you think
    nearly half of the households benefitting from the Affordable
    Connectivity Program are military families?
        Reliable and affordable Internet connections are essential to U.S.
    military veterans accessing the benefits they have earned--from
    education and home loans to healthcare. However, 15 percent of all
    veterans in the U.S. and 27 percent of rural veterans do not have an
    Internet connection. ACP helps bridge that divide and connects veterans
    and active military with the critical resources they need.
        Veterans can qualify for ACP through a number of channels--more
    than 1.1 million households are enrolled because they receive VA
    Veterans Pensions or Survivors Benefits, and 1.2 million veteran
    households qualify through SNAP.
        It is abundantly clear that these families rely on the broadband
    benefits afforded by the program.\1\ Access to health care through
    telehealth services is an essential resource for veterans. In 2018,
    just 13 percent of veterans who received health care from the VA did so
    through VA telehealth programs. From January 2020 to January 2021, the
    number of telehealth appointments offered by the VA increased by 1,831
    percent. In 2022, approximately one million veterans used telehealth
    services for mental health care. Veterans are not only older on average
    than other Americans (61 years old to 45 years old), but they are also
    twice as likely to be disabled, underscoring why access to digitally-
    enabled medical care--from telehealth to wearables--is necessary.
    ---------------------------------------------------------------------------
        \1\ Pew has not explored in great detail why the percentage of
    households with veterans enrolled in ACP is high, or even higher than
    other covered populations. But it is an important question worth
    researching and would require additional time, resources, and
    collaboration with the Department of Veterans Affairs.
    ---------------------------------------------------------------------------
        Veterans and active-duty members of the military are also using the
    Internet to break down barriers to education and employment
    opportunities, as the group is more likely to seek degrees online than
    their non-military peers. Twenty-four percent of veterans receiving
    education benefits are enrolled in an online program, compared to just
    14 percent of all undergraduates. Remote work has also helped bridge
    the digital divide, as it has been shown to ease the transition for
    veterans suffering from post-traumatic stress disorder as they enter
    the workforce.
        Allowing ACP to lapse could roll back the progress made for
    veterans and others and put additional financial pressure on millions
    of veterans' households, including the 4.4 million who live in rural
    areas, of which 44 percent make $35,000 or less annually. This could
    result in households having to choose Internet plans with lower speeds
    and capabilities or cancel their subscription. Millions of Veterans
    rely on this benefit to afford quality Internet plans that allow them
    to access healthcare resources, education, and employment
    opportunities, and they could struggle to maintain access if ACP ends.
                                     ______

          Response to Written Questions Submitted by Hon. Ted Cruz to
                                 Kathryn de Wit
    Technology Neutrality
        You testified during the hearing about the difficulties and high
    costs associated with serving rural locations. One of the ways to
    reduce deployment is allowing subsidies, like the Broadband Equity
    Access and Deployment (BEAD) Program, to be technology neutral and not
    favor one broadband technology (e.g., fiber) over others (e.g., fixed
    wireless or satellite) that can deliver similar speeds at a much lower
    cost.

        Question 1. Do you have concerns regarding the administration of
    the BEAD program with respect to technology bias?
        Answer. Cornell University's research (2023) found that most states
    employed technology neutral policy in statute and state-funded grant
    programs. This included expanding applicant eligibility to incorporate
    non-traditional Internet service providers (i.e., cooperatives)
    offering a multitude of technologies--including wireless. States scored
    applications using a range of tactics, including scalability and long-
    term capability. Of the 724 state grant program awards across 17
    states, Cornell found that more than half (57 percent) went to fiber
    projects.
        The BEAD program is designed to ensure unserved and underserved
    communities receive high-speed, reliable Internet access. While BEAD's
    authorizing statute and funding rules favor fiber and upgraded cable
    technology, past research from The Pew Charitable Trusts and Cornell's
    2023 report indicate that states will pursue a range of technologies to
    meet congressional goals. Fiber deployments provide the most
    reliability, higher speeds, and can be more easily scaled to meet
    future speed and capacity demands and keep pace with the evolving needs
    of the internet. Applications from providers proposing to use
    alternative technologies that offer less reliable or lower speeds will
    be considered by state broadband offices if the cost for a fiber
    deployment is unreasonably high, as determined by each state's high-
    cost threshold and the National Telecommunications and Information
    Administration (NTIA).

        Question 2. Do you agree that a technology neutral approach for
    Federal broadband programs would reduce costs and increase deployment?
        Answer. While deploying networks cost efficiently and without delay
    is important, so are considerations for the long-term return on
    investment. Different technologies may meet minimum requirements, such
    as speeds above 25/3 Mbps, and can be faster and cheaper to deploy, but
    may introduce other limitations that impact the quality or reliability
    of service for the user. Although fiber can be expensive to deploy, it
    is more future-proof than other technologies because of how easy it is
    to upgrade and scale to meet technologically driven demands of
    today's--and tomorrow's--economy. However, it is important to note that
    Pew is not in favor of fiber connecting every household. Rather, our
    research concluded that ``setting a forward-looking goal focuses state
    investment on infrastructure that will continue to meet future needs.''
        Our research shows that BEAD's approach to first consider fiber
    projects before evaluating alternative technologies strikes the right
    balance of delivering high-speed, reliable service while protecting
    taxpayer-funded investments. BEAD helps guarantee that an unserved
    community that is funded by BEAD will be served for generations to
    come.
    Affordable Connectivity Program
        Question 3. Your written testimony states ``ACP recipients pay a
    median of $40 a month after the benefit is applied.'' Please provide
    the citation for this data point.
        Answer. A January 2023 survey from the Benton Institute found that,
    ``When asked what they pay for Internet service after the ACP subsidy,
    the median figure cited by households that had signed up for fixed
    service was $40 per month.''

        Question 4. Your written testimony cites statistics on who benefits
    from ACP from a recent Benenson Strategy Group survey in partnership
    with--i.e., paid for by--a telecommunications provider receiving ACP
    (Comcast). According to the methodology of that survey, the sample size
    was 1,600 people who ``are eligible for ACP,'' with an ``over
    sampling'' of people enrolled in ACP, reported as ``801.'' Does this
    methodology and sample fit the standards for surveys at Pew Charitable
    Trusts?
        Answer. We appreciate your question regarding the veracity of the
    methodology used in this report. As documented in the testimony
    submitted to the Committee, there are shortcomings with the data
    available on ACP enrollment. Further, more research is needed to
    adequately understand the long-term effects of this program, including
    on competition in the marketplace.
        Generally, Pew does not comment on the methodology of other studies
    unless we have full access to the underlying approach, design, and
    goals of the research. However, upon review, the Benenson Strategy
    Group methodology follows best practices for survey research, as
    reported by the American Association of Public Opinion Research
    (AAPOR). Additionally, BSG follows many of the transparency guidelines
    outlined by AAPOR, including a listing of the data collection strategy,
    the sponsor of the research, and the population under study.
        Finally, it is Pew's view that oversampling for the population of
    ACP participants was appropriate given the nature of the population in
    question for the survey. Oversampling can be a useful tool for
    analyzing smaller groups of a given population. In this case, the
    smaller group was ACP recipients. Furthermore, the methodology section
    makes clear that ``ACP Participants'' in the report ``reflect American
    adults who are aware that their household participates in the
    Affordable Connectivity Program.'' Oversampling, in this case, provides
    for more reliable estimates of the impact of ACP on those benefiting
    from the program.

        Question 5. Your written testimony cites another telecommunications
    provider survey (Cox). This survey states it had 551 respondents in six
    states of approximately 6,000 customers. There is no indication in the
    methodology section as to whether this population received ACP.

        a. What does this survey tell us about the impact of ACP on rural
    broadband as opposed to simply reporting general benefits of having
    broadband?
        Answer. This survey was not designed to show the impact of ACP on
    rural broadband.

        b. What evidence has Cox provided that there has been an increase
    in rural access as a result of ACP?
        Answer. This report does not evaluate the impact of ACP on rural
    access.
        At this time and with the available data, it is unclear what
    percentage of this funding has gone specifically to rural areas. More
    data is needed to assess this question and to ascertain the impact of
    ACP on rural customers.
        Question 6. Before ACP, broadband companies would compete for
    customers by offering lower prices and/or better service. With ACP's
    $30 subsidy, there is no competitive benefit to offering a service for
    less than $30 a month. Consequently, ACP discourages competition on
    price.

        c. Please provide the Committee with evidence of broadband
    offerings at less than $30 per month since the program began and before
    it was announced that it was ending.
        Answer. The National Digital Inclusion Alliance maintains a list of
    free and low-cost Internet plans for consumers, several of which were
    available before ACP existed, including Comcast's Internet Essentials
    for less than $10 per month.

        d. Please provide the Committee with evidence of changes in the
    frequency of customers switching broadband providers before and after
    ACP.
        Answer. We are not aware that any such dataset exists.

        Question 7. You stated in your testimony that ACP is essential to
    the success of the BEAD program. Does Pew view ACP as a substitute for
    the high-cost program at FCC, which provides subsidies to telecom
    providers in exchange for providing service to rural consumers at rates
    that are reasonably comparable to those charged in urban areas?
        Answer. The ACP and Universal Service Fund (USF) high-cost programs
    are not substitutes but should work in harmony, playing vital and
    complementary roles in achieving broadband access. Specifically, USF
    will play a role in addressing supply-side barriers to network
    deployment and operations, while affordability subsidies, such as ACP,
    address demand-side cost considerations for customers and Internet
    service providers.
        More specifically, the ACP ensures that broadband is affordable to
    consumers in low return-on-investment areas, thereby translating
    deployment into actual adoption. The high-cost program, on the other
    hand, provides financial support to ISPs, empowering them to expand
    broadband networks in rural areas facing geographic and economic
    challenges. Both programs are essential in fulfilling the
    congressionally mandated goal of universal broadband service.

        Question 8. How much BEAD funding is anticipated to go to the urban
    consumers that make up the vast majority of current ACP recipients?
        Answer. At this time, we cannot quantify precisely how much BEAD
    funding will go directly to rural or urban areas as states must first
    complete the adjudication of their challenge processes to determine a
    final list of BEAD-eligible locations.
        State officials will determine where this funding is directed, and
    we do have recent evidence from the U.S. Treasury Department's Capital
    Projects Fund (CPF) suggesting states will tailor solutions to fit
    their specific needs. For example, multiple states prioritized rural
    broadband expansion through CPF-funded projects or created multiple
    grant programs focused on both urban and rural areas. We anticipate
    that states will develop policies and programs similar to BEAD funding,
    but it is too early to definitively assess what those will be.
                                     ______

          Response to Written Questions Submitted by Hon. Ted Cruz to
                                  Blair Levin
    Affordable Connectivity Program
        Question 1. In your opening statement, you write: ``But we do know
    53 percent rural survey respondents and 47 percent of all respondents
    reported having either zero Internet connectivity or relying solely on
    mobile Internet service prior to receiving their ACP benefit.''

        a. What is your reason for counting households with only mobile
    service in the same bucket as households with no service at all? Do you
    consider these types of households to be similarly situated?
        Answer. The key points to my answer are briefly summarized
    immediately below, with a more complete answer provided thereafter.

       As the FCC and Congress have correctly found, mobile
            services and in-home broadband are not perfect substitutes,
            with each serving functions that should be universally
            accessible.

       Part of the difference relates to the functionalities
            inherent in different screen and key board sizes, while other
            differences relate to market-based realities such as data caps.

       A key strength of the current ACP program is its flexibility
            in giving customers choice over the selected service they opt
            into.

       The program in the future should maintain that strength so
            that the recipients can choose the best service or services for
            their needs as technologies and markets evolve.

