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Round-Up for the Week of March 22-26, 2021

What constitutes a lifeline in 2021? Is it a phone? A smartphone? A fixed-location broadband connection? Or some combination of all these services? Last week, the Federal Communications Commission's Wireline Competition Bureau launched a proceeding seeking public input on a report on the state of the FCC's Lifeline program. The report will have a huge impact on what services are available to Lifeline's low-income participants. 

Universal service, the principle that all Americans should have access to communications services, is a cornerstone of the law that established the FCC, the Communications Act of 1934. In the 20th century, the FCC focused on ensuring universal telephone access. 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 2016, the FCC adopted a comprehensive reform and modernization of the Lifeline program. For the first time, the FCC included broadband as a supported service in the program. Lifeline program rules allowed support for stand-alone mobile (think cell phone) or fixed broadband Internet access service (think home broadband service delivered over a wire), as well as bundles including fixed or mobile voice and broadband. But the 2016 decision also set out to zero-out support for voice-only services. As the deadline for ending support for voice-only services nears, the Wireline Competition Bureau is supposed to give a program status update and make recommendations to the full FCC.

Usage trends indicate how crucial mobile broadband service has become to people in the U.S., even before the COVID-19 pandemic. According to wireless trade association CTIA, monthly data usage per smartphone subscriber rose to an average of 9.2 GB per month, an increase of approximately 39% from year-end 2018 to year-end 2019. Total network annual data usage increased by approximately 30% from 2018 to 2019, with a commensurate increase in total annual minutes of voice use of approximately 29%. This growth in data usage is primarily driven by increasing data demanded per device. According to a 2019 Pew Research Center survey, smartphone and tablet ownership were 81% and 52%, respectively, largely unchanged from the 77% and 53% ownership figures reported in 2018.

Pew reported that 17% of American adults are “smartphone-only” Internet users—they own a smartphone but do not have traditional fixed home broadband service. Reliance on smartphones for online access is especially common among younger adults, non-whites, and lower-income Americans. Many consumers also choose to depend on some combination of fixed and mobile broadband access, while discontinuing their landline telephone services. In fact, according to preliminary data from the Centers for Disease Control and Prevention, as of June 2019, the percentage of U.S. adults living in households that were identified as having wireless-only telephone service (no landline telephone service) was approximately 59%.

Lifeline Modernization in 2016

As mentioned above, in 2016 the FCC reformed the Lifeline program which had originally focused on making basic telephone service more affordable for low-income households. Seeing that 43% of the nation's poorest households could not afford broadband, the FCC decided to refocus Lifeline support on internet access. For the first time, Lifeline was allowed to support stand-alone broadband service as well as bundled voice and data service packages. The FCC decided to gradually phase out support for voice-only mobile service while ramping up mobile broadband requirements over five years. 

In the FCC's own words, a core tenet of the 2016 decision was to enable “Lifeline customers to obtain the type of robust service which is essential to participate in today’s society.” The FCC recognized “it is vital that the offered service provides sufficient speed and capacity to allow the user to utilize all that the Internet has to offer.” And the FCC meant to ensure that Lifeline supports an evolving level of service.

Phasing Out Voice-Only Lifeline Support

To prevent undue disruption and allow the Lifeline marketplace to adjust to the phaseout of support for voice-only service, the FCC adopted a multi-year Lifeline transition:

• Prior to December 1, 2019, voice-only support was set $9.25 per month.
• Beginning December 1, 2019, the support amount declined to $7.25 per month.
• Beginning December 1, 2020, it declined further to $5.25 per month.

Ramping Up Minimum Service Standards for Mobile Broadband

To ensure that Lifeline subscribers receive services meeting 21st century needs, the FCC set minimum standards for broadband to "enable consumers to fully participate in digital society." The standards included:

• A fixed speed standard originally set at 10 Mbps downloads/1 Mbps uploads,
• Minimum monthly fixed broadband usage allowance standards, starting at 150 GB and updated thereafter,
• Minimum data allowances for mobile broadband service, starting at 500 MB per month of 3G data by Dec. 1, 2016, 1 GB by Dec. 1, 2017, and 2 GB per month by the end of 2018, and
• Mobile voice monthly standards: 500 min/month, beginning on Dec. 1, 2016, rising to 750 min/mo. on Dec. 1, 2017; and 1,000 min/mo., starting on Dec. 1, 2018.

The FCC also adopted a formula to calculate updates to the minimum service standard for mobile broadband usage based on certain data regarding consumer broadband usage. Specifically, the minimum service standard for mobile broadband was calculated by finding the product of:

1. the average number of mobile subscriptions per household;
2. the percentage of Americans who own a smartphone; and
3. the average data used per mobile smartphone subscriber.

