Lifeline/Low-Income Consumers

At our November open meeting, we'll be tackling top priorities: curtailing unlawful robocalls, unleashing 5G wireless connectivity, enabling the next generation of broadcast television, speeding infrastructure deployment, and modernizing our media ownership rules.

Lifeline: Speaking of bridging the digital divide, the Lifeline program is an important component of the Commission's efforts to bring digital opportunity to low-income Americans. But when I testified on Capitol Hill last month, I heard loud and clear from Democratic and Republican Senators alike that the program is in need of serious reform. For starters, we need to crack down on waste, fraud, and abuse. And we will. For instance, right now, Lifeline recipients in cities like Tulsa, Oklahoma, and Reno, Nevada receive an enhanced Tribal subsidy, intended for rural Tribal lands, of $34.25 a month, while those in other cities receive the standard $9.25 subsidy. Giving residents of Tulsa and Reno an extra $25 per month subsidy is a waste of money given that the cost of providing service in those cities is far lower there than it is in poorer, rural areas. Therefore, at our November meeting, the Commission will aim to close this loophole and limit the enhanced Tribal subsidy to those actually living on Tribal lands in rural areas. We'll also vote to solicit public input on how to effectively and efficiently direct Lifeline funds to the areas where they are most needed and to do so consistent with the FCC's legal authority. And we'll give Lifeline recipients better service and more choices–such as by eliminating a current prohibition on Lifeline broadband beneficiaries changing service providers for an entire year.

Media Ownership: We will be voting on modernizing our media ownership rules to reflect the marketplace of the present, not the past. President Clinton's first FCC Chairman stated, "Under current conditions, the FCC's [newspaper/broadcast cross-ownership] rule is perverse." In 2017, the FCC is poised to finally bring our media ownership rules into the digital age. If this proposed Order is adopted, the FCC would make five significant nods to reality. First, we would once and for all eliminate the newspaper/broadcast cross-ownership rule. In this day and age, if you want to buy a newspaper, you deserve a roadmap, not a roadblock. Second, we would eliminate the radio/television cross-ownership rule, which is unnecessary in today's marketplace given the Commission's separate local radio and local television ownership rules. Third, we would revise the local television ownership rule to eliminate the eight-voices test and incorporate a case-by-case review into the top-four restriction. This would better reflect the competitive conditions in local markets. Fourth, we would eliminate the attribution rule for television joint sales agreements, finding that JSAs serve the public interest by allowing broadcasters to better serve their local markets. And fifth, we would finally establish an incubator program to encourage greater diversity in and new entry into the media business and seek comment on what the details of that program should be.

Intended initially as a mechanism to reduce the cost of phone service for low-income customers, the bipartisan Lifeline program has worked in lockstep with telephone providers and consumers to increase the uptake in phone service throughout the country and has kept pace with changes in technology as the U.S. moved from a wireline world to one where the number of mobile devices and services now exceeds the population to a recognition that broadband internet is an essential communications service. Unfortunately, Chairman Pai’s proposal turns America’s back on our commitment, enshrined in law, to make sure world-class telecommunications are available and affordable for all. By nick and hack, Pai is gutting the only Universal Service Fund program that directly benefits consumers instead of carriers. His changes will mean fewer low-income households are served by fewer competitive options. At the very least, we hope that the FCC will take the time to do an economic analysis around the impact of the proposed changes. Many, many Lifeline recipients are U.S. veterans who fought for our flag. Chairman Pai appears to be waiving the white flag of surrender for their connected future. This is a sad day for anyone who believes in truly universal service.

[Commentary] No matter how valuable the Lifeline program is in theory, it’s wasting millions of taxpayer dollars. It allows the telecommunications carriers who profit from the program to verify eligibility for their participants — and too many are turning a blind eye. Lifeline was poorly structured and badly executed from the start. The goal of providing low-income Americans help regaining their economic footing with phone and broadband service is worthwhile and admirable — but that doesn’t mean that any plan doing that is worthy of unequivocal support.

Sidestepping the problems in this terribly run program is a disservice to all participants as well as those footing the bill, and will endanger the program’s existence if we allow it to continue. I’ll remain engaged on this issue and committed to serious changes. In the meantime, I encourage my party, as well as my friends from across the aisle, to join me in pushing for oversight and accountability regardless of its political convenience.

What is unsettling is that many of the changes we are currently making at the Federal Communications Commission have a one-sided benefit, and the impact on consumers, competition, and the public interest are mere afterthoughts. The FCC is a regulatory agency, with a charge that requires us to protect the public interest. This means we should strike and maintain the proper balance, when it comes to consumer and industry interests. Yet, when it comes to the future of our media landscape, the FCC majority is embarking on a path, toward a regulatory-free zone....

