CURB Your Enthusiasm: House Considers Capping Lifeline Program and Passes Ban on Broadband Rate Regulation

Submitted on April 15, 2016

CURB Your Enthusiasm: House Passes Ban on Broadband Rate Regulation and Considers Capping Lifeline Program

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Robbie’s Round-Up for the Week of April 11-15, 2016

Two important communication bills are winding their way through the House: On April 13, the House Communications Subcommittee held a hearing on seven (seven!) communications bills. One of those bills, the Controlling the Unchecked and Reckless Ballooning of the Lifeline Fund Act (CURB Lifeline) (HR 4884) seeks to impose a hard budget cap on the Lifeline program. Separately, the full House this week considered the No Rate Regulation of Broadband Internet Access Act (HR 2666), which would prevent the Federal Communications Commission from imposing rate regulations on broadband service. But some fear the bill would go far beyond blocking telephone-style rate regulations, gutting the FCC’s authority to enforce its Open Internet rules.

GOP Wants to Throw Low-Income Consumers to the CURB
The CURB Lifeline Act (HR 4884), authored by Rep Austin Scott (R-GA), aims to reign in the FCC’s Lifeline program by capping spending at $1.5 billion per year, prohibiting the use of subsidies for devices, and phasing out subsidies for voice-only service for mobile. In his opening remarks at the April 13 hearing, House Communications Subcommittee Chairman Greg Walden (R-OR) said, “We are not opposed to the mission of Lifeline. Universal connectivity is a core principle in this country, particularly for those who need it most, like children from low-income families. What we cannot support is a fund that lacks external controls and is susceptible to waste, fraud, and abuse.”

Press reports around the FCC’s March 31 vote on Lifeline reform and modernization indicated that capping the program’s budget was an issue of intense negotiation in the days and hours before the commissioners voted. When the FCC adopted its new Lifeline rules, a press release indicated that a $2.25 billion budget was set, but, moving forward, it would be indexed to inflation to allow for increased participation generated by the support for broadband. In addition, when Lifeline spending reaches 90 percent of the budget, the FCC’s Wireline Comptitoon Bureau will notify the full commission and prepare an analysis of the causes of spending growth and provide recommendations for the commission to consider.

Why did the FCC not impose a harder cap on Lifeline spending? As Sam Gustin wrote for Vice, "There are several reasons that the FCC voted not to impose a hard cap on the Lifeline program, but perhaps the most important is in order to preserve the agency’s flexibility in the event that the hard cap is reached halfway through the year, or a recession or natural disaster necessitates an increase in the program’s budget."

Republicans support HR 4884 while Democrats generally oppose it. Republican FCC Commissioners Michael O’Rielly and Ajit Pai wrote a letter to Chairman Walden in support of the bill, saying, “This measure represents a necessary and important step toward greater fiscal responsibility for the program, especially as it expands in size and scope to cover broadband services.”

Democrats took a different tone:

“This bill to curb the Lifeline program would take essential life-saving devices away from people who need help the most,” said House Commerce Committee Ranking Member Rep Frank Pallone Jr. (D-NJ). He voiced “serious concerns” about the bill.
Subcommittee Ranking Member Anna Eshoo (D-CA) raised the prospect that a hard cap on the program might incentivize eligible users who don’t desperately need the service to apply for it anyway, out of concern they might lose the opportunity if the program hits the cap.
Rep John Yarmuth (D-KY) brought up students who need to go outside of their homes so they can access the Internet they need to do their homework. “How many blocks would you say it would be OK to have a second or third grader walk so they could get their homework done?” he asked a witness who favored the cap.

Numerous public interest groups wrote a letter to Chairman Walden and Ranking Member Eshoo (D-CA) to voice their opposition to HR 4884:

We believe that it is essential to ensure that people of color, low-income people, and other vulnerable populations have access to broadband...We oppose the proposed cap, which would prevent eligible participants from using the Lifeline program and preclude universality, a key principle for Lifeline reform. The Lifeline program has never approached full participation rates by eligible populations. This cap could halt payments to eligible consumers mid-stream or result in unacceptable waiting lists for eligible households or other unreasonable and administratively cumbersome management mechanisms. By contrast, the FCC’s new budget mechanism combines fiscal responsibility with the ability to respond intelligently in the event of an unanticipated increase in need, such as one caused by an economic downturn or natural disaster. In addition, HR 4884 would eliminate support for voice-only mobile services in two years. As we stated in our comments to the FCC, it is evident from marketplace choices that mobile services have been a particularly important choice for people of color, low-income people, and other vulnerable populations. Moreover, access to mobile services align with important anti-poverty programs. The FCC’s planned modernization of Lifeline will phase out support for voice-only services by 2021 after a full review and report prior to the phase out, enabling the Commission to weigh the extent to which consumers have moved from voice-only to bundled voice and data plans. This provision of H.R. 4884 is unnecessary and will fail to protect low-income people.

