FCC’s Lifeline Reforms Saved More Than $210 Million in 2012; FCC Announces 14 Broadband Pilot Projects

The Federal Communications Commission announced that savings from its comprehensive reform of its Lifeline program earlier this year reached nearly $214 million in 2012, surpassing the $200 million target the FCC set when it comprehensively reformed the program in January. The FCC also announced the selection of 14 pilot projects in 21 states and Puerto Rico that will field test approaches to using Lifeline to increase broadband adoption among low-income Americans.

Major savings are being realized by:

• Eliminating “Link Up” subsidies for new connections, which were acting as unnecessary “bounties” for new sign-ups. As a result, Link Up expenditures dropped from roughly $14 million in May – the final month Link Up payments were sent to providers -- to less than $200,000 in December. Link Up is still available in some Tribal areas.
• Requiring carriers to obtain proof of income eligibility from new subscribers. These changes took effect in June and were first reflected in August disbursements, which dropped by nearly $40 million in one month.

Clarifying that Lifeline subscriptions are limited to one per household, and scrubbing subscriber roles of duplicates. The FCC has reviewed over 12 million subscriber records and eliminated 1.1 million duplicate subscriptions, which will result in $128 million in annualized savings. The process of examining subscriber rolls state-by-state continues as the FCC develops a comprehensive database that will automatically check for duplicate subscriptions.
Requiring providers to verify the continued eligibility of their subscribers for Lifeline on annual basis.

Using $14 million in savings from reforms, the FCC’s Wireline Competition Bureau has chosen 14 high-quality pilot projects to advance broadband adoption through Lifeline. The projects will provide critical data and rigorous analysis regarding how Lifeline can efficiently and effectively increase broadband adoption and retention among low-income consumers. Located in 21 states and Puerto Rico, the pilots will also provide broadband for nearly 75,000 low-income consumers who now lack service. In order to rigorously test how best to use Lifeline to support broadband adoption, the pilots will gather
data and provide analysis on a wide a range of geographic, technological, and programmatic variables. Projects include five wireless broadband projects, seven wireline broadband projects, and two offering wireline or wireless technologies. Seven will test discounted service in rural areas, including two on Tribal lands, and seven will test discounted service in urban and suburban areas. Variables that will be experimentally tested include the use of digital literacy training, equipment types, subsidy levels, speed ranges, and usage limits. The Pilot Program will run for 18 months, beginning on Feb. 1, 2013. Winners have three months to set up the pilots, and must provide one year of subsidized service. The pilots must complete data collection and analysis in the final three months.

1. Frontier Communications Corporation (OH, WV)
2. Gila River Telecommunications, Inc. (AZ – Tribal)
3. Hopi Telecommunications, Inc. (AZ – Tribal)
4. National Telecommunications Cooperative Association (NTCA) Project (which includes the following carriers: Alpine Communications (IA); and Leaco Rural Telephone (NM))
5. Nexus Communications, Inc. (OH, MI, IA, NV, CA, LA, MS, NJ)
6. Partnership for a Connected Illinois Project (which includes the following carriers: Adams Telephone Cooperative; Cass Telephone Company; Harrisonville Telephone Company; Madison Telephone Company; Mid-Century Telephone Cooperative; Shawnee Telephone Company; and Wabash Telephone Cooperative (IL))
7. PR Wireless, Inc. (Puerto Rico)
8. Puerto Rico Telephone Company (Puerto Rico)
9. T-Mobile Puerto Rico LLC (Puerto Rico)
10. TracFone Wireless, Inc. project using smartphones (FL, MD, TX, WA, WI, MA)
11. Troy Cablevision, Inc. (AL)
12. Vermont Telephone Company, Inc. (VT)
13. Virgin Mobile USA, L.P. (MA, OH)
14. XChange Telecom Corp. (NY)