In just about every other context and every other Universal Service program, we have acted with haste, to remove existing barriers to entry. But when it comes to the Lifeline program, that provides millions the chance to maintain a dial tone or should be providing millions more the opportunity to afford broadband at home, we erect insurmountable barriers to entry for Lifeline providers wishing to do business.

A point often lost when we talk about the digital divide is what happens when we actually bridge the divide. Too often, we declare mission accomplished when we’ve connected a home that has been forever without, but I challenge you to take a more nuanced view. We should only claim victory when a consumer is meaningfully using their connectivity to take advantage of the economic, educational, and health care opportunities it affords....

One of our primary goals at the Federal Communications Commission is to be good stewards of ratepayer dollars. That means moving away from the past practice of using our high-cost program to fund multiple networks in the same geographic area. We should not support a company that is serving an area where another provider is providing quality service without a subsidy. That is fundamentally inconsistent with protecting consumers and it does not enable the market to work as intended.

The lack of cellular phone service in Puerto Rico right now is contributing to the unfolding humanitarian crisis on the island. “We had consumers that were standing outside the mall, plugging in where they found power, and people were lined up to use their phones, our customers’ phones to make calls,” says Issa Asad, the CEO of Q-Link, a wireless cell provider. Q-Link is the third-largest U.S. provider of Lifeline, a Federal Communications Commission program that provides phones and service to low-income users, which means that the company is extending a vital service to some of the most vulnerable victims of these hurricanes. Emergency 911 calls on Q-Link’s Houston network spiked by 900 percent after Harvey, Asad says.

Providing all that free bandwidth comes at a cost for Q-Link, of course. That’s one reason that Asad has proposed that the FCC require Lifeline providers to extend free coverage after disasters—and for the FCC to help out with the costs. “While Q-Link has undertaken these efforts voluntarily, we urge the Commission to consider whether a supplemental allotment of Lifeline support for additional minutes for consumers located in federally declared disaster or emergency areas should be a part of the Commission’s response to future disasters,” reads Asad’s presentation to the FCC, dated September 6. “We feel that the FCC should put a disaster-recovery plan in that enables us to help consumers,” Asad says. “Because right now one doesn’t exist.”

While the Lifeline program was a crucial step toward providing low-income Americans with internet access, it’s also become the target of uproarious criticism. The reason? A Government Accountability Office (GAO) study recently reported waste and fraud in Lifeline, and the immense backlash even prompted two Congressional hearings on the matter, both of which largely served as opportunities for senators to publicly tear into the program for alleged “waste, fraud, and abuse.”

Thing is, these claims are based on outdated data, given that the Federal Communications Commission has implemented several significant and targeted reforms to root out fraud in the time since the agency collected its data. Weakening the Lifeline program poises the vicious cycle of wealth and opportunity disparity to be passed onto the next generation—and potentially beyond. We shouldn’t allow that to happen.

On July 17, 2017, Senate Commerce Committee Chairman John Thune (R-SD) sent Federal Communications Commission Chairman Ajit Pai a letter with five questions about Universal Service Fund collections and disbursements and “a description of any regulations limiting allocation of undisbursed USF funds to a particular program or use.” On Sept 5, Chairman Pai replied.

Altice USA said “Economy Internet,” an uncapped broadband service for low-income households, is now available across its Optimum (former Cablevision Systems) and Suddenlink footprints.

The service, for eligible families and senior citizens, offers 30 Mbps (downstream) and integrated in-home Wi-Fi for $14.99 per month. Altice USA launched Economy Internet is select areas of the New York region in 2016, and was linked to a commitment to introduce a low income broadband option throughout the former Cablevision service territory.

The Senate Homeland Security and Government Affairs Committee held a hearing Sept 14 titled, "FCC’s Lifeline Program: A Case Study of Government Waste and Mismanagement". Committee members criticized the subsidy program for phone and Internet access that was the subject of a recent watchdog report detailing cases of fraud and abuse. Chairman Ron Johnson (R-WI) said at a hearing that there “probably” needs to be a complete overhaul of the Lifeline program. “We need to completely rethink how we distribute that subsidy,” Chairman Johnson said.

Sen Claire McCaskill (D-MO) called on the Federal Communications Commission to crack down on the companies that she says are defrauding the program. “Why are we providing these companies with this massive opportunity for fraud?” