FCC proposes changes to Lifeline program: $9.95 subsidy for broadband

The FCC is proposing a changes to the Lifeline program, the program that has helped low-income households get access to telephone service since 1985. The proposal was made last week; Multichannel gives a nice synopsis…

FCC chairman Tom Wheeler is circulating his proposal to modernize the FCC’s Lifeline subsidy program to migrate it to broadband. A vote on the proposal is planned for the March 31 meeting.

The chairman is billing it as a “reboot” of the program to bring it into the 21st Century. The Lifeline program is part of the Universal Service Fund and provides subsidies for communications services to low income households.

For the first time, the $9.95 per subsidy–the order does not increase the subsidy–can be used to support stand-alone mobile or fixed broadband service as well as bundled voice and data packages.

The program keeps the 10 Mbps downstream/1 Mbps upstream benchmark for service, and a minimum monthly usage allowance of 150 GB for fixed service and 500 Megabits per month of 3G data for mobile, increasing to 2 MB by the end of 2018.

Support for standalone mobile voice will be wound down to $7.25 per month as of December 2017, $5.25 per month as of December 2018, and nothing after that. But mobile voice will still be supported as part of a mobile broadband bundle.

To help combat waste, fraud and abuse, the order would establish a National Eligibility Verifier and says it will minimize the impact on ratepayers–the subsidies wind up on consumer bills–by setting a budget of $2.25 billion, indexed for inflation.

In a blog post FCC Commissioners outline the three central facets to their plan…

First, it re-orients Lifeline for the broadband era and sets minimum service standards for voice and broadband. That way Lifeline subscribers will be able to take full advantage of the many benefits reliable Internet access can bring – from jobs to education to healthcare, and the hard-working Americans who support the program won’t be paying for second-rate service.

Second, it improves Lifeline’s management and design. We streamline program rules and eliminate outdated or unnecessary regulations to reduce administrative burdens and make it easier for broadband providers to participate. This provides them with a good business case for participation – and provides Lifeline consumers with more competitive options. By increasing competition and bringing market forces to bear on the program, we get at the heart of the historic issues that have undermined the program’s efficiency. In short, we get more bang for our Lifeline buck and ensure low income consumers have access to services comparable to what the rest of us are fortunate to enjoy.

Third, it shuts the door on the program’s final remaining vulnerability. We establish a National Eligibility Verifier as a powerful check against waste, fraud, and abuse. The program we inherited allowed Lifeline providers to verify the eligibility of their subscribers. This is both an administrative burden for providers, and an opportunity for unscrupulous marketers to admit ineligible consumers. The National Eligibility Verifier solves this problem by creating an independent third party to establish an efficient system of eligibility verification, lifting burden and foreclosing fraud. This verifier will use existing trusted programs such as Medicaid and the Supplemental Nutrition Assistance Program (SNAP) to determine eligibility. The independent Verifier has the added benefits of increased subscriber portability, which means more consumer choice.  The result is a more dignified process for enrollment that better protects consumer privacy and security.

Public Knowledge (and others) have been supportive of the changes…

Today, Public Knowledge joined a broad cross-section of public interest groups and broadband providers in a letter to support the Federal Communications Commission’s goal of bringing the Lifeline phone subsidy program into the modern era by extending the subsidy to broadband service.

Broadcasting and Cable outline the reactions to the proposed changes.  Industry folks seem to like it…

Comcast senior executive VP David Cohen blogged his applause for and advice to the FCC for its effort to modernize the program to support broadband and to simplify the process for provider participation. But he also said that addressed only one barrier to adoption, and that it must prevent waste, fraud and abuse.

Common Sense Media approved…

We applaud the FCC’s draft Lifeline order because it will take America a critical step closer to eliminating the gaping divide between today’s digital haves and have nots. The FCC’s thoughtfully drafted plan will ensure the program is efficient and accountable and that millions of America’s children and adults can more fully participate in our modern economy and education system.

FCC Commissioner O’Rielly was less enthusiastic…

Republican FCC Commissioner Michael O’Rielly, who echoed a complaint he lodged against the chairman over previewing the item for press before circulating it.

“Hours after the Chairman launched his press campaign and multiple sources reported he had circulated this item, it has just landed in my inbox,” he said. “I haven’t had a chance to review all 150 pages yet, but as usual, the “Fact Sheet” released this morning raises more questions than answers. It’s impossible to tell whether the “budget mechanism” is actually a budget in any real sense of the word. It is unclear what “Commission action” would take place when spending gets close to the amount specified – would the full Commission get a vote? And what is the rationale to justify increasing spending on this Universal Service program – but not others – by $750 million, an increase of 50%?

“These are the answers I will be looking for as I review the Order. But since they are not actually given in the information made public so far, under the current rules I will be barred from discussing them. This fiasco seems to add fuel to my arguments for releasing the document to the public or at minimum to stop censoring Commissioners with rules that aren’t being applied equally.”

Complaints about media preview aside, budget seems to be his concern.

I have heard that some tribal communities are not supportive. I know there were concerns in early February about Tribal Lifeline issues in Oklahoma

In a February 2, 2016 press release, Federal Communications Commissioner Ajit Pai called the continuation of Tribal Lifeline subsidies in Oklahoma a “legal scandal” and a “bloated tax payer subsidy.” …

At issue is the map used to determine “tribal lands.” Mr. Pai’s objections are based upon the fact that the FCC will, at least for a short period of time, continue to use a map that includes lands that were historically occupied by Native Americans.

Mr. Pai’s knee-jerk statement implies that Tribes are somehow the culpable recipients of undeserved benefits. Mr. Pai’s statements also suggest a misunderstanding of how the Lifeline program actually operates to assist all low-income families on Tribal lands, not just Tribal families.

Providers in Oklahoma are concerned with wireless restrictions…

“Without wireless resellers, the vast majority of Tribal Lifeline wireless subscribers would be left without a wireless option,” the company said. “These statistics plainly show that removing wireless resellers from participation in the Tribal Lifeline program in Oklahoma would decimate the Lifeline program in Oklahoma and dramatically undermine the primary purpose of the enhanced Tribal Lifeline benefit, which is to increase suscribership to communications services on tribal lands.”

I believe that the Tribal Lifeline subsidy will still be added to the “new” subsidy…

The FCC earlier this month gave wireless carriers an extra four months to drop some customers from Tribal Lifeline, the federally funded subsidy for low-income residents on tribal lands in Oklahoma, saying providers need more time to implement the transition smoothly. The $25 per month enhanced Tribal Lifeline subsidy is applied on top of the $9.25 offered to providers for phone service to low-income customers through the federal Lifeline program.

This entry was posted in Digital Divide, FCC, Funding by Ann Treacy. Bookmark the permalink.

About Ann Treacy

I have a Master’s Degree in Library and Information Science. I have been interested or involved in providing access to information through the Internet since 1994, when I worked for Minnesota’s first Internet service provider. I am pleased to be a part of the Blandin on Broadband Team. I also work with MN Coalition on Government Information, Minnesota Rural Partners, and the American Society for Information Science and Technology.

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