HR 4884 is scheduled for a markup in the House Commerce Committee's Communications and Technology Subcommittee on April 18, and if all goes as planned, a vote to refer it to the full committee

Banning Broadband Rate Regulation -- Or Net Neutrality?
The purpose of the No Rate Regulation of Broadband Internet Access Act, according to the Electronic Frontier Foundation (EFF), is to codify FCC Chairman Tom Wheeler’s pledge not to use the Open Internet order to regulate broadband rates. However, some believe that Members of Congress want to use this bill to fundamentally undermine the central purpose of the order itself and gut FCC authority to impose its Open Internet prohibitions on blocking, throttling content, or anticompetitive paid prioritization.

Some also warn that the bill goes much further than network neutrality, weakening FCC authority in other areas. EFF wrote:

The bill...affects other issues that normally do not make front page news but are critical to disadvantaged communities. For example, the FCC has explicitly targeted phone rates prisons charge inmates after finding that prisons and telephone companies were entering into contracts that would kick back excessive charges to the prison industry. Since prisoners do not have a choice on what communications service they use, the FCC has directly intervened by regulating the rates these monopolies charge to the families of prisoners. If H.R. 2666 were to become law, prison industry lawyers would likely challenge the FCC’s authority to regulate rates in this space due to the legislation’s overly broad approach.

Over 50 different public interest groups joined together in writing a letter to House Speaker Paul Ryan (R-WI) and Minority Leader Nancy Pelosi (D-CA), urging the House to vote against HR 2666. They wrote, "Although the FCC is not setting rates, stripping away its authority to review monopoly charges and other unjust and unreasonable business practices would harm everyone…The legislation would undermine the FCC's efforts to protect consumer privacy, including oversight of so-called 'pay-for-privacy' plans that require customers to pay significant additional fees to their broadband provider to avoid having their online data collected and sold to third parties."

White House Threatens Veto
On April 12, the Obama Administration released a Statement of Administration policy regarding HR 2666. The statement reads:

The Administration strongly opposes House passage of HR 2666...which would undermine key provisions in the FCC’s Open Internet order and harm the Commission’s ability to protect consumers while facilitating innovation and economic growth,” the statement reads. For almost a century, our laws have recognized that companies that connect Americans to the world have special obligations not to exploit the gatekeeper power they enjoy over access in and out of our homes and businesses. The same philosophy should guide any service that is based on the transmission of information, whether a phone call or a packet of data. The FCC's rules —issued after a lengthy rulemaking process that garnered an unprecedented amount of public input, including comments from four million Americans — recognize that broadband service is of the same importance, and must carry the same obligations as so many of the other vital services do. These carefully-designed rules have already been implemented in large part with little or no adverse impact on the telecommunications companies making important investments in our economy.

The statement concludes (in underlined format), “If the President were presented with H.R. 2666, his senior advisors would recommend that he veto the bill.”

April 15 Vote
On April 15, the bill was debated on the House floor. Chairman Walden made it clear that one of the things the bill was aimed at preventing was the potential regulation of zero data plans, which the FCC is eyeing under its Net Neutrality general conduct standard. He pointed to T-Mobile's Binge On as an example of a pro-competitive, pro-consumer, innovative offering the FCC's authority to regulate under the Open Internet order was threatening.

During the debate, bill sponsor Rep Adam Kinzinger (R-IL) said he simply wanted to make sure that the FCC does not have the power to regulate rates, before or after the fact, saying "we are just taking back a little power from the FCC." In a voice vote, the bill received 241 ayes, and 173 noes.

For more information on the Rate Regulation bill, see Public Knowledge’s “The Emperor’s New Clothes: “Rate Regulation” as an Excuse to Gut FCC Consumer Protection Authority”

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