        Thank you for the opportunity to clarify my thinking behind that
    statement. It is a good question, though the answer is complicated,
    requiring both a look back at history but also an understanding of
    potential changes in the market in the future.
        My basic answer is that today, there is an important distinction
    between mobile services on a smart phone and broadband services
    provided in the home to a computing device with a larger screen. In
    that sense, the homes in the question are not similarly situated.
        The history here is important. In 1985, during the Reagan
    Administration, the FCC created the Lifeline program, designed to
    assure that all Americans had access to a minimum level of voice
    services to communicate with emergency services, jobs, and family.
    During the George W. Bush Administration, the FCC allowed the Lifeline
    subsidy to be used for mobile services.
        Both decisions by Republican FCCs stand up well in the light of
    history. The Reagan era Lifeline program served its purposes well. But
    so did the adjustment to market changes done under the George W. Bush
    FCC. Today, more than 90 percent of the Lifeline funds go to mobile
    services.\1\ This makes sense, particularly as to emergency services,
    where emergencies often happen outside the home, and voice services,
    which are now largely done on mobile devices.
    ---------------------------------------------------------------------------
        \1\ https://www.benton.org/sites/default/ files/
    reimagininglifeline_final1_0.pdf
    ---------------------------------------------------------------------------
        But just as the George W. Bush FCC recognized, the world does not
    stay static. After the 2010 National Broadband plan, the FCC, under
    both Democrats and Republicans, recognized that universal service funds
    should no longer be allocated to voice only networks but should be
    restructured to reflect that communications are now dependent on
    broadband networks, and that we should analyze and acknowledge how
    different networks serve different purposes. Under both the Obama and
    Trump administration, changes were made to the universal service
    program generally and further changes were made to the Lifeline
    program.\2\
    ---------------------------------------------------------------------------
        \2\ The specific changes to Lifeline are not relevant here except
    to reflect that problems in the program do not justify ending them but
    rather should cause analysis and course corrections, as the FCC has
    done.
    ---------------------------------------------------------------------------
        Further, in 2021 Congress, on a bipartisan basis, came to a similar
    and important conclusion, finding that ``Access to affordable,
    reliable, high-speed broadband is essential to full participation in
    modern life in the United States;'' and that ``(t)he persistent
    `digital divide' in the United States is a barrier to the economic
    competitiveness of the United States and equitable distribution of
    essential public services, including health care and education.''
        Congress was right to do so. And we should recognize that there are
    many uses of broadband services that we want people to be able to do
    that require a larger screen, different functionalities, and different
    kinds of keyboards than mobile phones offer. These include performing
    jobs that require document production, job training, job placement
    activities, doing homework and associated research, many (though not
    all) telehealth services, and interactions with government social
    services, among others.
        The difference between mobile and fixed is not just a function of
    screen sizes. There is also a market difference in that low-end mobile
    services often include a data cap that makes certain uses, such as
    homework, job training, and telehealth, problematic from the point of
    view of the user. My point is not that such data caps should be
    regulated; after all, such data caps reflect the reality that spectrum
    through the air is a scarcer resource than spectrum in a wire. My point
    is that that policy makers should understand that while mobile services
    for low-income users carries with it restrictions on how much they can
    use the service, fixed services for low-income households generally do
    not have those restrictions.
        An example of how these factors demonstrate the difference between
    the common mobile plan and in-home broadband can be seen in a study by
    the Quello Center which noted that ``contrary to some expectations that
    students can get by through the use of a cell phone as a substitute for
    high-speed home Internet access, those who rely on a cell phone only
    for Internet access outside of school experience as large, or larger,
    gaps in performance than those with no home Internet. Unlike their
    peers, students who are dependent on a cell phone for Internet access
    outside of school rely on smaller screens with slower devices, have
    access to content with fewer features, and need to monitor data caps
    and recharge pre-paid phone plans.'' \3\
    ---------------------------------------------------------------------------
        \3\ https://quello.msu.edu/wp-content/uploads/2020/03/
    Broadband_Gap_Quello_Report_MSU
    .pdf#page=5
    ---------------------------------------------------------------------------
        Considering that history and the practical consumer realities, I
    see mobile and fixed broadband as related but not perfect substitutes.
    That is, while there are functions that can be done on both, there are
    other functions, critical to public policy goals, that as a practical
    matter can only be done on one or the other.
        That is why, at least for now, I would count households with only
    mobile service in the same bucket as households with no service at all.
        Having said that, we should be conscious that technologies and
    functionalities evolve. It could be that mobile networks provide the
    necessary bandwidth--some would argue they already do--to accomplish
    the public policy goals, provided the recipient has the computing
    devices necessary for activities related to public purposed, such as
    education, job training and placement, and health care.
        In this regard, I think one strength of the current ACP program is
    its flexibility in giving customers choice over the selected service
    they opt into. Going forward, I would hope that the FCC and Congress
    evaluate current practices and continue to structure the program to
    optimize for flexibility and consumer choice for program recipients.

        b. Given that, per the FCC's data, the majority of ACP recipients
    (55.9 percent) choose to apply ACP to their mobile phone subscriptions,
    do you believe that ACP has not been successful for this cohort of
    recipients?
        Answer. The key points to my answer are briefly summarized
    immediately below, with a more complete answer provided thereafter.

       The ACP has largely been a successful program.

       Every new program has flaws that require study and
            adjustment.

       The data cited, which is likely out of date, ignores how the
            predecessor program, the EBB, was a mobile program and how the
            percentage using the funds for mobile has gone down and is
            likely to go further down.

       The key, as noted in the answer to 1a, is for the government
            to structure the program so that recipients have practical
            access to all the essential services that are now offered
            online.

        As a preliminary matter, let me repeat what I said in my testimony.
    I am in complete agreement with the 20 House Republicans who wrote to
    Speaker Johnson last month asking for action on ACP, who wrote that
    ``We believe that bipartisan solutions are within reach to ensure
    uninterrupted access to the ACP while concurrently pursuing long-term
    funding strategies.'' That is, I hope Congress would provide an ACP
    extension and then, as part of a larger and necessary Universal Service
    Fund reform effort, design a more efficient and sustainable program
    that moves us toward universal adoption.
        So here, while I believe Congress should provide funding to extend
    the current ACP program, I also would support reforms to all universal
    service programs that achieve the goals but in more through a more
    efficient and sustainable framework.
        Specifically, to your question, I would hope that the FCC and
    others would provide the information necessary for Congress to evaluate
    why those ACP recipients chose to apply ACP to mobile, as opposed to
    in-home, subscriptions. Such an analysis should look at other barriers
    to adoption, such as the availability of the service and/or devices,
    different pricing strategies, and the role of digital literacy, among
    other potential reasons that might be relevant to how the program is
    structured in the future.
        Having said that, I want to be clear that I would not challenge the
    good faith of the recipients, who are in a far better position than I
    to evaluate what is in their best interest. But such an analysis would
    be helpful in considering how to structure the program going forward.
        Further, I would guess that a significant percentage of the
    wireless usage was driven by the history of the program in which the
    Emergency Broadband Benefit (EBB) that preceded the ACP was primarily a
    mobile program. Based on conversations I have had in the context of my
    Wall Street work as well as data I have seen,\4\ I believe that the
    percentage of the use of ACP for mobile has, in fact, declined from its
    early days. The data therefore suggests that the FCC data you cite may
    be out of date and more up to date studies would show that a higher
    percentage of ACP recipients chose to use the subsidy for a wireline
    service.
    ---------------------------------------------------------------------------
        \4\ On 12/31/2021 (end of EBB) enrollment was 67 percent mobile, 33
    percent fixed. https://www.usac.org/about/emergency-broadband-benefit-
    program/emergency-broadband-benefit-program-enrollments-and-claims-
    tracker/additional-ebb-program-data/ By 02/08/2024 (end of ACP),
    enrollment was 56 percent mobile, 43 percent fixed. https://
    www.usac.org/about/affordable-connectivity-program/acp-enrollment-and-
    claims-tracker/additional-acp-data/ Also, the data show a huge spike in
    Lifeline-pathway enrollment right at the beginning of EBB, which makes
    sense given Lifeline providers were well positioned to move fast.
    Presumably most of those were mobile users.
    ---------------------------------------------------------------------------
        But as noted in my answer to your question 1a, I am of the view
    that for purposes of adequately responding to the Congressional finding
    noted above regarding how ``access to affordable, reliable, high-speed
    broadband is essential to full participation in modern life in the
    United States'' and to the ``equitable distribution of essential public
    services, including health care and education,'' we should seek to
    structure a permanent program that achieves universal access to both
    mobility and to in-home broadband services.
        There are multiple ways to do so. One could have two separate
    funds, one solely for mobility and one solely for in-home broadband.
    However, given the current trends toward convergence--a key trend that
    communications investors see as one of the most important indicators of
    where they should be investing--in which some traditional fixed
    providers (cable) are offering mobile services and traditional mobile
    providers (such as AT&T, Verizon, T-Mobile) are offering fixed services
    as well, I would urge policy makers to structure the ultimate long-term
    program to enable the private sector to develop different options that
    accomplish the same goal: universal mobility and in-home broadband.
    Again, the key here is the flexibility to enable the program recipients
    to respond to both their own needs and changes in the market, as well
    as driving ISPs to compete for their business.
        Finally, the question implies that the results to date challenge
    the success of the ACP program. I have been involved in public policy
    debates, as a participant or an observer for over 30 years. It always
    amazes me the way inside some inside the beltway have the view that any
    problem in a program, particularly a new program, justifies a failing
    grade. That is not the way the world works. Every organization--
    private, public, or non-profit--will try things, study the results, and
    then adjust the program to improve its effectiveness.
        The FCC's spectrum auction program is the most successful
    telecommunications policy innovation of all time, both in the United
    States and abroad, where countries around the world followed the model
    established in the United States in the mid-1990s. Spectrum auctions
    succeeded, where other methods like comparative hearings and lotteries
    failed, in efficiently allocating and reallocating spectrum to higher
    and better uses.
        But having been present at the creation, I am acutely aware of
    mistakes we made early on in some of the early auctions, mistakes for
    which I bear some responsibility. But the important thing was that--and
    here the FCC staff and leadership deserve the credit--the institution
    learned from those mistakes and quickly pivoted to changes that made
    the program one that has been replicated around the world.\5\
    ---------------------------------------------------------------------------
        \5\ From a perspective of 2024, spectrum auctions may seem obvious
    and simple. From the perspective of 1993, when Congress authorized the
    FCC to allocate spectrum through auctions, it was not. But the FCC
    consulted the best minds for creating the auctions and decided to use
    an innovative simultaneous multi-round ascending auction design. That
    design worked, as indicated by, among other things, the success of
    nearly all the auctions, the use of theory that won the 1994 Nobel
    Prize for economics, and the FCC auctions being cited in awarding the
    2020 Nobel prize for economics. But there were hiccups and problems
    along the way.
    ---------------------------------------------------------------------------
        I would further argue that the ACP program has been, in the grand
    scheme of things, very effective. While there are legitimate
    criticisms, there have also been significant accomplishments. For
    example, a Georgetown McDonough School of Business examination of the
    program in October, 2023 found that based on the data so far, ``(1) the
    ACP has successfully transitioned from the stop-gap EBB program to a
    low-income assistance program that is more stable, and which in less
    than two years has enrolled over 20.6 million households; (2) the
    program has acted to provide standardized vehicles for efficient
    enrollment;\6\ (3) the ACP includes multiple paths to establish
    eligibility, which eases impediments to eligible household
    participation; (4) while large population states have naturally seen
    the largest subscriptions to the ACP, the greatest percentage changes
    in subscriptions have been in more rural, low-population states;\7\ and
    (5) the program appears to have stimulated enrollment within certain
    high populated Native American counties.'' \8\
    ---------------------------------------------------------------------------
        \6\ In a way that is unusual for government programs, particularly
    in the early days, more than 80 percent of enrollees were satisfied
    with the enrollment process. https://connectednation.org/static_assets/
    5a34b1a7-fb9e-4a72-98be-1524f8db1df9/
    23_ATT_Mind_The_Gap_9.5_hi.pdf#page
    =7
        \7\ This is also consistent with the Dr. Horrigan's research which
    has also found that, as a percentage of total households, ACP
    enrollment in rural areas outpaced urban areas https://www.benton.org/
    blog/affordable-connectivity-program-and-rural-america
        \8\ DeStefano, Tim and John W. Mayo ``What do the Early Data
    Indicate about the Affordable Connectivity Program,'' Georgetown
    University, McDonough School of Business, Center for Business and
    Public Policy, October 2023. Available here https://
    georgetown.app.box.com/s/dgid
    kcv02uo0b70asay69l65syyem39h
    ---------------------------------------------------------------------------
        In short, your question raises a good point. But the answer lies in
    understanding our goals and then adjusting as necessary to achieve
    those goals. The key, as noted in the answer to 1a, is for the
    government to structure the program so that recipients have access to
    all the essential services that are now offered online. I believe the
    FCC and Congress are up to that challenge, but the path forward to
    success lies in study, constructive debate, and then better solutions,
    not simply criticisms, followed by inaction.

        Question 2. In response to a question from Sen. Lujan during the
    hearing, you emphasized that you were not a health care economist. Yet,
    you claimed the economic benefit of ACP to the health care system would
    be greater than cost of administering ``sometime in the near future.''

        a. What evidence do you have to support this claim?
        Answer. The key points to my answer are briefly summarized
    immediately below, with a more complete answer provided thereafter.

       My written testimony cites many studies indicating
            significant cost savings and additional studies are included
            here.

       Broadband is a general-purpose technology that produces
            productivity gains throughout different sectors of the economy.
            The cost of providing it to those who cannot currently afford
            it is relatively small compared to the economic gains that such
            access would provide, in healthcare and other areas.

       Two House committees recently unanimously passed extensions
            to telehealth reforms initially adopted to enable telehealth
            during Covid, implicitly confirming the value of telehealth to
            improve outcomes and lower costs.

       While I am confident that I am directionally correct, there
            are many ways to run the numbers. It would be helpful in the
            context of not just the ACP debate, but also for the future of
            Medicare, Medicaid, and the Veterans Administration for the
            Administration and/or Congress to seek an authoritative study
            on how best to utilize telehealth to improve the outcomes and
            lower the costs of those programs.

       In doing that study, it is important to ``skate where the
            puck is going,'' which includes improvements to and increases
            in the utilization of telehealth.

        My written testimony points to numerous studies that point to
    savings through telehealth. Specifically, I wrote that ``It should not
    be surprising that as a 2021 medical paper found that ``Digital
    literacies and Internet connectivity have been called the `super social
    determinants of health' because they address all other social
    determinants of health (SDOH). For example, applications for
    employment, housing, and other assistance programs, each of which
    influences an individual's health, are increasingly, and sometimes
    exclusively, accessible online. The costs of equipping a person to use
    the Internet are substantially lower than treating health conditions
    and the benefits are persistent and significant, making the efforts to
    improve digital literacy skills and access valuable tools to reduce
    disparities.'' \9\
    ---------------------------------------------------------------------------
        \9\ https://www.nature.com/articles/s41746-021-00413-8
    ---------------------------------------------------------------------------
        Similarly, a 2018 a Georgetown Business School paper looking at
    multiple studies found that as to telehealth (referred to in this paper
    as eHealth) the'' deployment of the Internet creates the possibility
    that consumers can access information at significantly lower costs than
    heretofore possible. But does this access to online health-related
    information (i.e., eHealth) improve healthcare behaviors and outcomes?
    We find that eHealth use promotes precautionary and acute healthcare
    consumption and improves health outcomes.\10\
    ---------------------------------------------------------------------------
        \10\ Macher, Jeffrey T., John W. Mayo and Olga Ukhaneva ``Does the
    Internet Improve Consumer Healthcare Behaviors, Georgetown University
    working paper, October 29, 2018.
    ---------------------------------------------------------------------------
        But it is not just good for the patient; it is also good for the
    patient's insurance company. As the largest health care insurer, the
    Federal government should want to take advantage of savings such as
    those seen in a recent study \11\ finding the cost savings of using
    telehealth for patients with cancer ranged from $147 to $186 per visit,
    or the University of Pennsylvania study \12\ showing that telemedicine
    was 23 percent less expensive than in-person visits. Cigna found that
    ``average cost of a non-urgent virtual care visit is $93 less than the
    average cost of an in-person visit. Seeing a specialist averages $120
    less for a virtual visit than an in-person visit, while a virtual
    urgent-care visit averages $141 less than being seen in an urgent care
    clinic.'' \13\ Similarly, a 2023 study \14\ by the Department of
    Veterans Affairs found that ``veterans who utilized a new tele-
    emergency service were nearly half as likely to visit an emergency
    department in-person and showed reduced short-term Veteran visits to
    emergency departments outside of VA.''
    ---------------------------------------------------------------------------
        \11\ https://jamanetwork.com/journals/jamanetworkopen/fullarticle/
    2800164
        \12\ https://www.pennmedicine.org/news/news-releases/2023/june/
    employee-telemed-visits-25-percent-less-costly-for-health-system
        \13\ https://newsroom.cigna.com/convenient-cost-effective-and-high-
    quality-virtual-care-is-here-to-stay
        \14\ https://www.va.gov/ann-arbor-health-care/stories/new-research-
    telehealth-emergency-care-
    leads-to-decreased-emergency-department-visits-hospitalizations-
    reduced-health/#::text=Health%
    20Care%20Costs-
    New%20Research:%20Telehealth%20Emergency%20Care%20Leads%20to%20
    Decreased%20Emergency%20Department,Hospitalizations%2C%20Reduced%20Healt
    h%20Care
    %20Costs
    ---------------------------------------------------------------------------
        Another area where telehealth can improve both costs and outcomes
    is with maternal mortality rates. The United States has an alarming
    trend line in this arena, with an increase of 60 percent in maternal
    mortality between 2019 and 2021.\15\ At the behest of Congress, the
    Federal Communications Commission mapped where maternal mortality is
    highest--and the maps of places where new mothers die at the highest
    rates look a lot like maps of where household Internet subscription
    rates are low,\16\ both being consequences of low household income.
    ---------------------------------------------------------------------------
        \15\ https://healthcare.rti.org/insights/digital-health-maternal-
    outcomes
        \16\ https://www.fcc.gov/reports-research/maps/connect2health/
    maternal-health-map.html?bb
    Sel=Broadband+Access&mhSel=Maternal+Deaths&bbThresh=90.25&mhThresh=1&md=
    2
    ---------------------------------------------------------------------------
        It is worth noting that there are promising ways to address
    maternal mortality that rely on home broadband for new mothers. In
    Louisiana, Ochsner Health has had success in using digital tools to
    monitor at-home blood pressure and other risk factors for pregnant
    women, resulting in fewer hospital admissions and cesarean section
    procedures. Such remote maternity online monitoring has reduced
    unexpected neonatal intensive-care unit admissions by 27 percent.\17\
    ---------------------------------------------------------------------------
        \17\ https://www.ama-assn.org/practice-management/digital/how-
    digitally-enabled-care-can-improve-postpartum-outcomes
    ---------------------------------------------------------------------------
        The healthcare benefits of using digital tools extend beyond
    maternal mortality. Telehealth is associated with people maintaining
    their participation in opioid treatment programs \18\ and telehealth
    can reduce the cost of healthcare service delivery with only marginal
    increases in in-person visits.\19\
    ---------------------------------------------------------------------------
        \18\ https://jamanetwork.com/journals/jamanetworkopen/fullarticle/
    2810828
        \19\ https://www.ajmc.com/view/economics-of-a-health-system-s-
    direct-to-consumer-telemedicine-for-its-employees
    ---------------------------------------------------------------------------
        These citations are not exhaustive. For example, as a recent
    article noted ``a significant portion of telehealth visits in 2021--44
    percent to be precise--were related to chronic conditions, which are
    more prevalent in lower-income areas. Research has shown that the use
    of telehealth services can potentially reduce mortality rates and
    hospital stays among lower-income patients.'' \20\ In this regard, let
    me also point to a study cited in the 2010 National Broadband Plan that
    found that remote monitoring could generate net savings of $197 billion
    over 25 years from just four chronic conditions.\21\ Further, as the
    2010 National Broadband Plan also found ``video consultations could
    lead to $1.2 billion in annual savings through avoiding costs from
    moving patients from correctional facilities and nursing homes to
    emergency departments and physician offices.'' \22\ The Plan pointed to
    even greater savings through the use of telehealth for the Veterans
    Health Administration (VHA) where a Care Coordination/Home Telehealth
    (CCHT) program ``led to a 25 percent reduction in bed days of care and
    a 19 percent drop in hospital admissions. At $1,600 per patient per
    year (the cost of the CCHT program), it costs far less than the VHA's
    home-based primary care services ($13,121 per year) and nursing home
    care rates ($77,745 on average per patient per year.)'' \23\
    ---------------------------------------------------------------------------
        \20\ https://www.statnews.com/2023/07/20/acp-internet-access-
    health-care/
        \21\ Robert Litan, Better Health Care Together Coalition, Vital
    Signs Via Broadband: Remote Health Monitoring Transmits Savings,
    Enhances Lives (2008), available at http://www
    .betterhealthcaretogether.org/Library/Documents/
    VITAL%20SIGNS%20via%20BROADBAND%
    20FINAL%20with%20FOREWORD%20and%20TITLE%20pp%2010%2022.pdf
        \22\ CITL, The Value of Provider-to-Provider Telehealth
    Technologies. CITL modeled pre-and post-telehealth costs based on
    national baseline number of transports, transport cost, and number of
    avoided transports. Annual savings were calculated by subtracting post
    telehealth costs from pre-telehealth costs for each provider-to-
    provider setting. These savings sum to $1.2 billion.
        \23\ Adam Darkins et al., Care Coordination/Home Telehealth: The
    Systematic Implementation of Health Informatics, Home Telehealth, and
    Disease Management to Support the Care of Veteran Patients with Chronic
    Conditions, 10 Telemed. & e-Health 1118, 1118 (2008), available at
    http://www.liebertonline.com/doi/pdf/10.1089/tmj.2008.0021?cookieSet=1
    ---------------------------------------------------------------------------
        This savings should not be surprising. As the Georgetown study
    noted ``online health-related information appears to shift some
    proportion of healthcare consumption from acute to precautionary care
    (e.g., via increased doctor visits) and to improve health outcomes
    (e.g., via reduced hospital stays). As hospital stays are orders of
    magnitude more costly than typical doctor visits, it would seem that
    providers (i.e., hospitals) and insurance companies have vested
    interests in (1) increasing the deployment of broadband technologies,
    and (2) insuring the health information available online is timely and
    accurate.'' \24\
    ---------------------------------------------------------------------------
        \24\ Macher, Jeffrey T., John W. Mayo and Olga Ukhaneva ``Does the
    Internet Improve Consumer Healthcare Behaviors, Georgetown University
    working paper, October 29, 2018.
    ---------------------------------------------------------------------------
        It is also important to consider how telehealth is becoming more
    important for certain geographic areas. In 2010, the Plan noted that
    ``Video consultation is especially beneficial for extending the reach
    of under-staffed specialties to patients residing in rural areas,
    Tribal lands and health professional shortage areas (HPSAs)'' and that
    at that time sixty-five million people reside in such HPSAs.\25\ The
    number of Americans living in HPSAs is, as of March, now 74,383,347,
    with rural areas representing nearly 67 percent of such areas.\26\ This
    is a problem that is likely to get worse. Since 2005, 104 rural
    hospitals have closed and more than 600 additional rural hospitals--30
    percent of all rural hospitals in the U.S.--are at risk of closing in
    the near future, according to the Center for Healthcare Quality and
    Payment Reform.\27\ There is also a problem with rural hospitals losing
    services. For example, Texas has seen the greatest number of rural
    hospital closures, at 25, but also the greatest number of rural
    hospitals losing services, at 101.\28\
    ---------------------------------------------------------------------------
        \25\ https://transition.fcc.gov/national-broadband-plan/national-
    broadband-plan.pdf Section 10.1
        \26\ Bureau of Health Workforce Health Resources and Services
    Administration (HRSA) U.S. Department of Health & Human Services.
    BCD_HPSA_SCR50_Qtr_Smry.pdf
        \27\ https://www.beckershospitalreview.com/finance/states-with-the-
    most-rural-hospital-closures.html
        \28\ Ibid.
    ---------------------------------------------------------------------------
        In short, there are many ways that telehealth can reduce costs and
    improve outcomes. This is not really a debatable point. As a recent
    witness \29\ testified at a House hearing on telehealth, there is now
    substantial research demonstrating improved outcomes and access across
    numerous specialties and a vast array of healthcare services published
    in recent years.\30\
    ---------------------------------------------------------------------------
        \29\ The witness was Lee Schwamm, MD, FAHA, the Associate Dean of
    Digital Strategy & Transformation at the Yale School of Medicine and
    the Senior Vice President and Chief Digital Health Officer for the Yale
    New Haven Health System. The witness is also a professor of Neurology
    and Biomedical Informatics & Data Sciences.
        \30\ The testimony can be found at https://democrats-
    energycommerce.house.gov/sites/evo-sub
    sites/democrats-energycommerce.house.gov/files/evo-media_document/
    Lee%20Schwamm_Wit
    ness%20Testimony_04.10.2024.pdf. The testimony cited referred to a
    recent study that can be found at Kevin K Wiley, Johnson J, Coleman C,
    Olson C, Chuo J, McSwain SD. Translating Value Across Telehealth
    Stakeholders: A Rapid Review of Telehealth Measurement Evidence and a
    New Policy Framework to Guide Telehealth Researchers. Telemedicine and
    e-Health. April 2, 2024. tps://doi.org/10.1089/tmj.2023.0211
    ---------------------------------------------------------------------------
        Another way to consider potential cost savings is through
    McKinsey's finding that ``evidence prior to COVID-19 shows that
    telehealth solutions deployed for chronic populations can improve total
    cost of care by 2 to 3 percent.'' \31\ Medicaid spending in FY 2022 was
    $804 billion.\32\ As to the portion attributable to chronic conditions,
    a study on the prevalence and medical costs of chronic diseases among
    the adult Medicaid population noted that ``The high prevalence of
    chronic diseases is a key driver of total U.S. healthcare costs; in
    2010, 86 percent of healthcare spending was for patients with at least
    one chronic condition, and 71 percent of spending was for patients with
    multiple conditions.'' The study further noted that ``Medicaid has
    primarily covered low-income children and parents, pregnant women, and
    the disabled. This population is vulnerable to higher rates of chronic
    diseases than are seen in the U.S. as a whole or even in the low-income
    population overall.'' \33\ Assuring that all Medicaid recipients had
    access to broadband could, under that analysis, save Medicaid billions.
    ---------------------------------------------------------------------------
        \31\ https://www.mckinsey.com/industries/healthcare/our-insights/
    telehealth-a-quarter-trillion
    -dollar-post-covid-19-reality
        \32\ https://www.kff.org/medicaid/state-indicator/total-medicaid-
    spending/?currentTimeframe
    =0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D
        \33\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5798200/
    ---------------------------------------------------------------------------
        One could also add savings to the government related to the
    Veterans Administration. Military families make up nearly half of all
    ACP recipients.\34\ The Veterans Administration budget is about $302
    billion with 42 percent, or $126 billion, allocated to healthcare.\35\
    Redesigning the system to assure that all veterans can take advantage
    of telehealth could add additional savings.
    ---------------------------------------------------------------------------
        \34\ https://www.whitehouse.gov/briefing-room/statements-releases/
    2024/02/06/fact-sheet-as-
    affordable-connectivity-program-hits-milestone-of-providing-affordable-
    high-speed-internet-to-23-
    million-households-nationwide-biden-harris-administration-calls-on-
    congress-t/
        \35\ https://www.pgpf.org/blog/2024/04/spending-on-veterans-in-the-
    budget
    ---------------------------------------------------------------------------
        None of these studies are ACP focused. But it is reasonable to
    extrapolate savings on chronic conditions, mortality, hospital stays,
    emergency room visits, transport, and many other healthcare services.
    After all, no demographic group is immune from the need for such
    services. And indeed, as noted above, there are certain savings likely
    to be greater on a per capita basis for the ACP population than for the
    general public, such as with monitoring chronic conditions.
        Having said that, you are correct in quoting me to the extent that
    I am not a health economist. The studies cited above suggest that I am
    directionally correct, but I recognize that there are ways to refine
    those numbers to provide a more complete and accurate assessment of the
    potential improvement of outcomes and lower costs of government insured
    health care if all were connected.
        What I hope we could all agree on is that it would be helpful in
    the context of not just the ACP debate--but also for the future of
    Medicare, Medicaid, and the Veterans Administration--for the
    Administration and/or Congress to seek an authoritative study on the
    issue. I think it should be framed in terms of what COVID has taught us
    about the future of healthcare delivery. That episode accelerated the
    movement to online healthcare, and it would serve many public policy
    purposes to have such a study.
        In doing that study, we should incorporate the wisdom of Wayne
    Gretzky, who famously said that the key is to skate to where the puck
    is going. So here, there is a movement by multiple stakeholders to use
    telehealth generally to improve outcomes and lower costs. We should not
    only understand that movement, but we should restructure our
    government's healthcare insurance policies (Medicare, Medicaid, and
    medical services provided by the Veterans' Administration) to take
    advantage of the opportunities created by modern communications
    technology. After all, as discussed in my testimony, broadband is a
    general-purpose technology that produces productivity gains throughout
    different sectors of the economy. The cost of providing it to those who
    cannot currently afford it is relatively small compared to the economic
    gains that such access would provide, in healthcare and other areas.
        In this regard, let me point to and praise the House Ways and Means
    Committee for its recent passage of the Preserving Telehealth,
    Hospital, and Ambulance Access Act by a vote of 41-0 and the House
    Health Subcommittee of the Energy and Commerce Committee for its
    unanimous vote supporting the Telehealth Modernization Act of 2024. I
    hope the House and then the Senate follow. These Acts extend numerous
    provisions adopted to address healthcare needs clearly demonstrated
    during the COVID crisis.
        Two points about it are particularly notable for our discussion of
    the ACP. First, the legislation recognizes that while the COVID
    emergency is over, the movement to online delivery of essential
    services is not. Second, it did not make the changes permanent. It
    created extensions, so that legitimate issues raised in the debate
    could be studied before adopting more permanent rules. There is wisdom
    in both that applies to the ACP; a recognition of the importance of
    telehealth for healthcare delivery and the willingness to keep the
    status quo while studying the details before adopting longer-term
    rules.
        But perhaps the most important message from the unanimous votes in
    the Committees is this. While the House has many issues on which there
    is huge canyons separating the views of the members, it is apparently
    in agreement that increased access to telehealth will result in
    improved outcomes and/or lower costs. If not, why would they have voted
    to provide increased access to telehealth? And if so, don't we want all
    lower income American families whose health insurance is provided by
    the government to take advantage of the efficiencies that the House
    Committees clearly saw in their unanimous actions to extend the
    telehealth provisions?
        In short, given the amount the United States spends on Medicare and
    Medicaid, universal, sustainable broadband should be seen as a huge
    opportunity to improve health outcomes while lowering costs. We should
    seize that opportunity.

