January 2012

A Justice Department memo last month that cleared the way for states to legalize online poker and lotteries makes it more important than ever for Congress to clear up the issue on a federal level, supporters of legislation say.

The Justice Department said the 1961 Wire Act, a federal law barring certain types of betting using wire communications, only applies to gambling on sporting events. The memo, which was written in September but not released until late last month, was crafted in response to questions from New York and Illinois about the legality of selling state lottery tickets online. Supporters of legalizing online poker cheered the ruling but said it may create confusion and encourage the creation of a patchwork of state Internet gambling rules. Congress passed legislation in 2006 aimed at barring online gambling in the United States by prohibiting financial institutions from processing payments for online bets. "I think that this ruling creates more confusion than clarity in the Internet gambling debate," SAID American Gaming Association President and CEO Frank Fahrenkopf.

Dropped calls and spotty service, particularly for iPhone owners, made AT&T the most hated wireless carrier in America. Here's the surprise twist: widespread, under-the-radar improvements to the company's network have quietly helped AT&T move past its infamous struggles.

The nation's second-largest wireless carrier says it spent roughly $20 billion last year making 48,000 network enhancements across the country. That spending spree bought a 25% improvement in dropped-call performance on AT&T's 3G network, plus added capacity and faster speeds. In the process, the company turned on two new networks. They each offer significant improvements over AT&T's existing 3G network: one new network has speeds of up to four times faster than 3G, and the other brings a ten-fold improvement in speed.

[Commentary] Sometimes government reform is actually something else in disguise. I am wondering if that is the case with the recent criticism of Lifeline-Linkup, a program established by Congress and started under the Reagan administration to provide access to communications services for the poorest Americans.

Congress and the Federal Communications Commission have long acknowledged the societal and economic importance of communications: networks actually increase in value as more people connect. So does income, employability, access to healthcare, and access to emergency services. With technological change, Congress updated Lifeline-Linkup to include cellular service, and now provide persons below the poverty level a choice—just as higher income individuals have—regarding their devices and services. No one disputes that the program can be streamlined and improved; specifically, duplicate subsidies should be disallowed, eligibility enforced, and overall administration improved. Two industry leaders, Nexus and Tracfone, have come forward with self-regulatory and creative ways to solve many issues related to Lifeline-Linkup. One of these is a data-driven solution, paid for by the industry, to ensure only one subsidy per household. The FCC has an opportunity to adopt an industry-led, voluntary resolution which will be cost-saving because it is paid for by the companies themselves. It can certainly be implemented much more quickly than a burdensome bureaucratic government scheme. And most importantly, will it resolve the program’s problems.

While I would hope our policymakers govern with compassion, perhaps they should just look at the bottom line and realize that Lifeline/Linkup could actually assist in raising incomes and improving the economy. As President Reagan so eloquently stated: “(W)elfare’s purpose should be to eliminate, as far as possible, the need for its own existence.” Lifeline-Linkup is one of the few government programs which does precisely that.

Here’s an outline of proposed changes to the Federal Communications Commission’s Lifeline program.

I. Proposed changes to eliminate waste, fraud, and abuse from and otherwise reform Lifeline will:

• Establish clear goals and metrics to measure performance towards those goals;
• Create a National Lifeline Accountability Database to prevent multiple carriers from receiving support for the same subscriber;
• Set a budget for Lifeline, while acknowledging that the size of the program should fluctuate as the economy improves or worsens and the Lifeline-eligible population shrinks or grows.
• Establish national eligibility criteria to ensure access to Lifeline service for all low-income consumers who meet federal standards for participation in the program, with the recognition of the unique circumstances facing Tribal communities. States would be permitted to add to these criteria.
• Conduct independent audits every two years on every carrier that receives more than a specified annual amount of support from the program.

II. Reforms will start the process of modernizing Lifeline from telephone service to supporting broadband:
Broadband has gone from being a luxury to a necessity for Americans, including to look for and find a job and access education and healthcare services. Proposed modernization of Lifeline will:

• Establish a Broadband Adoption Pilot Program using savings from other reforms to test and determine how Lifeline can best be used to increase broadband adoption among Lifeline-eligible consumers. Starting this year, the program will solicit applications from broadband providers and will select a number of projects to fund. Lifeline will help reduce the monthly cost of broadband service, but applicants will be expected to help address other challenges to broadband adoption, including the cost of devices and digital literacy.
• Increase digital literacy training at libraries and schools. A Further Notice of Proposed Rulemaking will seek comment on using savings from USF reforms to increase digital literacy training at libraries and schools, a key step in increasing broadband adoption.
• Build on FCC efforts to close the broadband adoption gap and address digital literacy, including the Connect-to-Compete initiative, which enlists government, non-profit, and private sector leaders to address broadband adoption barriers through digital literacy training and low-cost broadband availability.