FCC Chairman Pai Plans to Put an End to the US Commitment to Universal Service and Affordability

[Commentary] Under the guise of promoting network investment and deployment and enhancing consumer choice, Federal Communications Commission Chairman Ajit Pai’s attack on the Lifeline program does the complete opposite. His plan proposes to kick all non-facilities-based service providers out of the Lifeline program, which includes wireless carriers like Tracfone’s Safelink Wireless or Virgin Mobile’s Assurance Wireless, that don’t have their own networks but lease capacity from facilities-based providers (e.g., AT&T, Sprint) and serve approximately 70 percent of Lifeline subscribers. In many states, facilities-based providers have opted out of offering Lifeline-supported service altogether and prefer to allow non-facilities-based wireless providers to serve Lifeline subscribers and the low-income segments of the wireless market. The largest wireless carriers profit from this arrangement by leasing excess network capacity rather than letting it sit unused. Instead of promoting new network deployments and consumer choice, Chairman Pai’s plan would eliminate a profitable revenue stream for wireless carriers, while also eliminating non-facilities-based providers as a choice for Lifeline subscribers. Rather than incentivizing wireless carriers to enter the market, Chairman Pai actually proposes to erect barriers to entry, leaving Lifeline subscribers with vastly fewer choices. In 2016, the FCC listened to facilities-based providers like AT&T, which said a prerequisite to entering the Lifeline market was a streamlined, centralized certification process. Chairman Pai’s proposal eliminates this centralized process, while also raising additional barriers to entry and disincentives to offer Lifeline-supported service. The Chairman’s plan would drive out both subscribers and providers by creating a hard spending cap on the Lifeline program, proposing automatic cuts when spending appears on pace to exceed the cap. Additionally, the Chairman floats the idea of implementing a co-pay requirement for Lifeline subscribers. Both proposals are counterproductive to the Lifeline program’s mission of closing the digital divide by making broadband affordable for low-income families. First, the Chairman’s “self-enforcing” budget would require either slashing the subsidy amount, creating waiting lists for new enrollees, or kicking existing subscribers out of the program. Second, the co-pay requirement would create significant attrition in the program since most subscribers are on plans that provide no-cost service and many Lifeline subscribers lack bank accounts and access to basic financial services. These consequences stand in contrast to the goal of the program -- to make basic telecommunications service, like broadband, affordable to those that need it most, and to be available to those that need it during times of economic distress. Further, in his rush to slash the social safety net, the Chairman’s plan would not only eliminate broadband access for needy families, but it would create significant uncertainty about the program’s funding on a year-to-year, or even a month-to-month basis, and require participating facilities-based carriers remaining in the program to establish costly new new payment processing systems to comply with the co-pay mandate.