        b. Please specify what you mean by ``sometime in the near future.''
        Answer. There are many variables that can affect the timing of any
    technology trend, including government policies. But given the trends
    that I see in communications, artificial intelligence, and healthcare
    delivery, I think in 3-5 years it should be clear that just as being
    online is, in Congress' words, ``essential to full participation in
    modern life in the United States'' and the affordability barrier to
    adoption is a barrier to the ``equitable distribution of essential
    public services, including health care,'' it will be clear that every
    provider of health insurance will want to make sure all the persons
    they cover have in home access to telehealth.

        Question 3. You testified that investing in ACP ``may actually
    result in a. . .net cost savings to the government.''

        a. What evidence do you have to support this claim?
        Answer. Please see the answer to question 2a for some of the
    evidence. As noted, the savings from reductions in the cost of Medicaid
    alone could result in a net gain to the government. And that does not
    incorporate savings from Medicare, the Veterans Administration, and
    other government-funded healthcare programs.
        Further, there are other savings related to other government
    programs. For example, as noted in my written testimony, for lower-
    income individuals, adopting in-home broadband increases their
    likelihood of employment by 14 percent, with 62 percent of those newly
    connected households citing the connection as having helped them or a
    family member successfully find employment.\36\ This trend, applied
    across all ACP recipients, would reduce the cost of unemployment
    insurance.
    ---------------------------------------------------------------------------
        \36\ https://www.aeaweb.org/articles?id=10.1257/pol.20190648
    ---------------------------------------------------------------------------
        Another set of savings would be found in the administration of
    government services. The U.K. government, for example, estimated that
    it could save up to several billions by shifting 80 percent of public
    services online, with savings likely to come from four key areas: the
    reduced staff time involved in processing digital transactions compared
    to offline alternatives; estates and accommodation; postage, packaging,
    and materials; and the costs of supporting IT systems. Among the more
    dramatic findings were that the cost of digital transactions was 20
    times lower than by phone and 50 times lower than face to face.\37\ As
    a study from the consulting group BCG pointed out, online government
    services can also spur job creation and economic growth. For example,
    when new businesses have a simple path for filing documents and
    obtaining licenses, barriers to entry are lowered and growth
    increases.\38\
    ---------------------------------------------------------------------------
        \37\ https://www.gov.uk/government/publications/digital-efficiency-
    report/digital-efficiency-report
        \38\ Awad, N., Brice, J., Ferrer, S., Kim, H. & Stuart, T. (2022).
    Delivering government services like a digital native. Boston Consulting
    Group. https://www.bcg.com/publications/2022/delivering-customer-
    centric-digital-government-services.

        b. Would the net cost saving be immediate? Or would it be down the
    road?
        Answer. It would, if administered properly, be immediate. In
    particular, I would expect savings in healthcare, job training and
    placement, and government services to be immediate upon effective
    adoption.
        Savings related to education are more long term.\39\ For example,
    an analysis from Common Sense Media extrapolated from the previously
    mentioned study from Michigan State University showing the effect of
    connectivity and devices on student performance to show a GDP loss of
    $22b-$33b attributable to bad student connectivity.\40\
    ---------------------------------------------------------------------------
        \39\ In my oral testimony I mentioned how in the early 2000s, my
    sister, a public-school teacher pointed out my work at the FCC resulted
    in difficulties for her in that many of her students were using
    Internet access to do their homework while others did not have access.
    That problem continues. As Common Sense Media has pointed out ``Over 40
    percent of Title I teachers do not assign work that requires Internet
    access because they fear that doing so would exacerbate inequalities,
    and nearly 60 percent report that a lack of home Internet and computers
    limits student learning.'' Fazlullah, A. & Ong, S. (2019). The homework
    gap: Teacher perspectives on closing the digital divide. Common Sense
    Media. https://www.commonsensemedia.org/sites/default/files/featured-
    content/files/homework-gap-report-2019.pdf. My point for raising it
    here is to note that while I would hope we could all agree that those
    fears and the failure to assign certain kinds of homework will be
    negative for our economy down the road, it is difficult to be precise
    about the timing and scope of those costs.
        \40\ https://www.commonsensemedia.org/sites/default/files/research/
    report/final_-_what_it
    _will_take_to_permanently_ close_the_k-12_
    digital_divide_vfeb3.pdf#page=7
    ---------------------------------------------------------------------------
        But the key point policy makers should understand that whatever the
    savings there are today, those savings are likely to grow down the
    road.
        Let me add that in answering your questions two and three, I
    recognize that we should all be humble in understanding that many
    factors, some unknowable today, can affect future outcomes. But while
    we cannot know for future what the future holds, we nonetheless must
    move forward by making reasonable predictions. For the last quarter
    century, most of my work has been with institutional investors who
    every day make investments based on their predictions of the future.
    Some turn out to be true; others don't. But those in that business
    don't have the luxury of throwing up their hands and simply saying
    ``who knows?''
        Neither does the Congress. I think Congress was right to invest
    $42.5 billion in rural broadband deployment, but one could argue that
    it should have waited until we were sure wireless would not offer the
    same functionality. Waiting, however, carries its own costs,
    particularly when the evidence is strong that fiber is far more future
    proof. As for the adoption side, as discussed above, I am for more
    through study. But as of now, the data is very clear that directionally
    there are significant savings to be had today from getting all
    Americans online and there will be more savings in the future.
    Ecclesiastes suggested that the race is not always to the swift nor the
    battle to the strong.\41\ Still, as Damon Runyon noted, ``but that's
    the way to bet.'' So here, we as a country should be betting on savings
    from online services growing over time.
    ---------------------------------------------------------------------------
        \41\ Ecclesiastes 9:11.

        Question 4. During the hearing, you claimed there was a study by
    John Horrigan which estimated that for ``every dollar spent on ACP, we
    ---------------------------------------------------------------------------
    get a $3.89 increase in GDP.''

        a. Is there a John Horrigan paper that finds this conclusion? If
    yes, please provide a citation for this study.
        Answer. In my written testimony I cited Dr. Horrigan's paper as
    saying, ``Another study found that `every dollar of ACP subsidy returns
    nearly two dollars in impacts to those using the program' due to
    `employment effects that boost household income; and convenience
    effects, e.g., time saved from shopping online as well as having access
    to a greater variety (or quality) of goods.' '' The title of that study
    is ``The Affordable Connectivity Program Creates Benefits that Far
    Outweigh the Program's Costs.'' \42\
    ---------------------------------------------------------------------------
        \42\ https://www.benton.org/publications/affordable-connectivity-
    program-benefits-outweigh-costs.
    ---------------------------------------------------------------------------
        In that written testimony I cited a different paper related to the
    finding on the increase in the GDP.
        To the extent that my oral testimony implied something different
    than my written testimony, that is my error for which I apologize.
        I would note, however, that there are other studies that come to
    similar findings about how universal broadband access and adoption can
    increase the GDP. For example, a 2021 paper published by the National
    Bureau of Economic Research found that ``moving to high-quality, fully
    reliable home Internet service for all Americans (``universal access'')
    would raise earnings-weighted labor productivity by an estimated 1.1
    percent in the coming years. The implied output gains are $160 billion
    per year, or $4 trillion when capitalized at a 4 percent rate.'' \43\
    ---------------------------------------------------------------------------
        \43\ https://www.nber.org/papers/w29102

        b. John Horrigan has published a ``brief,'' in which he provides an
    ``exploration'' of existing data to develop a benefit-cost analysis.
    According to this brief, ``This exploration finds that every dollar of
    ACP subsidy returns nearly two dollars in impacts to those using the
    program.'' Is this the paper you meant to discuss during your
    testimony?
        Answer. As noted above, that is the brief to which my written
    testimony refers, and it is the brief to which I meant to refer to in
    my oral testimony.

        c. In this brief, Mr. Horrigan states that the FCC's survey finds
    that only 22 percent of the ACP recipients did not have Internet prior
    to ACP. Do you also agree that this is the finding of the FCC survey?
        Answer. I believe that the single data point misrepresents Dr.
    Horrigan's analysis and the historical record.
        A fair reading of Dr. Horrigan's work would start by adopting his
    insight that ACP is part of a three-legged stool that during the
    pandemic helped increase broadband adoption and sustain it for low-
    income households. Philanthropic and private sector initiatives were
    important, but the EBB and then the ACP were crucial in making these
    efforts have an impact on a national scale.
        It is then important to consider how Dr. Horrigan describes that
    ACP's predecessor EBB is an important historical antecedent that, if,
    taken into account, would increase that number of households that were
    not connected prior to a government subsidy program. As he writes, ``It
    is hard to escape the fact that pandemic era initiatives (such as
    stimulus checks, the EBB, private-sector marketing initiatives, and
    philanthropic efforts) were responsible for getting a large number of
    low-income households online. The ACP not only sustained this, but
    helped low-income households weather a 2022 that saw a growth in
    inflation, the end of the child tax credit, and other economic
    headwinds. It is worth noting that the data only takes us through 2022
    and it is likely that 2023 ACP signups included significant numbers of
    wireline customers.'' \44\
    ---------------------------------------------------------------------------
        \44\ https://www.benton.org/sites/ default/files/ACP-Cost-
    Benefit_0.pdf
    ---------------------------------------------------------------------------
        Further, Dr. Horrigan writes that based on his analysis of American
    Community Survey data from 2019-2022, 56 percent of the growth in home
    wireline broadband subscriptions in that time was among households
    whose annual incomes were $50K or less. And 38 percent of the growth
    was from ``under $25K households'' (that make up about 16 percent of
    all households).\45\ ACP and EBB were partly responsible for this.\46\
    ---------------------------------------------------------------------------
        \45\ A 2023 USC survey of California made similar findings. https:/
    /broadbandforall.cdt.ca.gov/wp-content/uploads/sites/19/2023/12/2023-
    Statewide-Digital-Equity-Survey-Final-Remediated-Report.pdf#page=19
        \46\ https://www.benton.org/sites/default/files/ACP-Cost-
    Benefit_0.pdf
    ---------------------------------------------------------------------------
        Dr. Horrigan also urges policy makers to understand that a high
    percentage of ACP recipients are returning and intermittent users,
    writing for example ``Many low-income households have at one time had
    their Internet subscription lapse. Estimating just how many low-income
    households are likely to cycle on and off home connectivity in a given
    year is a crucial step in determining the overall benefit of the
    program.'' \47\
    ---------------------------------------------------------------------------
        \47\ https://www.benton.org/sites/default/files/ACP-Cost-
    Benefit_0.pdf
    ---------------------------------------------------------------------------
        He then suggests that policymakers ask, ``How many more consistent
    broadband subscribers did ACP create?'' He answers that question by
    writing:

       Surveys conducted during the pandemic showed that 29 percent
            of Internet users with annual incomes below $30,000 (or nearly
            5 million households) lost service due to the economic
            challenges the pandemic imposed upon them.

       That survey looked not just at those who lost service but
            also at the past subscription patterns of those currently
            lacking service. Some 31 percent of those without a home
            wireline subscription had had service in the past.

