FCC Moves Toward Making Broadband More Affordable Through Its Lifeline Program

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On June 18, 2015, the Federal Communications Commission proposed to again reform and modernize its Lifeline program, seeking public input on restructuring the program to better support 21st Century communications while building on existing reforms to continue strengthening protections against waste, fraud and abuse. Established in 1985, the Lifeline program has made phone service – first landline service and now supporting wireless service as an option -- affordable for low-income Americans. Last year, Lifeline served some 12 million people. Now, a majority of the five FCC commissioners believe it is time for a fundamental, comprehensive restructuring of the program to meet today’s most pressing communications needs: access to broadband.

As Brian Fung writes in the Washington Post, the June 18 vote was about considering how to subsidize broadband access “in a move that recognizes high-speed Internet as a key to pulling the poor out of poverty.”

The FCC is proposing to maintain the program’s $9.25/month subsidy for low-income consumers, and seeks to use that money as efficiently and effectively as possible to deliver modern communications services. Proposals on which the FCC seeks comment include:

• Adopting minimum service standards for both voice and broadband service;
• Whether broadband should be a required offering of Lifeline providers;
• How to encourage more competition to improve price and service; and
• How to encourage more participation by the states.

"Today begins a proceeding to spend ratepayers' money more wisely, to deliver 21st-century benefits to deserving recipients, and to get to the heart of the historic issues that have haunted this program's efficiency," said FCC Chairman Tom Wheeler. “Both political parties are now engaged in serious campaigning as to who’s going to be responsible for the country and the Commission in a few years,” he said. “But both political parties are in violent agreement that our country is challenged by economic inequality.”

Building on Past Reforms

The FCC on Thursday adopted new rules to reduce waste, fraud and abuse in the Lifeline program. These include requiring providers to retain documentation of consumer eligibility, which will improve oversight and audits. But the FCC is also proposing to streamline and tighten the process of verifying consumer eligibility by taking it out of the hands of providers. Ideas include establishing a third-party “national verifier,” coordination with other federal needs-based programs, and considering the use of direct subsidies to consumers through vouchers. The FCC also seeks comment on a budget for the program.

In 2012, the agency adopted a series of reforms to streamline the program, and Thursday's vote aims to expand those measures.

Reaction Reveals Partisan Divide

The proposal was met with vocal opposition by FCC Commissioners Ajit Pai and Michael O’Rielly. Critics of Lifeline have accused the program of mismanagement and waste. Some free or discounted mobile phones have been given to those who do not qualify to receive them, and some people have signed up for the program more than once in violation of federal regulations.

"I am open to having a conversation about including broadband in the Lifeline program," said Commissioner Pai. "But any such change must go hand in hand with the reforms that are necessary to producing a fiscally responsible program."

“Adequate controls and deterrents against waste, fraud and abuse should be in place before considering expanding the program to broadband,” said Commissioner O’Rielly.

“I am befuddled at how this Republican program has suddenly become so partisan,” Chairman Wheeler said in responding to Commissioners Pai and O’Rielly. “But I am proud to cast my vote with the majority.”

Commissioner Mignon Clyburn said that too many Americans are “trapped in digital darkness and abandoned on the wrong side of the digital divide.”

Commissioner Jessica Rosenworcel called a broadband subsidy essential to bridging the “homework gap” in particular, pointing to children’s increasing need for Internet access. “Students who lack regular broadband access are struggling to keep up,” she said, noting that as many as 7 in 10 teachers assign homework that requires online connectivity. “Now is not a moment too soon, because this is about the future.”

On Capitol Hill, reaction to the FCC proposal – as at the Commission itself -- was divided along party lines. Senate Commerce Committee Chairman John Thune (R-SD) and Subcommittee on Communications, Technology, Innovation, and the Internet Chairman Roger Wicker (R-MS) said, “We are not convinced that the measures taken by the FCC to address waste, fraud, and abuse are sufficient to warrant the expansion of the program. At our subcommittee hearing earlier this month, Committee members on both sides of the aisle expressed concern about the FCC fundamentally changing or growing Lifeline without fixing existing problems first. This expansion may be ‘too much, too soon’ for a program plagued with problems and a lack of accountability in recent years. Regardless if Lifeline is expanded to include broadband, we urge the FCC to adopt critical measures to restore fiscal responsibility to ensure that the program serves those who truly need it. We also reiterate our call for the FCC to conduct a full program evaluation in accordance with GAO’s recommendations in its March 2015 report prior to adopting a final order expanding the Lifeline program to broadband.”

“I applaud the FCC for moving forward to modernize the Lifeline program,” said Sen Ed Markey (D-MA), a member of the Senate Commerce Committee. “Lifeline should reflect America’s need for broadband access at home for everyday living. The FCC’s decision today is an important step towards ensuring that low-income Americans will not be left with analog connections to the digital economy. I look forward to continuing to work with the Commission to update the Lifeline program for our increasingly interconnected world.”