The product of (1)-(3) was then multiplied by 0.7, and the result was rounded up to the nearest 250 MB. To give providers time to adjust to the new minimum service standards, the FCC specified the minimum standard for mobile broadband service for the first two annual updates of that standard, with the standard increasing in each successive year. As a result, the minimum standard for mobile broadband usage, initially set at 500 MB/month beginning on December 2, 2016, increased to 1 GB/month on December 1, 2017, and increased again to 2 GB/month on December 1, 2018. The FCC’s 2016 formula would have started governing the mobile broadband standard as of December 1, 2019, but the FCC’s formula resulted in an unexpectedly large increase—more than four-fold from 2 GB/month to 8.75 GB/month. Instead, the FCC adopted a moderate increase of 50% to 3 GB/month.

Lifeline Circa 2020-2021

In July 2020, the Wireline Competition Bureau announced that beginning December 1, 2020 the Lifeline minimum service standard for:

• Fixed broadband speed would be 25 Mbps downstream and 3 Mbps upstream (assuming the Lifeline provider offered any generally available residential fixed broadband packages that meet the minimum service standard at a subscriber’s residence). 
• Fixed broadband data usage would be 1024 GB per month.
• Mobile broadband data capacity would increase from 3 GB to 11.75 GB per month.
• Mobile broadband speed would remain 3G mobile technology.
• Mobile voice service would remain unchanged, at 1,000 minutes per month.

Soon after, however, FCC Chairman Ajit Pai proposed changes to the FCC formula. Under the revised methodology, the Lifeline program’s minimum service standard for mobile broadband data capacity would increase, effective December 1, 2020, from 3 GB to just 4.5 GB per month, not 11.75 GB—and well short of the average monthly data usage per smartphone subscriber of 9.2 GB per subscriber. In November, the Wireline Competition Bureau adopted Pai's approach finding that the original, nearly four-fold increase could threaten the affordability of Lifeline services. At that time, the FCC also denied a request from stakeholders to halt the phase-down of the support amount for voice service that does not meet the broadband minimum standard.

The Wireline Competition Bureau found that failing to provide low-income consumers a moderate increase in the mobile broadband usage minimum service standard at a time when broadband usage was growing more essential by the day risked inhibiting their participation in today’s society and leaving them further behind. In line with the 2016 decision, the bureau decided the data increase ensured that low-income Americans are not left behind during the pandemic with “second class” service, and “remove[s] the incentive for providers to offer minimal, un-innovative services.” And, in the absence of clear data that the moderate increase would prevent providers from providing affordable service, the bureau "decline[d] to fill that gap with speculation."

State of the Lifeline Marketplace Report

In 2016, the FCC also directed the Wireline Competition Bureau, by June 30, 2021, to review the Lifeline program and submit a report to the full FCC recommending whether action should be taken to revise the above approach to supported services. Beginning December 1, 2021, there will no longer be support for voice-only service, or voice service bundled with a broadband offering that does not meet the applicable minimum service standard for broadband internet access service—or, at least, not unless the FCC acts upon recommendations to do otherwise presented in what it called for in the 2016 decision—the State of the Lifeline Marketplace Report. (Voice service will continue to be supported as long as it is offered with a broadband service meeting the minimum service standards.)

In 2016, the FCC decided that the State of the Lifeline Marketplace Report should review the Lifeline marketplace for the purpose of recommending to the FCC whether the transition should be completed or whether the FCC should act to continue delaying Lifeline’s transition to chiefly supporting broadband services. The Wireline Competition Bureau is supposed to consider:

• the prevalence of subscriptions to various service offerings in the Lifeline program,
• the affordability of both voice and broadband services,
• the pace (since adoption of the 2016 decision) at which voice and data usage has changed, and
• the associated net benefits of continuing to support voice service as a standalone option.

On March 19, the Wireline Competition Bureau issued a notice seeking public input on the Lifeline marketplace report. The bureau did not include specific questions, it just noted that it will include in the report the bulleted points above. Of note, in late December 2020, the Wireline Competition Bureau directed a group of mobile service providers to respond to a questionnaire about Lifeline customer usage and costs to aid the development of the State of the Lifeline Marketplace Report and the FCC’s policy choices regarding the mobile broadband minimum service standards. The nine largest Lifeline providers by subscribership were ordered to submit five years of network cost data, including detailed information related to their wholesale voice/broadband costs, subscriber usage costs, overhead costs, and costs to serve rural and tribal areas. Through the National Lifeline Association, the mobile service providers objected to the data request. The FCC has not issued a decision on the National Lifeline Association’s appeal and carriers, as far as we know, have not yet submitted the requested data.