       Another view of the comings-and-goings of connectivity comes
            via data from surveys that ask people without service if they
            had had a home subscription previously. The National
            Telecommunications and Information Administration's (NTIA) 2021
            Internet Use surveys found that 23.5 percent of households
            without Internet subscriptions had household members who had
            previously been home Internet users. ·

       If 30 percent of wireline ACP enrollees restore service they
            once had, this comes to about 2.4 million ``returning user''
            households--30 percent of the 8 million wireline ACP enrollees
            who are not new broadband households due to the benefit.\48\
    ---------------------------------------------------------------------------
        \48\ https://www.benton.org/sites/default/files/ACP-Cost-
    Benefit_0.pdf
    ---------------------------------------------------------------------------
        In short, the 22 percent number is a snapshot in time that ignores
    critical data from both before and after the snapshot was taken.

        Question 5. Your written testimony cites a 2021 article from the
    American Economic Journal: Economic Policy. That study is not based on
    ACP but instead is based on information from a Comcast program from
    2012-2018.
        a. Given that private low-income plans like Internet Essentials and
    Spectrum Internet Assist were available in the majority of the country
    prior to ACP, doesn't that suggest that a $30 nationwide subsidy isn't
    universally necessary, and that ACP should be better tailored to
    account for local offerings and the presence of competition?
        Answer. I applaud private efforts to address low-income adoption,
    particularly Comcast's Internet Essentials, which is the oldest and
    most extensive program. To reiterate a point that I made in my answer
    to question 1b, Comcast started the program in 2011 and has continually
    studied and changed the program to improve its outcomes. That is the
    path the FCC and Congress should follow with the ACP.
        But the question ignores how the ACP, by focusing on improving the
    demand side of the equation, improved the supply side of low-income
    offerings. ACP caused the private sector to improve the quality of
    their offerings to lower income Americans--both in terms of the price
    actually paid by the consumer and the quality of the service--in
    response to greater aggregate demand from lower-income households.
        Moreover, I don't think that private efforts alone will solve the
    problem of universal broadband, in the same way that the admirable
    private efforts providing meals for the hungry would not eliminate the
    need for SNAP or the commendable charitable efforts related to
    healthcare would not eliminate the need for Medicaid.
        As to the dollar amount that the government subsidy should provide,
    I would hope that the FCC economists, who are capable of great work,
    would take the data from the EBB and ACP programs and provide an
    analysis to Congress about the two variables of the eligibility
    criteria and price point.\49\ I would further hope that the analysis
    would evaluate the trade-offs for different combinations.\50\ I would
    also hope that the FCC could evaluate and determine if there are
    various ways to lower the cost structure for providers and benefit from
    that in terms of lowering the price point and structure its programs
    and advise Congress accordingly.\51\
    ---------------------------------------------------------------------------
        \49\ Some have suggested a different variable of eligibility being
    based on not previously being on broadband. I would hope those
    advocating that position would acknowledge that the current law does
    not make that requirement. I would also hope they would have the
    decency to articulate how they think it would be administered. I think
    such a requirement would be an administrative nightmare for the ISPs
    and the recipients.
        \50\ On this point, the Committee might review Dr. Horrigan's 2021
    affordability study which supports the ``one size does not fit all''
    finding on the price point, as different people in the same income
    bracket had very different views as to what they would be willing to
    pay to obtain a broadband service. https://static1.squarespace.com/
    static/5aa8af1fc3c16a54bcbb0415/t/61ad77
    22de56262d89e76c94/1638758180025/
    EveryoneOn+Report+on+Affordability+%26+the+Digital+
    Divide+2021.pdf
        \51\ In this regard, I might reference the current debate occurring
    at the FCC over ``bulk billing'' practices in which various parties are
    arguing that bulk billing enables lower prices while some are arguing
    the opposite. My point is not to weigh in on the merits of that debate
    but to suggest the debate appears to show evidence that there may be
    ways, through the aggregation of demand, to lower prices.
    ---------------------------------------------------------------------------
        As to tailoring the program for local offerings, I am not sure what
    the question is implying. But if it should be read to imply that we
    should have a different program for areas served by different ISPs, I
    would be opposed. I don't see why we would subsidize Comcast
    subscribers differently than Charter, AT&T or Verizon subscribers. I
    think such a program would be administratively chaotic and lead to
    problematic and inefficient incentives.
        As to focusing on competition, I support improved market-based
    competition. Indeed, we are seeing significant market-based efforts to
    upgrade copper networks to fiber that I believe will improve broadband
    prices and offerings for tens of millions of Americans.
        But no one should be under the illusion that the increased fiber
    competition to cable will result in entry level prices sufficient to
    result in low-income Americans increasing their levels of adoption.
    Noted telecom economist Dr. Scott Wallsten of the Technology Policy
    Institute analyzed the data relating to fiber-cable competition and in
    a 2021 paper demonstrated that additional cable-fiber competition does
    not bring the unconnected online.\52\
    ---------------------------------------------------------------------------
        \52\ https://techpolicyinstitute.org/wp-content/uploads/2021/05/
    Does-Competition-Between-Cable-and-Fiber-Increase-Adoption.pdf.
    ---------------------------------------------------------------------------
        Again, as I said in my written and oral testimony, I am in complete
    agreement with the 20 House Republicans who wrote Speaker Johnson last
    month asking for action on ACP, saying ``We believe that bipartisan
    solutions are within reach to ensure uninterrupted access to the ACP
    while concurrently pursuing long-term funding strategies.'' That is, I
    would hope Congress would provide an ACP extension and then, as part of
    a larger and necessary Universal Service Fund reform effort, design a
    more efficient and sustainable program that moves us toward universal
    adoption.

        Question 6. Your written testimony cites several studies regarding
    telemedicine. Most of these studies are based on information that
    predates ACP, and none of the studies cite ACP as a benefit.
    Telemedicine may be a great benefit to Americans, but the studies cited
    indicate that it would have been a great benefit without ACP.
        a. What evidence exists that households, who were not previously
    purchasing Internet and are now doing so through ACP, have used the
    Internet to access telemedicine?
        Answer. First, the record shows that ACP recipients regard using
    access to broadband as critical to their healthcare. A recent study
    found that 75 percent of ACP participants fear that losing access to
    ACP will result in losing access to healthcare.\53\ This is consistent
    with another large-scale survey found that 45 percent of adults believe
    that inadequate access to technology, including broadband and
    computers, is a barrier to telehealth, and this was especially
    prominent among rural residents and adults over the age of 65.\54\ That
    is, ACP recipients and the public generally understand that today
    broadband access is critical to obtaining healthcare services.
    ---------------------------------------------------------------------------
        \53\ https://www.bsgco.com/acp-fact-sheet
        \54\ Bailey, V. (2021). Limited broadband poses a significant
    barrier to telehealth access. MHealthIntelligence. https://
    mhealthintelligence.com/news/limited-broadband-poses-a-significant-
    barrier-to-telehealth-access.
    ---------------------------------------------------------------------------
        Second, there are numerous media reports of ACP recipients using
    and depending on Internet access for healthcare.\55\ While I am aware
    that anecdotes are not the same as data, there should not be any doubt
    as to the impact of ACP on the use of telehealth.
    ---------------------------------------------------------------------------
        \55\ See, for example, https://kffhealthnews.org/news/article/
    internet-subsidy-ending-affordable
    -connectivity-program-telehealth/ or https://www.cnet.com/home/
    internet/americans-are-facing-a-mental-health-crisis-losing-the-
    internet-wont-help/
    ---------------------------------------------------------------------------
        Third, there is evidence that when lower income persons have
    broadband access, they tend to use it for healthcare more than the
    general population. For example, the Georgetown study noted above found
    that ``consumers who face greater financial constraints (e.g., those
    with high deductible healthcare plans or who delay healthcare to save
    money) are more likely to use eHealth. This finding suggests that
    eHealth provides a tool for altering and potentially improving consumer
    healthcare decision-making--especially for those who most acutely bear
    healthcare costs.'' \56\
    ---------------------------------------------------------------------------
        \56\ Macher, Jeffrey T., John W. Mayo and Olga Ukhaneva ``Does the
    Internet Improve Consumer Healthcare Behaviors, Georgetown University
    working paper, October 29, 2018.
    ---------------------------------------------------------------------------
        Fourth, while I agree with the comment that ``Telemedicine may be a
    great benefit to Americans, but the studies cited indicate that it
    would have been a great benefit without ACP,'' we should not be blind
    to the fact that the United States government, through Medicare,
    Medicaid, and the Veterans Administration, is the largest provider of
    health insurance in the country. If the general public and private
    insurers benefit from telehealth, then the government, as a provider of
    health insurance, would benefit as well, particularly given the overlap
    of those depending on ACP and those depending on Medicaid and Veterans
    Administration services.
        Fifth, the question implies that ACP recipients might regard the
    value of telehealth differently than other broadband subscribers. There
    is no evidence that this is true. To the contrary, there is evidence
    that among those connected, telehealth is quite popular. For example, a
    study showed that among patients who recently used telehealth, 73
    percent reported they would continue to use telehealth services in the
    future, while 41 percent reported they would have chosen telehealth
    over an in-person appointment, even if both required a co-pay.\57\
    Again, there is no reason to believe that ACP recipients would view the
    benefits of telehealth differently.
    ---------------------------------------------------------------------------
        \57\ https://www.ama-assn.org/practice-management/digital/patients-
    doctors-telehealth-here-s-what-should-come-next
    ---------------------------------------------------------------------------
        Sixth, with respect, I think the question ignores the wisdom, cited
    before, of skating to where the puck is going. Not only do we need ACP
    for telehealth, but we should also be looking for ways in which we can
    use telehealth for all Americans to improve outcomes and reduce costs.
    At the recent House hearing on telehealth cited above, the expert on
    telehealth correctly noted that ``Congress should focus on facilitating
    improved access to high-quality, integrated telehealth services by
    strengthening broadband access for disadvantaged and rural populations,
    establishing digital health literacy programs, conducting research to
    demonstrate the value of telehealth services (particularly hybrid
    telehealth modalities), and promoting payment models that increase
    adoption of well-integrated telehealth services focused on chronic
    disease management, longitudinal care, and service for disadvantaged
    populations.'' \58\
    ---------------------------------------------------------------------------
        \58\ https://democrats-energycommerce.house.gov/sites/evo-subsites/
    democrats-energycommerce
    .house.gov/files/evo-media-document/
    Lee%20Schwamm_Witness%20Testimony_04.10.2024.pdf
    ---------------------------------------------------------------------------
        The bottom line is that we should think of ACP as an essential
    piece of the puzzle for addressing healthcare needs in our country in
    an effective and efficient manner. And we should not neglect the fact
    that we also must put together the entire puzzle.

        Question 7. Your written testimony states: ``But of course, if ACP
    goes away, those savings will also go away and to put a fine point on
    it, it is a mathematical certainty that there will be communities in,
    for example, Texas that instead of getting fiber will end up with fixed
    wireless or even satellite.''

        a. Please provide specific numbers and equations that support the
    ``mathematical certainty'' portion of your statement.
        Answer. The key points to my answer are briefly summarized
    immediately below, with a more complete answer provided thereafter.

       The BEAD program does not fund the cost of deployment
            broadband to an unserved or underserved area; rather it funds
            the difference between the cost of deployment and what a
            provider would be willing to invest to serve that area.

       ACP increases the revenue for any such area, those closing
            the gap described above and decreasing the amount of BEAD
            funding necessary for that specific area, making the funds
            available for other areas.

       BCG found that ACP reduces the amount needed to incentivize
            ISP investment by about 25 percent per location or $500.

       A conservative projection indicates that the number of
            locations that will miss out on the opportunity to obtain fiber
            due to the end of the ACP program will be at least 47,705,
            though the actual number is likely to be larger.

