Is It Time For Lifeline To Include Broadband?

Over the past five years, the Federal Communications Commission has taken action to reform each of its universal service distribution programs to refocus them on broadband. With the fifth anniversary of the release of the FCC’s National Broadband Plan approaching, we focus today on what could be the next major item on the FCC’s implementation agenda: reform and modernization of its Lifeline program.

Since 1985, the Lifeline program has provided a discount on phone service for qualifying low-income consumers to ensure that all Americans have the opportunities and security that phone service brings, including being able to connect to jobs, family and emergency services. In 2005, Lifeline discounts were made available to qualifying low-income consumers on pre-paid wireless service plans in addition to traditional landline service.

In 2015, however, the opportunity gap is about broadband service, not telephone service. The Census Bureau’s 2013 American Community Survey found that just 52 percent of low-income households in the U.S., with household incomes below $35,000, now subscribe to wireline broadband at home. According to the National Telecommunications and Information Administration (NTIA), although broadband adoption for low-income households has been increasing, for certain low-income groups, it still falls more than 20 percentage points behind the general population, which had a 73 percent adoption rate in 2012.

Recommendation 9.1 of the National Broadband Plan reads:

The FCC should expand Lifeline Assistance and Link-Up America to make broadband more affordable for low-income households.

• The FCC and states should require eligible telecommunications carriers (ETCs) to permit Lifeline customers to apply Lifeline discounts to any service or package that includes basic voice service.
• The FCC should integrate the expanded Lifeline and Link-Up programs with other state and local e-government efforts.
• The FCC should facilitate pilot programs that will produce actionable information to implement the most efficient and effective long-term broadband support mechanism.

The National Broadband Plan also includes a set of principles for all stakeholders when addressing broadband adoption issues:

• Focus on the barriers to adoption. Successful efforts address multiple barriers to adoption simultaneously. They combine financial support with applications and training that make broadband connectivity more relevant for non-adopters. Relevance, in turn, boosts the technology’s perceived value and affordability.
• Focus on broadband in the home. While libraries and other public places are important points of free access that help people use online applications, home access is critical to maximizing utilization. Broadband home access can also help rural, low-income, minority and other communities overcome other persistent socioeconomic or geographic disparities.
• Promote connectivity across an entire community. New users adopt broadband to stay in touch with others. In addition, people are more likely to adopt and use broadband if the people they care about are online and if they see how broadband can improve their quality of life in key areas such as education, health care and employment.
• Promote broadband utilization. Promoting access and adoption are necessary steps, but utilization is the goal. People must be able to use broadband to efficiently find information or use applications to improve their lives. A connection is just the beginning.
• Plan for changes in technology. Adoption programs have to evolve with technology. Both the trainers and the equipment they use to serve non-adopters must employ up-to-date technology and applications.
• Measure and adjust. Measurement and evaluation are critical to success because they allow programs to make adjustments on an ongoing basis.
• Form partnerships across stakeholder groups. Promoting adoption requires federal commitment, state, local and Tribal action, industry partnership and support from non-profits and philanthropic organizations. Sustainable broadband adoption and use will require efforts from all partners.

In 2012, while reforming the Lifeline program to eliminate waste, fraud, and abuse, the FCC also began a modernization of the program to address low income consumers’ broadband needs:

• Adopting an express goal for the program of ensuring availability of broadband for all low-income Americans.
• Establishing a Broadband Adoption Pilot Program to test and determine how Lifeline can best be used to increase broadband adoption among Lifeline-eligible consumers. In December of 2012, the FCC selected 14 pilot projects, spanning 21 states and Puerto Rico. The pilots ended in November of 2014, and the FCC is expected to issue a report on the projects in 2015.
• Allowing Lifeline support for bundled services plans combining voice and broadband or packages including optional calling features.

