Should we provide a ‘Hand Up” to low-income Americans or “Hang Up” on them?

Should we provide a ‘Hand Up” to low-income Americans or “Hang Up” on them?

Last week’s Congressional oversight hearing on the Lifeline program vacillated between fact and fiction.

Thanks to efforts by Springwire and Consumer Action, more than 1,400 Americans who benefit from the program wrote to tell the committee how important Lifeline phone service is to low-income households.

Testimony from industry, consumer advocates and government confirmed that providing communications support to low-income households allows these Americans to call employers, schools, health care providers, family, veterans' help lines, and police. The bottom line is that access to communications helps people find their own pathways out of poverty.

However, despite a record overflowing with letters of support, individual stories and expert testimony, many members attending the hearing continued to perpetuate negative myths about the program.

Fiction: President Obama is responsible for the creation of the prepaid wireless Lifeline program.

Fact: Lifeline is a bi-partisan program started by the Reagan Administration and expanded in 2005 to include prepaid wireless under the Bush Administration. In 2012 the Obama administration focused on rooting out fraud, waste and abuse, reforming the program at both the user and the provider levels.

Some of the expert witnesses emphasized this basic fact by reiterating it in both their oral and written testimony. An excellent explanation of the history of the Lifeline program, the guiding concept of Universal Service and its roots in the Postal Act ushered in by the nation’s first president (yes, that would be President George Washington) can be found in the written testimony by expert witness Jessica Gonzales of the National Hispanic Media Coalition (NHMC.)

Even after hearing the expert witnesses, Reps. John Shimkus (R-IL) and Billy Long (R-MO), continued to confuse the discussion by calling the nearly 30-year old Lifeline program “Obama Phone.”

Fiction: Lifeline is a tax.

Fact: Lifeline is one of four programs of the Universal Service Fund utilized by industry for the extension of telecommunications services. These same industry groups pay into the fund. Of the four USF programs, Lifeline ranks third in cost.

Expert witness Chris Guttman-McCabe of CTIA the Wireless Association fielded this question before the panel:

The Lifeline program, like all USF programs, is funded through levies imposed on providers of interstate telecommunications services. Wireless companies, wireline telephone companies, and VOIP providers contribute to the fund and generally recover those contributions from their end-user customers. Funds are remitted not to the U.S. Treasury, but rather go to the Universal Service Administrative Company, an independent, not-for-profit organization established by the FCC to administer the four universal service programs.

Universal service contributions collected and distributed by USAC do not impact the federal budget, the deficit, or the debt in any way. Congress appropriates no money for the fund and, because of that, increasing or decreasing the size of the Lifeline program, or any other component of the overall universal service program, will not impact the federal budget.

Fiction: Lifeline users are not really in need.

Fact: According to data from one Lifeline provider the average Lifeline household makes $14,000 a year. That is well below the government’s definition of the “poverty line.”

Here are some additional facts carriers released about their Lifeline customers:

  • Seniors depend on this service -- 60% of customers are over the age of 45, and nearly a third of customers are over 55 years old
  • Our lowest-income households use this service – 79% of customers have an annual household income below $15,000
  • Lifeline users are diverse – 53% are Caucasian, 30% are African American and 10% are Hispanic

In comments to the FCC, carriers reported significant percentages of Lifeline users who have children, are disabled or are veterans.

Some carriers even worked with customers to create video testimonials to highlight the importance of the program.

However, if committee members at the hearing managed to miss all the written testimony, comments and letters of support, they could not miss the moving oral testimony by expert panel witness Jessica Gonzales of NHMC. Ms. Gonzales, during her five minutes of testimony, retold the stories of Lifeline users and recounted her own story of using Lifeline during a moment of need and struggle.

Fiction: The Federal Communications Commission (FCC) has not taken serious measures to reform the Lifeline program, illustrated by the “runaway growth” of the program.

Fact: The FCC's reform measures have met and exceeded the goals to curb growth and address fraud, and are on track to save 2 billion dollars by 2014.

On May 4, 2010 the FCC asked the Federal State Joint Board to provide input into reforms for Lifeline. On June 15, 2010 the Federal Joint Board began to examine Lifeline reforms to address issues of fraud, waste and abuse.

Following the required procedures for a rule change, the Commission received Federal State Joint Board input and initiated multiple rounds of public comment. By January of 2012 the FCC voted on rule changes to address fraud, waste and abuse.

Like any nationwide program with federal, state, industry and community components, the implementation of program changes takes time and close scrutiny to ensure that the rules are properly applied. Despite these challenges, the FCC reported that it not only met its 2012 target to reduce the program by 200 million dollars but it exceeded targets by reducing the program in 2012 by 214 million dollars. The program is on track to save 2 billion dollars by 2014.

If you are curious about changes made in the 2012 order, but don’t have the time to tackle the 500- page document, I strongly suggest you check out the Commission’s expert witness for the panel, Chief of the Wireline Competition Buearu, Julie Veach’s written testimony.

As the FCC continues to enforce and implement the program changes, I hope committee members take this time to get up to speed on the facts of this important, 30-year old program.

Communications tools provide a pathway out of poverty and help the nation ensure that all Americans can fully participate in the growth of the country. Informed and educated oversight by members of Congress will help guarantee the longevity and future relevance of this critical program.

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Comments

If were to return to a policy of equal access at lower layers and ensure open access to exchanges and intranets in middle and upper layers, the market would subsidize the bulk of access. This is by virtue of two aspects of metcalfe's law. One is that costs increase linearly while core/network value increases geometrically. The second is that this core value in turn pulls demand along and with balanced settlement exchanges, the core buyer will subsidize edge access. We saw lots of examples of this with the prior 3 waves of digitization (WAN/IXC, data and wireless) and we will see the same dynamics play out in last mile BB access.

Infostack on April 30, 2013 - 7:53am.