        As I noted in my written testimony, the consulting group BCG found
    that ACP reduces the subsidy needed to incentivize providers to build
    in rural areas by 25 percent per household, writing ``the existence of
    ACP, which subsidizes subscriber service fees up to $360 per year,
    reduces the per-household subsidy required to incentive ISP investment
    by $500, generating benefit for the government and increasing the
    market attractiveness for new entrants and incumbent providers.'' \59\
    ---------------------------------------------------------------------------
        \59\ https://www.commonsensemedia.org/sites/default/files/research/
    report/2022-cs-bcg-closing-digital-divide_final-release-3-for-web.pdf
    ---------------------------------------------------------------------------
        This makes sense from a capital markets perspective. After all,
    BEAD is not designed to fund 100 percent of the cost of any deployment.
    It will fund the difference between the cost of the deployment and what
    the private market would have paid to deploy a network to serve a
    designated geographic area. The greater the revenue, and hence likely
    profit, that the area would provide, the greater the private market's
    willingness to invest, reducing the amount of BEAD funding necessary
    for the specific project.\60\
    ---------------------------------------------------------------------------
        \60\ There may be areas where the revenue prospects are so low that
    there are no bidders willing to put in any of their own capital and
    BEAD does have to fund 100 percent of the capital costs. But those are
    likely to be relatively rare and are not important to the answer to
    this question.
    ---------------------------------------------------------------------------
        So, let's apply this to the situation in Texas, using numbers
    provided in a January 2024 report by Cartesian, a consulting group, and
    ACA, a trade association representing small cable providers.\61\
    ---------------------------------------------------------------------------
        \61\ The report can be found at https://www.cartesian.com/wp-
    content/uploads/2023/02/Texas_BEAD_Funding_Cartesian_
    ACA_Jan_2024_v4.0.pdf
    ---------------------------------------------------------------------------
        Texas, under the Infrastructure Bill's BEAD formula, will receive
    $3.3 billion, with an obligation to use the funds to connect all
    unserved locations and, if there are additional funds, to connect all
    underserved locations.
        Cartesian finds that Texas has 364,700 unserved locations and
    199,100 underserved locations. The current number is higher,\62\ but
    the FCC's RDOF and EACAM programs are currently set to serve 322,434
    unserved and underserved Texas locations.\63\ Thus, that leaves
    approximately 563,800 locations as the responsibility of BEAD funds.
    ---------------------------------------------------------------------------
        \62\ Slide 2.
        \63\ This number was provided to me from Mike Conlow, whose
    Substack on BEAD has been a valuable source of information for those
    involved in the BEAD process.
    ---------------------------------------------------------------------------
        Cartesian estimates that the ISPs bidding for BEAD funds will
    provide $1.6 billion for the projects,\64\ bringing the total to be
    utilized for the capital expenditures of deployment to $4.9 billion.
    That would average out to about $8,675 per location, though in reality
    there is a wide variation in the actual cost to serve different
    locations. Cartesian estimates that the average private sector
    contribution would be $2,903.\65\
    ---------------------------------------------------------------------------
        \64\ Slides 2 and 4.
        \65\ Slide 4. I am not sure how Cartesian arrived at that number.
    When I ran the numbers, I assumed the $1.6 billion in the private
    sector contribution, if distributed equally among the 563,800 unserved
    and underserved locations, would be $2,837. Cartesian likely weighed
    the unserved and underserved in a manner that is slightly more accurate
    so I will use their number for the average private sector contribution.
    ---------------------------------------------------------------------------
        However, it costs more than $8,675 to connect the average location
    to a fiber connection. Cartesian estimates that it will cost, on
    average, $12,399 to connect an unserved location to fiber and an
    average of $10,468 to connect an underserved location to fiber.\66\
    Therefore the BEAD contribution necessary for unserved locations would
    need to be $9,562 \67\ and the BEAD contribution for underserved
    locations would need to be $7,631.\68\
    ---------------------------------------------------------------------------
        \66\ Slide 5.
        \67\ That number is derived by subtracting the average private
    sector contribution ($2,903) from the average cost of the connecting an
    unserved location ($12,399.)
        \68\ That number is derived by subtracting the average private
    sector contribution ($2,903) from the average cost of the connecting an
    undeserved location ($10,468.)
    ---------------------------------------------------------------------------
        Again, according to BCG, reduces the per-household subsidy required
    to incentive ISP investment by $500.\69\ Assuming the Cartesian study
    assumed a continuation of ACP,\70\ the BEAD contribution must be
    increased by $500, so the amount necessary for unserved locations would
    be $10,062,\71\ and the amount for underserved locations would be
    $8,131.\72\
    ---------------------------------------------------------------------------
        \69\ I could have also used the 25 percent factor but after
    consulting with the authors of the study, I decided to use the more
    conservative number.
        \70\ The Cartesian study does not discuss its assumption on ACP,
    but I contacted the co-authors at ACA who told me that while the study
    didn't directly address ACP in the cost modelling, one could argue that
    it assumes that ACP--or a successor program--remains in place.
        \71\ This number represents the sum of $9,562 plus $500.
        \72\ This number represents the sum of $7,631 plus $500.
    ---------------------------------------------------------------------------
        This then leaves us with four relevant numbers:

       The average BEAD subsidy with ACP needed for a fiber
            connection to an unserved location at $9,562.

       The average BEAD subsidy without ACP needed for a fiber
            connection to an unserved location at $10,062.

       The average BEAD subsidy with ACP needed for a fiber
            connection to an underserved location at $7,631.

       The average BEAD subsidy without ACP needed for a fiber
            connection to an underserved location at $8,131.

        There is an interesting question as to whether Texas will
    prioritize connecting the unserved or the underserved to fiber. The
    state will likely try to optimize for both, with some percentage of
    both being forced to rely on fixed wireless or satellite. While that
    optimization will affect the math, it will not affect the conclusion
    that thousands of locations that would have been connected to fiber if
    ACP were to continue would have to be connected to an alternative.
        For purposes of answering the question, let us assume that Texas
    will prioritize connecting all the unserved locations to fiber and use
    any remaining amount to connect as many underserved locations as
    possible to fiber. To connect all the unserved locations with fiber
    with ACP continuing would cost $3.487 billion.\73\ Subtracting that
    amount from the total available capital funds of $4.9 billion would
    leave $1.413 billion. Using that to connect unserved locations would
    enable Texas to connect 185,165 such locations, leaving only 13,935
    underserved locations unconnected with fiber.\74\
    ---------------------------------------------------------------------------
        \73\ That number is derived by multiplying the 364,700 unserved
    locations by $9,562.
        \74\ That number is derived by dividing the $1.413 billion by the
    average $7,631 for each underserved location.
    ---------------------------------------------------------------------------
        Now let's compare that to the result if ACP goes away. To connect
    all the unserved locations to fiber would cost $3.669 billion,\75\
    leaving only $1.231 billion to connect underserved locations.\76\ That
    sum would only be enough to connect 151,395 underserved locations.\77\
    ---------------------------------------------------------------------------
        \75\ That amount is derived by multiplying the 364,000 unserved
    locations by $10,062.
        \76\ That number is derived by subtracting the amount necessary to
    connect all the unserved homes ($3.671 billion) from the total capital
    Cartesian projects will be available ($4.9 billion.)
        \77\ That number is derived by dividing the available $1.228
    billion by the average cost of connecting an underserved location to
    fiber of $8,136.
    ---------------------------------------------------------------------------
        In short, ACP going away would result in at least 47,705
    underserved locations not receiving fiber but being connected with
    another type of network, such as fixed wireless or satellite.\78\
    ---------------------------------------------------------------------------
        \78\ That number is derived by subtracting the number of
    underserved homes that can be reached by fiber under the scenario
    without ACP from the total number of underserved homes that could be
    connected to fiber if ACP were to continue (184,782 minus 33,779.)
    ---------------------------------------------------------------------------
        The actual number of underserved locations that will end up with
    wireless rather than fiber is likely to be materially larger. Under the
    terms of the BEAD program, Texas must connect all unserved and
    underserved locations. So, if ACP were to continue, the 13,935
    underserved locations would still have to be connected. The cost of
    those connections to either fixed wireless or satellite would then
    reduce further the number of locations who would obtain a fiber
    connection.
        As Cartesian does not estimate the cost for a fixed wireless
    connection, I did not do that math here of incorporating those costs,
    which would be necessary to connect all the remaining underserved
    locations.\79\ But whatever the cost of connecting 13,935 underserved
    locations to fixed wireless (or satellite), the cost of connecting
    47,705 underserved locations would be more than triple, meaning that
    even more underserved locations would be forced to settle for fixed
    wireless rather than fiber if ACP funding ends.
    ---------------------------------------------------------------------------
        \79\ The math is complicated as comparing fixed wired deployments
    to fixed wireless deployments do not yield an apples-to-apples cost
    comparison. Further, while fixed wireless is cheaper to deploy, it's
    operating costs are more expensive.
    ---------------------------------------------------------------------------
        Further, using the 25 percent figure would have resulted in a
    significantly higher number of homes that Texas would be forced to
    connect with fixed wireless or satellite.
        The bottom line is that while there can be some uncertainty about
    the number of homes that will lose out on fiber if ACP, there can be no
    uncertainty that tens of thousands of underserved Texas locations will
    be forced to connect with a wireless or satellite provider, instead of
    fiber, due to the end of the ACP program.

        b. The Wall Street Journal, in an article titled ``The $53,000
    Connection: The High Cost of High-Speed Internet for Everyone,''
    reported that the government is financing fiber-line buildouts that are
    higher per location than the value of the home getting the hookup. Why
    would it be the case that expensive fiber buildout financed entirely by
    the government would need continued cash payments to run a low-
    maintenance fiber line?
        Answer. The key points to my answer are briefly summarized
    immediately below, with a more complete answer provided thereafter.

       Congress should be interested in the question of whether
            certain subsidies per location are beyond an acceptable limit,
            something the National Broadband Plan and the recent NTIA
            reauthorization addressed.

       In the most low-density areas of the country, there simply
            aren't enough customers to generate enough revenue to pay for
            the ongoing operating expenses.

       The shortfall in operating expenses is likely to only affect
            about 2 percent of the locations in the U.S.

       That, however, has nothing to do with the ACP. ACP does not
            change the cost to deploy; rather it changes the incentives to
            deploy.

        As to the logic of financing fiber deployments that are more
    expensive than the value of the house the deployment is connecting, I
    offer two thoughts.
        First, the 2010 National Broadband Plan recommended a limit on the
    per-house subsidy for deployment, a recommendation I strongly supported
    and which the FCC subsequently adopted.\80\ That was aggressively
    opposed by rural telephone companies, although in practice the rather
    generous limit adopted by the FCC only impacted a very small number of
    companies.
    ---------------------------------------------------------------------------
        \80\ For a visual representation of the cost curve for currently
    unserved and underserved homes, see the Cartesian slide deck noted
    above at slide 3.
    ---------------------------------------------------------------------------
        Moreover, as the Wall Street Journal article you cite documents,
    the FCC subsidy dollars per location served ($1,753) is considerably
    lower than other Federal programs, such as the Department of
    Agriculture's Reconnect program (which averages $9,014 per
    location.)\81\ While there are differences in the program that make a
    simple dollar to dollar comparison misleading, the differences suggest
    that the Senate should follow the wisdom of the recent action by the
    House in passing an NTIA reauthorization that included a mandate to
    develop a digital divide strategy.\82\ Within that mandate, the House
    legislation would require NTIA's proposed strategy to support better
    management of Federal broadband programs to deliver on the goal of
    providing high-speed, affordable broadband Internet access service to
    all individuals in the United States; and synchronize interagency
    coordination among covered agencies for Federal broadband programs. I
    support the House's proposal and think it would be useful to address
    the problem you correctly raise. (I discuss the House's proposal
    further in answering part c below.)
    ---------------------------------------------------------------------------
        \81\ https://www.wsj.com/us-news/the-53-000-connection-the-high-
    cost-of-high-speed-internet-for-everyone-c903163f
        \82\ https://www.congress.gov/bill/118th-congress/house-bill/4510
    ---------------------------------------------------------------------------
        Whatever I personally think today about limits on per location
    support mechanisms, however, is irrelevant as the BEAD program is now
    the primary mechanism for connecting unserved and underserved
    locations. That program does not have an ex-ante limit to the amount of
    capex that may be provided to connect locations. The program, however,
    wisely incorporates the concept of the ``Extremely High Cost Per
    Location Threshold.'' As described by telecommunications expert Carol
    Mattey, that concept involves ``a BEAD subsidy cost per location that
    determines when states may select a less expensive technology over
    fiber. Essentially, the threshold determines where awardees will be
    able to use fixed wireless and potentially other technologies. Setting
    the threshold lower reduces the opportunity for fiber applicants to
    automatically win over non-fiber applicants, which allows finite BEAD
    dollars to go further.'' \83\ That is, NTIA's administration of the
    BEAD program is addressing the concern you appropriately raise.
    ---------------------------------------------------------------------------
        \83\ https://www.benton.org/blog/setting-extremely-high-cost-
    location-threshold-bead
    ---------------------------------------------------------------------------
        Second, I don't see what that issue of extremely high cost per
    location thresholds has to do with the ACP's impact on the incentives
    to deploy. ACP does not change the cost to deploy; rather it changes
    the incentives to deploy. Reasonable minds can differ on whether there
    should be a limit on public subsidies to deploy where private market
    incentives are not sufficient and if so, what that limit, if any,
    should be. On the other hand, it would be axiomatic to anyone who
    understands capital markets that continuing the ACP would reduce the
    capital gap between what the private sector would be willing to pay to
    deploy to an unserved or underserved area and what the cost of the
    deployment would be, as discussed in the answer to 7a, immediately
    above. In other words, as the BCG study and the mathematical
    explanation detailed above demonstrates, whatever is the government
    subsidy necessary to deploy to an unserved or underserved location, the
    ACP reduces that amount.\84\
    ---------------------------------------------------------------------------
        \84\ There is an interesting question, as government seeks to
    accomplish both deployment and adoption, as to what would be the right
    ratio of spending on each goal. I have not seen any studies that
    evaluate that question but if the government ever decides to again make
    new investments in deployment, I hope some evaluation of the right
    ratio is undertaken.
    ---------------------------------------------------------------------------
        As to the specific question of whether the ACP subsidy would affect
    the ongoing shortfalls in the operating expenses of an ISP deploying to
    an unserved or underserved area, a lot depends on the specific
    deployment. But policy makers should keep in mind that in the most low-
    density areas of the country, there simply aren't enough customers to
    generate enough revenue to pay for the ongoing operating expenses.
    Maintenance expenses in this context is something of a red herring; the
    network operator in the most remote areas must pay backhaul to someone
    else to get the traffic to the nearest Internet exchange point. Those
    backhaul expenses are operating expenses, not capital expenses. Other
    operating expenses that are higher on a per customer basis include such
    things as customer care and repairs, as the economies of scale
    available in denser areas are lower in less dense areas.
        As to data related to how many locations would be affected, a good
    source is the 2017 FCC study on the costs of deploying fiber to
    locations lacking reliable service using fiber or cable, which at the
    time were estimated to be 14 percent of U.S. homes and business
    locations. The study found that for the vast majority of these
    locations (12 percent out of the 14 percent) the initial subsidy should
    be sufficient, noting that ``we do not expect these first 12 percent of
    locations will require material ongoing support once the network has
    been built, as subscriber revenues should be sufficient to pay for
    ongoing network costs.'' The study continued, however, that for the
    last 2 percent--representing the costliest locations making up the
    difference between 98 percent and 100 percent deployment across the
    nation--``there is not enough addressable revenue to cover ongoing
    costs, so--in addition to the initial capex--an annual subsidy of about
    $2b would be required to keep the networks operating.'' \85\
    ---------------------------------------------------------------------------
        \85\ https://docs.fcc.gov/public/attachments/DOC-343135A1.pdf
    ---------------------------------------------------------------------------
        In short, while it is correct that the operating costs for fiber
    are lower than for copper, there still are likely to be low-density
    areas where operating subsidies for the rural ISPs are necessary to
    maintain economic viability.