While voting in December 2014 to modernize E-Rate, another universal service program which discounts broadband connections for schools and libraries, a majority of FCC Commissioners voiced support to complete Lifeline modernization, too. In addition, late last year, FCC Commissioner Mignon Clyburn took a lead role in Lifeline modernization by offering five principles to guide reform:

1. Getting the most bang for the universal service buck by establishing minimum service standards – that include both voice and broadband -- for any provider that receives the $9.25 Lifeline subsidy.
2. Providers should no longer be responsible for determining customer eligibility: "Lifeline is the only federal benefits program that I am aware of where the provider determines the consumer’s eligibility. Removing this responsibility from the provider will shore up the integrity of the program by further eliminating incentives for waste, fraud and abuse. The consumer would benefit through the reduction of privacy concerns." For the provider, this would mean a substantial reduction in the administrative burdens.
3. Encourage broader participation through a streamlined approval process.
4. Leverage efficiencies from existing programs and institute a coordinated enrollment.
5. Public-private partnerships and coordinated outreach efforts.

Just last month, FCC Commissioner Michael O’Rielly said he’d prefer to ensure that there are adequate controls and deterrents in place before considering a revamp of the Lifeline program to include broadband. But, he wrote, “Since the Commission appears ready to press forward notwithstanding the need for fundamental review, it seems appropriate to outline certain principles for any Lifeline reform effort in order to garner my consideration.” His ten principles are:

1. Set a budget for Lifeline: Setting a ceiling on reimbursements is a prudent step to protect ratepayers.
2. No increase in the reimbursement rate for broadband: The current $9.25 per month reimbursement rate is sufficient.
3. Limit services eligible for support: Only the FCC can determine which services are supported, and there are limits on what may be funded directly or as a condition of receiving support.
4. Prohibit double dipping: A household can decide to apply the discount to a voice plan or to a combined plan that offers both voice and broadband, but can't get a separate discount for each.
5. Better target funding to those who really need it: The FCC should seek further comment on ways to modify the program to make it more cost-effective.
6. Tighten eligibility requirements: Instead of setting the income eligibility threshold at 135 percent of the federal poverty guidelines, it could be set lower, which would focus funding on fewer subscribers that are most in need.
7. Require a minimum contribution: To deter waste and stretch program dollars further, all universal service beneficiaries should have skin in the game.
8. Carrier participation should be voluntary: It is time to amend the rules to permit, but not require, high-cost funding recipients to offer Lifeline service.
9. Automatic safeguards against abuse: The FCC should have a procedure in place to stop new payments if certain metrics, like high new subscriber rates, are exceeded.
10. Require document retention: Providers should be required to keep documentation of a subscriber's eligibility in order to facilitate oversight.

This week, Commissioner Clyburn appears on C-SPAN’s The Communicators and discusses plans to update Lifeline. "The Lifeline program, established in the mid '80s, has been stuck in the mid '80s," she said.

Under Clyburn's plan, Lifeline subsidies wouldn't necessarily increase, but consumers could choose to have them cover the data on their smartphone or their home broadband connection. She said she believes it's possible to cover broadband service without increasing the overall size of the program -- which would avoid increasing the fees on consumers' phone bills. Commissioner Clyburn also argues that the FCC should overhaul the program so that the phone and Internet providers aren't the ones responsible for determining if customers are eligible for the subsidies. That system encourages the companies to lie to receive more subsidies, she argued.

"This program is literally what it says," she said. "It is a lifeline, an opportunity for those who have significant financial challenges to be able to keep in touch with their doctors, with their educators, with their communities, with their loved ones. And it is vital that we reform that to meet the current needs of our most vulnerable citizens."

Commissioner Clyburn said she is hoping the agency will unveil a proposal by this summer to expand the program to cover Internet access.

Is Comcast's Internet Essentials a model?

One model for Lifeline modernization may come from Comcast, the largest Internet service provider in the U.S., which claims to run “the nation’s leading broadband adoption program for low-income Americans.”

When Comcast purchased NBC Universal from General Electric in 2011, the company promised to encourage broadband adoption by making service available to low-income households for less than $10/month along with personal computers, netbooks, or other computer equipment at a purchase price below $150. This week, Comcast Executive Vice President David Cohen released the company’s latest report on its Internet Essentials program. Touting the success of Internet Essentials, Cohen notes that more than 450,000 households have signed up for the program – reaching 1.8 million low-income Americans.

