Remarks of Gigi Sohn on Lifeline and Broadband Adoption

Federal Communications Commission Chairman Tom Wheeler proposal to modernize the Lifeline program and refocus it on making broadband service affordable for low income consumers. Here’s some concerns we’re hearing:

First, we have an obligation to focus the Lifeline program on broadband. While mobile voice will continue to be a supported service, after December 1, 2019, it will have to be bundled with data to be Lifeline-eligible. Our firm belief is that voice service will continue to be an important part of Lifeline. But we also believe that low-income Americans must have access to broadband as well if they are to participate fully in today’s society. To give Lifeline providers time to adjust, we will phase down support for stand-alone mobile voice over a multi-year period. We plan to eliminate the subsidy for stand-alone mobile voice starting on December 1, 2019, although the Commission will examine the market in mid-2019 to determine whether there needs to be an adjustment. We believe that three years will be enough time for the market to adapt and for promising technologies to develop, and that by the end of 2019, there will be affordable bundled mobile voice and data plans that meet, and hopefully exceed, Lifeline’s minimum service standards. But again, if that is not the case, the Commission has a safety valve by which it can examine how the market has evolved between now and 2019, and preserve a subsidy for stand-alone mobile voice if it’s deemed necessary.

Second, minimum service standards for voice and data will ensure that Lifeline is not a second-class service, while ensuring that it is still affordable. The Lifeline order the Chairman circulated sets the following minimums: for fixed broadband Internet access, the minimum speed is 10 Mbps down and 1 up and the minimum data allowance is 150 GB. For mobile voice, the minimum is unlimited minutes, and for mobile data, the minimum data allowance starts at 500 MB on December 1, 2016 with increases to 2GB by December 1, 2018. Finding the right balance between robust service and affordability is difficult, and we continue to talk to a variety of stakeholders on this issue. Our goal, which I know that you share, is to allow low-income Americans to take full advantage of the myriad opportunities access to broadband brings while ensuring that service remains within their reach. But that objective is unlikely to be fulfilled unless we provide incentives for carriers to offer meaningful broadband to low-income communities.

Third, states will continue to play a critical role in the Lifeline Program. Aside from moving the program to broadband, the single most important thing the proposed order does, in my opinion, is streamline the process for becoming a Lifeline provider to make it more attractive for new entrants. Chairman Wheeler’s mantra, “competition, competition, competition,” is just as relevant and important in the Lifeline context as in any other. The more we can encourage competition for Lifeline service, the more prices will decrease and service quality and quantity will increase. More competition can also help us create a Lifeline marketplace where we don’t have to choose between affordability and robust broadband service that also includes voice. But this new nationwide Lifeline Broadband Provider category does not eliminate the states’ role in the Lifeline Program. It simply gives a new entrant a choice in how it becomes a designated Lifeline provider.

Fourth, the budget will limit the impact on ratepayers while at the same time provide a safety valve to protect society’s most vulnerable. The proposed order sets a budget of $2.25 billion, indexed to inflation, which is sufficient to allow for increased participation generated by support for broadband service. The safety valve is triggered when spending reaches 90% of the budget. If that occurs, the Wireline Competition Bureau must notify the Commission and prepare an analysis of the causes of spending growth, followed by Commission action within 6 months. With this process, we can responsibly manage growth in the program without creating waiting lists or denying anyone service. Like the minimum service standards, a budget is all about balance. While we do expect that there will be more demand for Lifeline as it becomes a broadband program, we don’t expect that growth to be precipitous – remember, only about 30% of Lifeline eligible consumers take advantage of the program today. So, the proposed budget leaves room to meet increased demand, while also giving the Commission a mechanism to monitor and control spending to ensure the program is using ratepayer dollars efficiently and wisely.