        c. Indeed, you are quoted in this same article as having said ``The
    problem is money is not infinite.'' Are you aware that the Biden
    administration has made it clear that it seeks to enroll 40 percent of
    Americans in ACP, which could cost American taxpayers $20 billion
    annually, just $5 billion less than the annual NASA budget?
        Answer. I stand by my observation that money is not infinite.
        I would also extend that observation to note that the statement is
    as true for the companies my equity research firm covers for
    institutional investors as it is for government.
        As to the cost of the ACP program, I also stand by my comment at
    the hearing and earlier in this document that while I favor an
    extension, I would hope that the FCC provides data to Congress so that
    Congress, in considering the costs and benefits of the different
    Universal Service Fund programs and the trade-offs inherent in
    different program designs, can design a more efficient and sustainable
    program that moves us toward universal adoption.
        As to the benefits and comparisons with NASA, I would just note
    that all of us can find programs and expenditures that we believe are
    not justified. For example, in 2023, the GAO found that the Federal
    government lost an estimated $247 billion in payment errors during the
    most recently completed Fiscal Year (FY 2022). According to the report,
    ``these errors include overpayments or payments that should not have
    been made--for example, payments to deceased individuals or those no
    longer eligible for government programs.'' \86\ That is an amount more
    than 10 times larger than the amount spent on NASA. I am sure everyone
    in the Congress could come up with their own list of problematic
    expenditures that exceed NASA's budget.
    ---------------------------------------------------------------------------
        \86\ https://www.gao.gov/blog/federal-payment-errors-known-
    improper-payments-are-continuing-concern
    ---------------------------------------------------------------------------
        But, with respect, that is not the right way to look at the issue.
    It is perfectly fair to ask whether our economy and society is
    achieving a benefit that is commensurate with the cost to the public.
    It is, however, confusing, rather than helpful, to compare one program
    to another without a reference to the benefits.
        What would be helpful is for the Senate to follow the wisdom of the
    House, which, as noted above, recently passed an NTIA reauthorization
    that included a mandate to develop a digital divide strategy.\87\ As
    further noted above, within that mandate, the House language would
    instruct NTIA to support better management of Federal broadband
    programs to deliver on the goal of providing high-speed, affordable
    broadband Internet access service to all individuals in the United
    States; and synchronize interagency coordination among covered agencies
    for Federal broadband programs.
    ---------------------------------------------------------------------------
        \87\ https://www.congress.gov/bill/118th-congress/house-bill/4510
    ---------------------------------------------------------------------------
        This is an admirable and important goal. As the GAO found in 2023,
    ``Federal broadband efforts are fragmented and overlapping, with more
    than 133 funding programs administered by 15 agencies. Among these
    programs, 25 have broadband as their main purpose, and 13 of those
    programs overlap because they can each be used for the purpose of
    broadband deployment. Having numerous broadband programs can be helpful
    to address a multifaceted issue like broadband access, but this
    fragmentation and overlap can lead to the risk of duplicative support.
    However, determining whether program overlap results in duplicative
    support can be challenging.'' \88\ For purposes of evaluating the ACP,
    we should consider how to better coordinate and administer all Federal
    (and to extent practical, state and local) efforts to improve broadband
    access, adoption, and utilization, rather than comparing ACP to
    unrelated programs.
    ---------------------------------------------------------------------------
        \88\ https://www.gao.gov/products/gao-23-
    106818#::text=What%20GAO%20Found,deployment
    %20(see%20fig.). I might add that a report by the National Urban
    League, with which I assisted, made a similar point about the need to
    coordinate Federal broadband programs. https://nul.org/program/lewis-
    latimer-plan
    ---------------------------------------------------------------------------
        As NTIA hopefully conducts its analysis and as Congress responds, I
    would again urge Congress to adopt the wisdom of skating to where the
    puck is going. Getting the unconnected or the intermittently
    sustainably has significant value to our economy and society. Whatever
    value it has today is likely to be increased as Artificial Intelligence
    and other technology trends accelerate the movement of the delivery of
    goods and services to online sources. I am in favor of continually
    studying and evaluating both the costs and the benefits. Simple
    comparisons to other programs, without any reference to the costs and
    benefits does not advance a thoughtful public policy debate.

        Question 8. Your written testimony states: ``Recent data
    demonstrates that just 32 percent of fourth graders read at or above a
    fourth-grade level.'' But your citation to nationsreportcard.gov
    provides data over several decades, all of which show that no more than
    40 percent of fourth graders in public schools in any year were at
    fourth-grade level.

        a. Are there problems with our education system that exist beyond
    ACP?
        Answer. I do not consider myself an expert in education but feel
    comfortable in opining that I am 100 percent confident that there are
    problems with our education system that exist beyond ACP.
        Further, again acknowledging my limited expertise in education, I
    feel comfortable opining that there is no single cause for 100 percent
    of our problems with our education system.
        I am also confident in opining that the lack of broadband in homes
    of children attending school will make the problems in our educational
    system worse, not better. The fact that the problem of reading scores
    pre-dates ACP does not make it less of a problem. Nor does it address
    the question of whether ACP can be helpful in addressing low reading
    scores, particularly as artificial intelligence develops personalized
    ways to assist young readers in overcoming specific decoding problems
    that serve as barriers to their learning to read.
        Again, I would urge Congress to skate where the puck is going, not
    where it is or where it was in the past.

        b. A recent report from the National Library of Medicine examines
    the harmful effects of too much screen time for children. Do you agree
    there are harmful effects of too much screen time?
        Answer. I am also not an expert on the impact of too much screen
    time for children but based on reading I have done, such as Dr. Haidt's
    recent book,\89\ I would agree that there is evidence that should cause
    parents and public policy officials to investigate and adopt
    appropriate policies. Indeed, I gave a speech that touched on the
    subject in February 2023, advocating for a more active role for
    government to both study, and depending on the outcome of the study,
    address those concerns.\90\
    ---------------------------------------------------------------------------
        \89\ https://jonathanhaidt.com/anxious-generation/. This should not
    be seen as an endorsement of the book or its conclusion. I simply cite
    it as a serious work addressing what I believe is likely to be a set of
    serious issues.
        \90\ https://www.benton.org/blog/talking-about-things-we-dont-talk-
    about
    ---------------------------------------------------------------------------
        But I admit to being completely perplexed by the logic of the
    question in the context of the discussion of the ACP. The seems to
    imply that if any kind of screen time can be a problem, we should not
    seek to use the tools of technology that use screens in ways that
    improve a child's education.
        Of course, all technologies have negative consequences. Last year,
    40,990 Americans died in car related accidents \91\ but that is not an
    argument for banning cars. It is an argument for developing safety
    guidelines, such as requiring seat belts and having appropriate rules
    of the road to limit such fatalities.
    ---------------------------------------------------------------------------
        \91\ https://www.nhtsa.gov/press-releases/2022-traffic-deaths-2023-
    early-estimates#::text=The%
    20agency%20estimates%20that%2040%2C990,the%20second%20quarter%20of%20202
    2. As the NHTSA notes, that number represents a decline over the
    previous year. The release goes on to discuss various policies designed
    to continue the trend toward lowering the number of fatalities.
    ---------------------------------------------------------------------------
        Certain drugs, that can save and improve lives, can also be used in
    ways that cause harm. But that is not an argument for banning medically
    approved drugs. It is an argument for developing procedures and
    safeguards for the distribution of such drugs.
        I could cite many similar examples relating to technology but let
    me focus on one perhaps closer to the point of the hearing and my
    testimony on ACP. Recently Florida adopted a law that bans children
    under 14 in the state from having social media accounts and requiring
    minors aged 14 and 15 to have parental consent to hold one.\92\
    Similarly, Utah adopted a law that tries to address the harm by, among
    other things, requires social media companies to verify users' ages and
    implement age assurance systems to determine if account holders are
    minors and to disable certain features on accounts owned by Utah
    minors, including direct messages, sharing features, autopay, push
    notifications, and search engine indexing of account profiles.\93\ Ohio
    just enacted legislation that limits the use of cell phones in
    schools.\94\
    ---------------------------------------------------------------------------
        \92\ https://www.flgov.com/2024/03/25/governor-desantis-signs-
    legislation-to-protect-children-and-uphold-parental-rights/
        \93\ https://governor.utah.gov/2023/03/23/gov-cox-signs-bills-
    focused-on-social-media-in-utah/
        \94\ https://education.ohio.gov/Media/Ed-Connection/May-20-2024/
    Governor-DeWine-signs-
    bill-requiring-Ohio-
    schools#::text=Last%20week%2C%20Ohio%20Governor%20Mike,phones%20
    in520K%2D12%20schools.
    ---------------------------------------------------------------------------
        My point is not to endorse any specific legislation but to
    highlight that while these states, to their credit, are taking the
    concerns about screen time seriously and developing different
    solutions, they are, at the same time, recognizing that communications
    technology can play an important role in education. Indeed, those
    states spend hundreds of millions on technology related to education,
    suggesting a balanced approach to addressing both the opportunity and
    the potential problems screens can present for school children.\95\
    ---------------------------------------------------------------------------
        \95\ A more comprehensive answer to concerns about screen time and
    the relationship between those concerns and the educational potential
    of technology in the classroom can be found in a letter from The
    Schools, Health & Libraries Broadband (SHLB) Coalition, the American
    Library Association (ALA), and the Consortium for School Networking
    (CoSN) to the FCC relating to the E-Rate program. https://
    assets.noviams.com/novi-file-uploads/shlbc/PDFs_and_Documents
    /E-rate_and_ecf/SHLB-COSN-ALA_Response_to_Heritage_on_Hot_Spots-
    FINAL.pdf
    ---------------------------------------------------------------------------
        And we should recognize the importance of in-home connectivity for
    students to be able to do their best in their educational pursuits.\96\
    For example, even before the pandemic, numerous surveys and studies
    demonstrated that students without access to the Internet at home were
    at an educational disadvantage \97\ A different study using Census
    Bureau data estimated that individuals with greater access to a
    computer and the Internet at home spent 28 percent more hours learning
    than those without such access.\98\
    ---------------------------------------------------------------------------
        \96\ As a Brookings report from 2020 detailed (https://
    www.brookings.edu/articles/realizing-the-promise-how-can-education-
    technology-improve-learning-for-all/) educational technology has the
    potential to positively impact student outcomes, particularly in core
    reading and numeracy skills.
        \97\ See, e.g., Monica Anderson & Andrew Perrin, PEW RESEARCH
    CENTER, (Oct. 26, 2018), https://www.pewresearch.org/fact-tank/2018/10/
    26/nearly-one-in-five-teens-cant-always-finish-their-homework-because-
    of-the-digital-divide/ (finding that ``17 percent of teens say they are
    often or sometimes unable to complete homework assignments because they
    do not have reliable access to a computer or Internet connection'').
        \98\ Kolawole Ogundari, Student access to technology at home and
    learning hours during COVID-19 in the U.S, Educational Research for
    Policy and Practice (May 2023), https://www.ncbi.nlm.nih.gov/pmc/
    articles/PMC10176282/pdf/10671_2023_Article_9342.pdf.
    ---------------------------------------------------------------------------
        In short, I believe the United States is capable of both using
    technology to improve educational outcomes for school children, while
    also protecting children from potential harms from the use of
    technology. I would hope that we could all agree with those goals and
    develop policies accordingly.