This month, the Wireline Competition Bureau also sought comment on the intersection between the Emergency Broadband Benefit Program and the Lifeline program. Back in February, you may recall, the FCC adopted a framework of rules for a new, emergency program that will offer discounts on the monthly broadband service bills of eligible low-income households. The $3.2 billion program, designed by Congress to last up to six months after the COVID-19 emergency ends, is seen by some as a possible model for another reform of the Lifeline program aimed at making residential broadband service affordable for low-income households. The State of the Lifeline Marketplace Report, due at the end of June, could include recommendations on how, say, the Emergency Broadband Benefit Program and Lifeline coexist—or how one program is rolled into the other.

In any case, the 2016 FCC expected the 2021 FCC would take appropriate action, if necessary, to make changes to Lifeline within six months of receiving the State of the Lifeline Marketplace Report by, for example, adjusting support levels or minimum service standards, so that the Lifeline program continues to achieve its objectives. 

If the FCC does not act following the recommendation(s) in the State of the Lifeline Marketplace Report then the transition will be completed on December 1, 2021 as planned.  

Don't Forget Net Neutrality

Apart from the State of the Lifeline Marketplace Report, a Democrat-led FCC may see another justification to reexamine the Lifeline program: net neutrality. (Yes, net neutrality.)  The FCC's 2018 Restoring Internet Freedom order, among other things, concluded that the FCC did not have the authority to regulate residential broadband internet access service. Although the United States Court of Appeals for the District of Columbia Circuit generally upheld that decision, the court held that the FCC had not sufficiently considered the impact the decision would have on the agency's ability to include support for broadband services in the Lifeline program. The court ordered the FCC to reexamine that issue.

In 2020, the FCC concluded, after gathering and reviewing public comment, that the Restoring Internet Freedom order "allows us to continue to provide Lifeline support for broadband Internet access service." Moreover, the FCC ruled:

Then-Commissioner, now-Acting Chairwoman Jessica Rosenworcel called that ruling a dodge. She continued:

A move by a new FCC to restore its authority over broadband, then, could also impact the FCC's ability to support broadband services through the Lifeline program. 

The Timeline

The first round of public input on the State of the Lifeline Marketplace Report is due April 19, 2021. A reply comment period ends May 4. The Wireline Competition Bureau then has just a few weeks to compile its report and make recommendations to the full FCC. The FCC then has six months to consider and act on those recommendations. If there is no action, support for voice-only Lifeline services will end. 

Quick Bits

• House Commerce Committee Leaders Call on Internet Providers to Raise Awareness of Emergency Broadband Benefit (House Commerce Committee)
• FCC Reaches Out to Collect Consumer Broadband Availability Experiences (FCC)
• Partisan Fights Loom Over Broadband Talks (Politico)
• Reinstating net neutrality in the US (Mozilla)
• Social Media CEOs Can’t Defend Their Business Model (Wired)

Weekend Reads (resist tl;dr)

• Broadband as Civic Infrastructure: Community Empowerment, Equity, and a Digital New Deal (German Marshall Fund)
• Guide to Federal Broadband Funding Opportunities in the US (Internet Society | CTC Technology & Energy)
• Federal Funding for K-12 Home Connectivity (Education Superhighway)
• Internet Essential Progress Report | Comcast Commits to Investing $1 Billion Over Next 10 Years (Comcast)
• How to Bridge the Rural Broadband Gap Once and For All (Information Technology & Innovation Foundation)
• Big Tech, Big Cash: Washington’s New Power Players (Public Citizen)

ICYMI from Benton

• FCC Asks, "How Can $7 Billion Close the Homework Gap?" (Kevin Taglang)
• Where's the Lifeline? (Kevin Taglang)
• What's Going on With the FCC's Lifeline Program? (Kevin Taglang)
• National Efforts to Close the Digital Divide Require Local Empowerment (Ariel Benjamin, Erman Eruz, Danny Fuchs, David Gilford)
• States Look at the Data as They Try to Address the Digital Divide (John Horrigan)

Upcoming Events

Mar 31 — What Could Schools and Libraries Do With $7 Billion? (SHLB Coalition)

Apr 1 — How to Bridge the Rural Broadband Gap Once and For All (ITIF)

Apr 6 — Understand and Improve Library Broadband Challenges (ALA)

Apr 7 — The Structural Racism Behind Digital Inequity (NDIA)

Apr 14 — ReConnect Regulation Webinar (USDA)

The Benton Institute for Broadband & Society is a non-profit organization dedicated to ensuring that all people in the U.S. have access to competitive, High-Performance Broadband regardless of where they live or who they are. We believe communication policy - rooted in the values of access, equity, and diversity - has the power to deliver new opportunities and strengthen communities.

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