When Lifeline dwindles: the FCC is decreasing the field of players

Lifeline is a federal program that subsidizes phone and internet access for low income households. It can offset internet access by $9.25 a month. Right now only 28 percent of eligible households take advantage of Lifeline programs.

New America reports that the FCC is making it harder for more people to access the funds…

Unfortunately, the FCC, under Chairman Ajit Pai, recently limited the number of providers that can offer Lifeline service in tribal areas (though that decision is now tied up in legal proceedings), and in November 2017, the agency proposed a series of changes to the program that, together, would severely hobble the program and take Lifeline service away from millions of people. Put differently, the FCC is chipping away at the one federal program charting a path of opportunity for Americans cut off from the internet.

“Our statistics suggest the program has shrunk 30 percent under Chairman Pai’s watch,” John Heitmann, a partner at Kelley Drye & Warren LLP who has represented Lifeline-participating companies, said at a recent New America event, which broadly explored the function of the Lifeline program and the need to protect it.

Heitmann elaborated on the 30-percent drop in the program over the past two years, attributing it to, “in large part, regulatory uncertainty created during Chairman Pai’s administration. [Pai] started by eliminating [Lifeline Broadband Provider] LBP designations within weeks of walking in the door,” Heitmann added, referring to Pai’s decision, at the very beginning of his administration in 2017, to revoke nine broadband companies’ official designations, which had allowed them to participate in the program. “That sent a signal to the marketplace that we have problems. … The companies have been having difficulty attracting investment to grow in the Lifeline space.”

The FCC is also trying to change the rules on who can be a Lifeline providers. The funny thing is that the big wireless providers don’t really want the “business” of serving reduced rate retail service; instead they seem happy to work with resellers…

The FCC has also put a target on wireless resellers—indeed, this was one of the central points of conversation at the event. The FCC has proposed that only companies that build and operate wireless networks—so-called facilities-based providers—should offer Lifeline service. This is supposedly to fuel broadband infrastructure investment, which is a worthy cause, but, notably, that’s the task of several other FCC programs—not Lifeline. Wireless resellers, as their name suggests, purchase service from facilities-based providers and resell that capacity to their own customers, including Lifeline customers. Frequently with Lifeline providers, these resellers tailor their products for Lifeline recipients to ensure that they’re affordable, maximizing the $9.25 per month subsidy; often the service is free to the customer. Banning these providers from the program would potentially leave millions of low-income Americans unserved.

Heitmann noted that all four of the country’s large network providers (AT&T, Verizon, T-Mobile, and Sprint) “voluntarily resell their services to Lifeline wireless resellers.” These four providers are “happy to resell their services … because they’re not particularly good at serving these low-income consumers.”

Yosef Getachew, Director of the Media and Democracy Program at Common Cause, echoed these sentiments, noting that the proposal to eliminate wireless resellers would take away the “actual carriers” serving the low-income communities who “don’t necessarily have a bank account or good credit history or are suffering from disabilities” and thus require affordable services made possible through the Lifeline program. Given that wireline and facilities-based providers don’t have incentives or the motivation to serve these communities, Getachew added, “it’s the resellers who have actually developed the relationships, the customer base, and the credibility to actually provide service to these communities.”

Think of it this way: The proposed elimination of wireless resellers not only contradicts the very purpose of the Lifeline program, but it also undermines current revenue streams that nurture broadband infrastructure investment.

It sounds like a federal program that is already under-utilized is getting harder to access…

The FCC’s proposal, on the whole, represents a wholesale attack on the Lifeline program. Instead of merely rescinding its program, the agency has rebranded a series of coordinated attacks that would obstruct the program’s ability to help consumers as “reforms.” Thankfully, these proposals haven’t been formally approved by the FCC. But as long as they remain on the table, they live on as a constant threat to millions of low-income Americans who rely on the program for the communications services they require in their day-to-day lives.a

This entry was posted in Funding, Policy 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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