        Question 9. You cite a study based on an input-output model by
    Sprintson and Oughton.\99\
    ---------------------------------------------------------------------------
        \99\ 2-10-24 Unlinked. Sprintson, M. and Oughton, E.J. 2023. The
    contribution of U.S. broadband infrastructure subsidy and investment
    programs to GDP using input-output modeling (arxiv.org)

        a. Are you aware that the authors relied on an Input-Output model
    that is unrelated to ACP, and that uses no empirical evidence from ACP?
        Answer. Yes. As the authors make clear, they are using models ``to
    explore the potential macroeconomic impacts of broadband spending to
    Gross Domestic Product (GDP) and supply chain linkages.'' It is common
    for economic papers to use existing data to create models that estimate
    the likely outcome of various policies. Some prove to be more accurate
    than others, but we should acknowledge that in developing public
    policies, much as the private sector does in evaluating large capital
    allocations, we don't have the luxury of waiting for perfect data to
    evaluate the precise outcome. Hindsight can be 20/20 but it is also
    true that waiting can prove counterproductive.

        b. Are you aware that the authors relied on an Input-Output model
    that shows that any increased spending on the information sector would
    increase GDP disproportionately?
        Answer. This was brought to my attention at the hearing.

        c. In evaluating ACP, should the Committee rely on studies, such as
    Sprintson and Oughton, that offer no empirical evidence of the effects
    of ACP?
        Answer. I think that is a fair question and I appreciated some of
    the comments and questions at the hearing. I will say for myself that
    the questions made me more reluctant to cite the study in the future.
        But if I can add two other points, the problems with the Sprintson/
    Oughton study should not be used to disregard the many other studies I
    cited, including the Horrigan study, the telehealth studies, the
    education studies, the job training and placement studies, and others.
    Many of them do not have specific data on ACP but that does not mean
    they should be disregarded in terms of projecting where the puck is
    going in terms of the impact of connectivity on the cost and outcomes
    of various healthcare, educational, job training and job placement
    services, among other services now online.
        Second, the question raises a good point about the need to dig
    deeper into the studies all sides in good faith bring to the debate.
        In that regard, I would note that one of the witnesses produced a
    study (the EPIC study) that concluded that ACP led to inflation in
    broadband services.\100\ In addressing your question of which studies
    Congress should rely on, I think the EPIC study demonstrates the very
    problem you raise. While I am not an economist, my over two decades of
    working with institutional investors in communications causes me to
    immediately see several material problems with the study.
    ---------------------------------------------------------------------------
        \100\ https://epicforamerica.org/publications/bidenomics-goes-
    online-increasing-the-costs-of-high-speed-internet/
    ---------------------------------------------------------------------------
        First, it is empirically wrong. As a filing to the Committee from a
    conservative think tank, R Street, noted ``According to recent studies,
    the most popular broadband speed tier plan prices dropped by 18.1
    percent during ACP implementation.'' \101\ The letter further noted
    that ``recently-published research found that not only do Internet
    Service Providers (ISPs) pass cost savings on to their customers, but
    they also are `not inflating prices to appropriate government
    subsidies, and the ACP is successfully reducing the cost of Internet
    plans for eligible households.' '' \102\
    ---------------------------------------------------------------------------
        \101\ The letter cited Arthur Menko, 2023 Broadband Pricing Index
    Broadband Prices Continue to Decline, USTelecom https://ustelecom.org/
    wp-content/uploads/2023/10/USTelecom-2023-BPI-Report-final.pdf (last
    visited Apr. 30, 2024).
        \102\ Here, the letter cited Schieberl, River and Ahmadi, Nikki,
    Measuring the Success of the Affordable Connectivity Program (July 31,
    2023) https://ssrn.com/abstract=458690 or https://dx.doi.org/10.2139/
    ssrn.4528690
    ---------------------------------------------------------------------------
        The Bureau of Labor statistics offers data consistent with the R
    Street observation. Its Consumer Price Index for ``internet services
    and electronic information providers in U.S. city average, all urban
    customers, comparing January 2021 to January 2024,'' found that prices
    had dropped 7.8 percent, which compares quite favorably to another
    network business, electricity, for which prices rose 9 percent.\103\
    The index for all prices in those three years show an increase of 17.9
    percent.\104\
    ---------------------------------------------------------------------------
        \103\ https://www.ncta.com/broadband-affordability. This does not
    include an adjustment for increases in speed, which would, if added,
    show a decrease of 80 percent. But for purposes of this analysis, we
    are using the standard BLS CPI data.
        \104\ https://www.bls.gov/opub/ted/2024/consumer-prices-up-3-1-
    percent-from-january-2023-to-january-2024.htm. The data set provides
    the data for 22-23 (an increase of 6.4 percent) and 21-22 (an increase
    of 7.5 percent).
    ---------------------------------------------------------------------------
        Further, even the FCC Urban Rate Survey on which the EPIC study
    relies demonstrates exactly the opposite of what the EPIC model would
    predict. That survey concludes that prices for lower speed offers rose
    5.4 percent between 2020 and 2023, well below the general rate of
    inflation in those years. So, the price differences EPIC uses to make
    its claims took place in speed and price tiers not likely to be
    relevant for ACP-eligible households.\105\
    ---------------------------------------------------------------------------
        \105\ https://www.fcc.gov/economics-analytics/industry-analysis-
    division/urban-rate-survey-
    data-resources
    ---------------------------------------------------------------------------
        The key error made by the EPIC study errors is that it relies on
    pricing data that doesn't reflect the experiences of ACP subscribers.
    The FCC's Urban Rate Survey tells us the prices ISPs offer in the
    marketplace. It tells us nothing about what we want to know about ACP
    subscribers: what they pay for the services they subscribe to using the
    ACP benefit. In addition, the Urban Rate Survey data doesn't include
    mobile, but a significant portion of ACP enrollment is mobile (as
    discussed earlier). So EPIC is comparing the price of fixed to trends
    in a mixed fixed/mobile program. This raises significant questions
    about whether the resulting correlations are meaningless. In other
    words, the data that is the foundation of the EPIC study does not have
    a sufficiently clear link to the pricing relevant for ACP subscribers.
        Further, any analysis of price and ACP uptake needs to happen at
    ``apples-to-apples'' levels of geographic granularity. The EPIC study
    does not do this. It aggregates ACP enrollment to the state level (when
    zip code level ACP enrollment data is available) and compares it to
    statewide ACP enrollment and statewide pricing data. That's like saying
    ACP enrollment rates in the Bronx somehow have something to do with
    prices of service offerings in Westchester County NY. As I believe any
    person working for ISPs on pricing strategy would tell you, they don't.
        Second, the EPIC study is theoretically wrong. Anyone who
    understands communications networks would incorporate into their
    analysis that communications networks are a shared resource for which
    the greater the number of customers using the network, the lower the
    per user cost structure for the provider. That is, the networks involve
    high capital expenditures but low incremental costs, so the greater the
    number of customers, the lower the per user cost. While we can argue
    about how many new customers ACP created or how many intermittent
    customers were kept on by virtue of the ACP, there should be no
    argument that the per user cost to the ISP would go down, not up, by
    virtue of the ACP. We can also argue about the competitive intensity of
    the broadband services market, but we should all agree that if there is
    a competitive dynamic and the cost structure per user goes down, the
    price should also go down. That understanding, however, is absent in
    the analysis of the EPIC study.
        Third, it is logically wrong. Think of it this way. There are two
    kinds of broadband customers; those relying on ACP and those who don't.
        As to the first group, whether they previously purchased broadband
    or not, ACP meant that as a practical matter, they were paying less for
    broadband. So as to that group, ACP is clearly deflationary.
        As to the second group, they would be unaffected by ACP. That is,
    they are not eligible to receive it. But as noted above, as the ACP
    lowers the cost structure for the ISPs, if anything, it should reduce
    prices. As further noted above, it is illogical to think that ACP
    enrollment rates in the Bronx somehow have something to do with prices
    of service offerings in Westchester County NY.
        Further, to believe that ACP would cause ISPs to increase prices
    for those who don't receive ACP requires the belief that the ISPs have
    been charging non-ACP recipients less than what would be the profit-
    maximizing price. I do not mean this as any criticism of the ISPs, who
    are, and should be, profit maximizing enterprises. But having spent
    most of the last two plus decades advising institutional investors who
    invest in ISPs, I believe that my clients would be, at a minimum,
    highly skeptical of any study dependent on an assumption that the ISPs
    charged less than what they could to maximize profits.
        In addition, there are also a number of technical problems with the
    study. For example, the study's time-frame doesn't hold up, as it looks
    at price changes from 2021 to 2022. (It uses the 2023 FCC Urban Rate
    Survey which is 2022 data). That is probably not the right time-frame
    for an ACP analysis.\106\
    ---------------------------------------------------------------------------
        \106\ The EPIC study's methodology notes are too sparse for me to
    be certain but based on the limited citations the study does provide,
    it appears the study is comparing ACP enrollment rates from 2022 to
    2023 to FCC Urban Rate Survey data for 2021 to 2022 (i.e., the 2022 and
    2023 Urban Rate Survey datasets). As a result, its entire analysis may
    attribute 2022 trends in broadband prices to 2023 trends in ACP
    enrollment, which would be, to put it mildly, problematic. Again, while
    I am not an economist, I am fairly certain that future activities
    cannot be seen as causing actions in the past. Except, of course, in
    the Terminator movie series.
    ---------------------------------------------------------------------------
        Further, it ignores the predecessor program, the EBB.\107\ In
    addition, the study does not control for quality changes in broadband
    (e.g., higher speeds). Also, the Urban Rate Survey data on which the
    study relies doesn't consider promotions or bundles; it's basically the
    rack rate for broadband. As anyone who knows the industry understands,
    a significant number of subscribers pay an amount less than the rack
    rate.
    ---------------------------------------------------------------------------
        \107\ In this regard, there is also an interesting historical
    error. While the study notes the ACP predecessor, the Emergency
    Broadband Benefit (EBB), it does not incorporate the subsidy, 67
    percent larger than the ACP subsidy, into its model. If the study's
    model were correct, the EBB should have caused a greater level of
    inflation than the smaller ACP subsidy. Further, and curiously, the
    paper says the benefits were ``similar.'' I have never read a study in
    which an economist refers to a benefit 67 percent greater than another
    as ``similar.'' Again, while I am not an economist, I don't believe the
    numbers, in this context, are similar.
    ---------------------------------------------------------------------------
        So, your question about how to weigh various studies is
    appropriate. Again, I appreciate being directed to areas where one
    study I cited might have a deficiency. I would hope, however, that in
    fairness and in a good faith effort to develop policy that serves the
    public interest, even when we lack perfect information, that all sides
    consider the validity of studies they have cited.

        Question 10. Your written testimony noted various affiliations.
    Which companies that receive ACP have you or your employers received
    funding from since the program's inception?
        Answer. As noted in my testimony, my views are my personal views
    and do not represent any institution in which I am affiliated. In terms
    of employment, I am an equity analyst with New Street Research, a
    global equity research firm focused on telecommunications, tech, and
    media. All my work at New Street Research is paid for by institutional
    investors, none of whom receive any ACP funding. Over 96 percent of New
    Street Research revenues are from institutional investors. While
    checking to make sure I was correct in my assumption that none of New
    Street's compensation comes from entities receiving ACP funding, I
    discovered that New Street has done a consulting project for an entity
    that does receive ACP dollars. The project was not related to ACP, and
    I did not work on the project, nor was I aware of it. The project
    involved a sum that was approximately 0.11 percent of the firm's
    revenues.
        Let me also note that the question--perhaps unintentionally--
    carries the subtle suggestion that the only enterprises that care about
    the ACP are the ones who have received funding from the program since
    the program's inception. While it is true that telecommunications
    providers support continuing the program, so do many organizations
    outside of telecommunications. For example--and in support of what I
    wrote in the several questions related to healthcare, the American
    Hospital Association wrote a letter to the several Senators in support
    of extending the ACP program.\108\ While they are not directly
    compensated through the ACP program, it wrote that ACP ``can support
    patients' access to certain services like telehealth visits, hospital
    at home, patient portals and electronic patient records, virtual
    scheduling, and remote patient monitoring--which are not possible
    without reliable internet.'' It further noted that the ACP is ``also
    critical in continuing efforts to reduce disparities and advance health
    equity by giving patients in rural and underserved areas the necessary
    resources to utilize various forms of telehealth, as well as other
    digital health services.'' Similarly, the United States Chamber of
    Commerce (along with many local Chambers of Commerce) endorsed the ACP
    extension, writing that the ``program's focus on Internet affordability
    serves as a critical tool to help connect all Americans, empower full
    participation in the 21st Century economy and broaden access to
    critical services such as education, healthcare and banking.'' \109\
    ---------------------------------------------------------------------------
        \108\ https://www.aha.org/2024-05-07-aha-letter-support-affordable-
    connectivity-program-extension-act-2024.
        \109\ https://www.uschamber.com/technology/broadband/u-s-chamber-
    comments-in-support-of-the-affordable-connectivity-program-extension-
    act
    ---------------------------------------------------------------------------
        In short, no one should be under the impression that the only
    companies who benefit from the ACP are telecommunications providers. As
    my testimony and answers to these questions, I hope, make clear, at
    this point, everyone benefits from universal adoption of broadband.
        Let me close by again thanking the Committee for the opportunity to
    share my views on this important topic and thanking the Senator for the
    opportunity to answer specific questions that my initial testimony
    raised. I hope the answers are helpful in leading to an efficient and
    sustainable policy for enabling all to afford broadband on a continuing
    basis.
                                     ______

          Response to Written Question Submitted by Hon. Ted Cruz to
                              Paul Winfree, Ph.D.
        Affordable Connectivity Program
        Question 1. During the hearing you cited a report by the National
    Review showing that companies treat the $30 ACP subsidy as the new
    price floor. Are there any other interesting conclusions from the
    report?
        Answer. The National Review used Internet archives to document how
    companies were offering low prices--as low as $10--for broadband
    services prior to the ACP. After ACP, these same offerings, or similar
    ones were offered at the ACP subsidy amount: $30.
        Quote from the February 15, 2024 National Review:

            A $30 subsidy for low-income households means AT&T could raise
            prices by up to $20 per month, and low-income households would
            still get Internet service at no cost to them. And sure enough,
            the price now advertised on AT&T's website for a faster ``low-
            cost Internet service for eligible households'' is $30 per
            month. (See this page from the Wayback Machine with the same
            URL in 2021 advertising service for $10 per month.) In a
            February 2022 press release, AT&T straightforwardly advertised
            its new low-cost plans as being ``the best monthly rate
            possible--$0'' with enrollment in the ACP. ``New `Access from
            AT&T' Plan + New Federal Benefit = Free Internet,'' the release
            was titled.

        It is also worth noting that many Internet companies are now
    advertising high-speed Internet plans for $30 per month or less with no
    fees or data caps, according to a May 31st White House statement.

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