The FCC Is Sucking The Life Out Of Lifeline

Submitted on February 16, 2017

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Robbie's Round-Up for the Week of February 13-17, 2017

Here at Benton, we work to make sure communications policy strengthen communities and democracy. We believe that expanding access, adoption, and use of communications technologies is essential for democratic participation -- so naturally, closing the digital divide is a key priority. The Federal Communications Commission, charged with making communication service available “to all the people of the United States" -- has a number of programs to ensure universal service. The E-rate program, created by Congress in 1996, makes broadband and Wi-Fi services more affordable for schools and libraries. The Lifeline program makes telecommunications services more affordable for low-income households. But recent FCC activity has indicated that these programs are at risk -- odd behavior from new FCC Chairman Ajit Pai who said, “I believe one of our core priorities going forward should be to close [the digital divide].”

I. Pai Stops 9 Companies From Participating in Lifeline
Last week we looked at how Chairman Ajit Pai is following through on promises to make the agency more transparent (Spoiler: the agency has been less than perfect) and we noted that Pai’s FCC had told nine companies that they will not be able to participate in the Lifeline program. As the Washington Post reported, the move, a reversal of a decision made while Tom Wheeler was still FCC chair, “undercuts the companies' ability to provide low-cost Internet access to poorer Americans.”

There was a fierce reaction to Chairman Pai’s decision. Importantly, many Senators and Representatives wrote to Chairman Pai to criticize the decision. For example, on February 13, 41 U.S. Representatives wrote Chairman Pai saying:

Your action will hurt those in our country that need the most help….Mr. Chairman, your arbitrary decision will hurt poor children and widen the digital divide. The American people deserve better. By reversing the decision made by your predecessor, you are reducing, not expanding, Internet access. We ask that you reconsider the Commission’s decision to remove the nine companies.

Chairman Pai took to Medium to “set the record straight” and address the controversy his Lifeline decision had caused. In the process he adopted the now-familiar Trump Administration tactic of criticizing the media when his actions were met with criticism.

But many people weren’t buying it, including former Counselor to the Chairman of the FCC Gigi Sohn. In Defending the Indefensible: Chairman Pai’s Lifeline Reversal Will Widen the Digital Divide, Sohn noted:

[Chairman Pai’s] thin arguments fail to mask two clear truths:

1. His actions will make the market for Lifeline broadband services less competitive, limiting choice and keeping prices high. As a result, fewer low income Americans will be able to afford broadband; and

2. He, and fellow FCC Commissioner Michael O'Rielly, fundamentally disagree with the structure and goals of the Lifeline program and will seek to undermine it in word and deed.

II. Pai’s FCC Asks Federal Appeals Court to Suspend Activity in Lifeline Legal Challenge
While Chairman Pai did address stopping nine companies from participating, he did not address the fact that the FCC also asked a federal appeals court to suspend activity in a legal challenge to its Lifeline order. Recently, FCC attorneys said the new majority on the commission, Pai and O’Reilly, both dissented from the March 2016 order to modernize the Lifeline program, including the decision to bypass states and streamline the process to designate companies as eligible to provide Lifeline broadband service. That portion of the order was challenged by states and their regulatory utility commissions, who argue the new rules preempt state oversight. The FCC asked the court to hold the case in abeyance to “allow the commission to review how to proceed in this matter and to consider whether to revisit the actions taken in the order.” [The parties challenging the order, including the National Association of Regulatory Utility Commissioners, did not oppose a 90-day pause, the FCC attorneys wrote.]

III. FCC Commissioner O’Rielly Has Questions About The E-Rate Program
In a move that startled the education community, Commissioner O’Rielly sent a letter to the Universal Service Administrative Company (the nonprofit that manages the funds for universal service programs like E-rate and Lifeline) and appeared to open up a new front against the E-rate program. Commissioner O’Rielly says he’s concerned about potential waste in the E-rate program -- specifically, applicants seeking funding to build broadband networks. O’Rielly sent ten questions to the USAC CEO, including how many applicants had sought subsidies for self-construction, how many of those would mean building a network where one already exists, how USAC determines when self-construction is the most cost-effective method, and how many requests were denied because it was not the most cost-effective method.

Many fear that under the guise of reducing waste, Commissioner O’Rielly’s questions indicate a desire to restrict competition and choice for recipients -- which could actually end up costing the E-rate program more money.

IV. Trump Advisor Argues for the End of Lifeline
On February 15, Mark Jamison, a member of President Trump’s FCC Transition team, wrote an article arguing for the end of the Lifeline program. He argues that the program does not help low-income households afford service. He claims seven out of eight low-income households would have mobile service even without the subsidy. He also claims, “[P]articipation in effect provides households with additional disposable income...Anecdotally, people I know who have received the subsidy state that it gave them additional money that they used for food, housing, education, etc.”

Andrew Jay Schwartzman, the Benton Senior Counselor at the Public Interest Communications Law Project at Georgetown University Law Center's Institute for Public Representation, had this to say in The Daily Item: “You only need to know two things about this blog post: 1) Everything it says is wrong; and 2) Its author headed the Trump transition team for the FCC.”

Free Press’ Deputy Director and Senior Counsel Jessica González told me:

Lifeline has brought affordable telephone service to millions of people in poverty. It is the only federal program poised to bring broadband to poor families across the U.S. so that they can connect to jobs, complete their homework, and communicate with healthcare providers and emergency services. Yet Trump advisor Mark Jamison falsely assumes that whether or not a household would adopt an essential service in the absence of the subsidy is a good metric for a subsidy’s effectiveness. Poor people make hard decisions about whether to feed their families or pay for internet access, and Jamison has no business negotiating those types of trade offs from his ivory tower. If FCC Chairman Pai is truly concerned about bridging the digital divide he must address the primary adoption barrier - cost - and dismiss Jamison's commentary for what it is: the latest, offensive iteration of the Trump Administration's War on the Poor.

Of note: González testified at a June 2, 2015 Senate Hearing on Lifeline. Her testimony can be found here: http://www.freepress.net/blog/2015/06/02/lifeline-pathway-out-poverty

V. A Death By Many Small Cuts
The recent Lifeline actions illustrate a concern I’ve had since Pai was appointed chair. Chairman Pai is giving lip service to addressing the digital divide, but with no concrete vision of how to support and/or improve the programs the FCC already has in place to address it. Instead, we see, late on Friday evenings, Chairman Pai and Commissioner O’Reilly quietly gutting or hampering innovative pieces of the existing programs. Given this strategy, there is no avenue for a proactive discussion between stakeholders and the FCC -- public interest advocates are left only with a reactive position.

We'll be watching -- even late on Friday afternoons -- how the FCC really addresses the digital divide. And we'll see you in the Headlines.

Quick Bits

Weekend Reads (resist tl;dr)
An Anti-Consumer Agenda at the FCC (New York Times Editorial)
The FCC talks the talk on the digital divide — and then walks in the other direction (Washington Post Editorial)
New Rules Intended to Protect Your Online Privacy Are Already Under Threat (Rep Frank Pallone (D-NJ) and FTC Commissioner Terrell McSweeny Op-Ed)
The Incentive Auction Clock Phase Is Over. What’s Next? (FCC blog)
In infrastructure plan, a big opening for rural broadband (Blair Levin, Carol Mattey)