In Comcast service areas, households with students who are eligible to participate in the National School Lunch Program may receive home Internet service with download speeds of up to 5 Mbps and upload speeds of up to 1 Mbps for $9.95 per month. These households may also purchase a computer through Internet Essentials for $149.99 plus tax. Comcast guarantees no price increases, activation fees or equipment rental fees. The service includes a basic modem, but not a wireless router. Importantly, Internet Essentials also makes training available for participants – either in print, in person or online, with the help of the Khan Academy (plus the Today Show’s Al Roker and other Comcast personalities). Comcast also enlists local community partners, offering them complimentary communications tools and resources like handouts and displays.

Cohen highlights that the Internet Essentials program has accounted for about one-quarter of the national broadband adoption growth for low-income families with children from the program’s inception through June 2014, according to Dr. John B. Horrigan. Cohen also highlighted that Comcast has:

• Invested more than $225 million in cash and in-kind support to help fund digital literacy and readiness initiatives, reaching more than 3.1 million people through our national and local non-profit community partners.
• Dedicated $1 million in grants to create Internet Essentials Learning Zones, where networks of non-profit partners are working together to enhance public Internet access and increase family-focused digital literacy training in Atlanta, Chicago, Denver, Fresno, Miami, and Seattle, among others.
• Provided nearly 38,000 subsidized computers at less than $150 each.
• Distributed more than 45 million Internet Essentials program materials.
• Broadcast more than 6 million public service announcements, valued at more than $75 million.
• Welcomed nearly 3.2 million visitors to the Internet Essentials websites in English and Spanish and the Online Learning Center.
• Fielded nearly 3 million phone calls to our Internet Essentials call center.
• Offered Internet Essentials in more than 30,000 schools and 4,000 school districts, in 39 states and the District of Columbia.
• Partnered with thousands of community-based organizations, government agencies, and federal, state, and local elected officials to spread the word.

Essentials of Connectivity to Deepening Ties

Cohen’s release also points to new research from Dr Horrigan and funded by the Comcast Technology Research & Development Fund. In Deepening Ties, Horrigan surveyed 700 Internet Essentials subscribers who were also contacted for his previous research, Essentials of Connectivity, which benchmarked the Internet usage patterns of low-income families who obtained home broadband service through Internet Essentials. In Deepening Ties, Horrigan examined:

1. What has changed for respondents with the passage of time?
2. Have respondents’ relationships with the Internet deepened?
3. Have reported impacts of having the Internet at home changed?
4. To what, if anything, can we attribute identified changes?

Horrigan highlights these findings:

• The Primacy of Training: The most significant finding in Deepening Ties is the very large impact formal training has on digital literacy or the attainment of concrete Internet skills. Those who receive formal training from an IE program, library, or other institution (as opposed to informal assistance from family or friends) were significantly more likely to use the Internet to pursue economic opportunities and cultivate social ties. Those who received formal training were 15 percentage points more likely to use the Internet to look for a job, 14 percentage points more likely to use it to access government services, and 12 percentage points more likely to use it to connect with family and friends. Some 31% of IE families report taking advantage of training, highlighting the need to do more.
• Leveling the Playing Field for Working Parents: 63% of the IE users surveyed said home broadband helped them to manage their work schedules and balance family responsibilities, 48% reported being better able to communicate with their employers, and 41% said home broadband allowed them to work at home on occasion. In other words, home broadband is a critical tool to achieve work/life balance. It can bring key elements of workplace flexibility that many high-income and white-collar families take for granted to everyone.
• Education Drives Engagement: As a program directed at families with school-age children, it is no surprise that the IE families surveyed are highly motivated to use home broadband to further their children’s educational aspirations and accomplishments. But the degree to which survey respondents felt that home broadband was genuinely working for their families in this regard is striking: 84% of those surveyed said IE’s home broadband helps their children with schoolwork “a lot”; 81% said it helps their children learn about specific topics that interest them, such as science or history, “a lot”; 63% said it helps their children’s “creative pursuits”; and 65% said it helps their children’s reading ability. At the same time, however, these families want even more educational value from IE, with 65% seeking training on how to better communicate with their children’s teachers and 63% wanting more information on college and financial aid.

Conclusion

At Benton, we expect a major debate about the future of Lifeline in 2015; we’ll be tracking it and hope you’ll check out our Lifeline Modernization page And, as every week, we’ll see you in the Headlines.