In the House, Commerce Committee Chairman Fred Upton (R-MI) and Communications and Technology Subcommittee Chairman Greg Walden (R-OR) said, “The benefits of broadband Internet access and adoption are nearly boundless. We share the goal of making sure all Americans can connect to this fundamental tool of economic growth and social connectivity, but we cannot stand by as uncapped spending threatens to undermine the USF and its benefits. Unfortunately, it appears the order adopted by the FCC today – which still has not seen the light of day – fails to protect ratepayers from runaway costs and lacks necessary metrics to gauge performance. We have called time-and-again for the FCC to rein in out of control costs in the USF. The Commission has agreed that the program should be put on a budget, but despite this important recognition, there is still no fiscal restraint in sight.”

“Access to broadband is the 21st century’s lifeline,” said Rep. Anna Eshoo (D-CA), Ranking Member of the Communications and Technology Subcommittee. “It is a pathway to jobs, education, health care and much more. The steps taken by the FCC today to modernize Lifeline and add broadband ensure that low-income Americans will have access to this critical communications tool. It also furthers our nation’s progress toward bridging the digital divide.”

On June 1, 2015, Rep Doris Matsui (D-CA), along with Sen Chris Murphy (D-CT) and Sen Cory Booker (D-NJ), introduced legislation to reform and modernize the Lifeline program by allowing for broadband Internet services to be available to eligible households . If passed, the Broadband Adoption Act of 2015 will instruct the FCC to establish a broadband Lifeline Assistance program and will help bridge the digital divide by making in-home online services more affordable across the country.

Responding to the FCC’s June 18 action, Rep Matsui said, “I applaud the FCC for voting to modernize the Lifeline program for broadband. This is the future and we should not look back. The Lifeline program provides a tangible service to lower-income Americans and it is imperative that it be reformed and modernized to account for broadband services. We must ensure lower-income Americans have a greater opportunity to participate in the digital economy, whether it be for workforce training, education, finding a job, or developing the next big idea. I applaud the FCC for moving forward with reform measures to modernize the Lifeline program for the 21st Century.”

Many organizations weighed in on the FCC action, too.

Amina Fazlullah, the Director of Policy for the Benton Foundation, said, “The Benton Foundation applauds the FCC's move today to modernize its Lifeline program. This is an important step to provide low-income Americans with meaningful access to robust broadband. Now, more so than ever before, broadband is a necessary requisite to partake in our democratic society. Vulnerable communities, many of which are already lagging behind in broadband adoption, need this support to meet their vital and basic communication needs. Only 48% of households making less than $25,000 in income have broadband access. With substantial support for broadband services, a modernized Lifeline program will be great news for low-income consumers. We look forward to engaging in the Lifeline debate and commend FCC Chairman Wheeler and Commissioners Clyburn and Rosenworcel for their leadership on this issue.”

The Leadership Conference on Civil and Human Rights and National Council of La Raza issued a joint statement saying, “By voting to bring the Lifeline program into the 21st century, the FCC took an important step in narrowing our country’s digital divide and ensuring that all Americans have access to the essential communications services they need to live, learn, and work in today’s digital age. We thank Chairman Wheeler, and Commissioners Clyburn and Rosenworcel, for their leadership in moving forward with the critical and urgent task of building the bridge to connectivity for children, seniors, job seekers, low-income communities, and communities of color.”

The groups reiterated five principles recently endorsed by over 60 public interest and civil rights groups:

1. Universality: The program must provide sufficient resources and be designed to ensure all eligible households receive the support needed to afford high-quality broadband services.
2. Excellence: The Lifeline program for broadband must deliver maximum “bang for our buck.” Substandard services are not worthy of federal support.
3. Choice and competition. The FCC should leverage marketplace competition. A portable Lifeline benefit will encourage companies to improve offerings to compete for Lifeline customers.
4. Innovation. The FCC should structure the Lifeline for broadband program to support continuous innovation to improve program design and efficient operations.
5. Efficiency, transparency, accountability. The FCC must continue its vigilance to protect consumers’ pocketbooks and their privacy.

“Lifeline has tremendous potential to dramatically improve the lives of millions of Americans who cannot currently afford to connect to the Internet – the essential communications network of today,” said National Hispanic Media Coalition Executive Vice President and General Counsel Jessica Gonzalez. “This is an exciting moment in history: we have the opportunity to take the next step in a commitment that dates back to the Postal Act of 1792 – to ensure that everyone in this country can access the networks that connect us to commerce, information, education and democracy. In this day and age, making sure that our neighbors can afford broadband should be a national priority and is among the best investments that we can make as a country. Today, we begin a tried and tested FCC process to explore proposals, ask questions, and facilitate a national dialogue on the issue. I hope that this process will conclude by the end of this year because, as we all know, every moment a family goes without access to the essential tools that exist online is a profound missed opportunity, especially for the 5 million U.S. households with schoolchildren that cannot complete basic homework assignments because they do not have broadband Internet.”

“Public Knowledge commends the FCC for taking an historic step to bring the low-income Lifeline program in line with the way people communicate today by approving a Further Notice of Proposed Rulemaking to extend the program to broadband,” said Edyael Casaperalta, Internet Rights fellow at Public Knowledge. “The Notice acknowledges the critical role the Internet plays in the daily lives of all Americans, including low-income communities, by providing access to employers, schools, health care providers, family members and other services…. Public Knowledge is pleased to see positive action by the FCC in addressing fraud and abuse, and moving us towards a stable and effective Lifeline program that enhances competition, provides consumer choice, and allows the most vulnerable Americans to be full participants of our society.”

The National Association of State Utility Consumer Advocates supports the FCC's effort to expand Lifeline service to include broadband Internet access. NASUCA has been a staunch supporter of the national effort to ensure that all Americans can receive affordable access to essential communications services, including expanding the Lifeline program to include broadband. “NASUCA applauds the FCC on today's Notice. We look forward to working with the FCC to design a sustainable broadband Lifeline program that delivers ubiquitous, affordable access to this essential service at a reasonable cost.”

Delara Derakhshani, policy counsel for Consumers Union, said, “The FCC is taking important steps to restructure Lifeline and connect more Americans to broadband. People need broadband more than ever to find a job, keep a job, stay informed, and manage their day-to-day lives. Yet we still have a serious gap where millions of Americans don’t have access to affordable broadband. The FCC’s plan will help close the broadband gap and make Lifeline more relevant and impactful for a lot more people.”

The American Library Association strongly supports the efforts to update the Lifeline program. "Librarians know well that broadband access is essential to connecting people with educational and economic opportunity, as well as enabling full civic participation," said ALA President Courtney Young.

The New York, Kansas City, and Saint Paul Public Library systems applauded the FCC’s work to explore new ways to support affordable, high-quality internet access for all Americans. “We cannot accept a system that leaves nearly one-third of our neighbors in the digital dark,” said Tony Marx, president of the New York Public Library. “The FCC has a tremendous opportunity to help make sure every American has access to high-quality, home internet.”

“The lack of internet access at home contributes to achievement gaps in education and workforce skills,” said Kit Hadley, Director of the Saint Paul Public Library. “The FCC’s proposed rules take an important step toward the goal of affordable internet access for all.”

“Broadband, mobile, tablet, and smartphone have long since replaced the telephone, and even cell phone as the connection to the world for those seeking knowledge, jobs, education, health information and public safety. For the poor, challenged and underserved parts of our communities this is especially true. The Lifeline program should reflect those realities,” offered Crosby Kemper III, Executive Director of the Kansas City Public Library.

“As recently as 2013, one in five Americans still had no home access to Internet service of any kind. Census data from that year shows that the nation's persistent digital divide is heavily concentrated among lower-income households, for whom the cost of commercial Internet service remains a significant obstacle. Millions of our poorer, older and less educated neighbors are increasingly isolated -- from job opportunities, education, 21st century health care, civic and community activities, and social support -- because they lack mainstream digital access and skills. The Lifeline program was created decades ago to address a similar problem of isolation in a world dependent on voice telephony. That world has fundamentally changed in the era of broadband Internet. To serve its historic purpose, the Lifeline program must change as well,” said Angela Siefer, Director of the National Digital Inclusion Alliance.

Malkia Cyril, the Executive Director at the Center for Media Justice, said “As a national network organization representing low-income communities and communities of color, we are thrilled the FCC and Chairman Tom Wheeler are moving to bring millions across the digital divide, and close both the homework and income gaps that deny opportunity to so many. Modernizing the Lifeline program and extending it to include broadband ensures that our communities -- people of color, low-income families and rural communities -- can access jobs, education and other essential needs…. An open Internet can help elevate struggling families out of poverty. A Lifeline program with affordable broadband ensures equal access to the modern communications services everyone needs to succeed in today’s economy.”

TracFone, the nation's largest provider of wireless Lifeline service, said it is prepared to “work closely with the Commission to ensure that any new steps enhance this program that has proven critical to helping low-income Americans find and keep jobs, access emergency public services and health care, and remain connected with their families. TracFone is uniquely qualified to work with the FCC in the further evolution of the Lifeline program. TracFone has strived tirelessly since 2008 to ensure that a substantially increased number of qualified American households get the benefits that they are eligible to receive. The result: TracFone possesses Lifeline leadership and expertise that is unparalleled in the telecommunications industry today.”

What's Next?
The FCC will now begin to discuss the logistics of how exactly to incorporate broadband into Lifeline and write specific rules. Those changes will need to be approved by a separate vote, one not expected for at least several months. At Benton, we’ve been tracking Lifeline reform for a number of years and will continue to update you every step of the way. And, as always, we’ll see you in the Headlines.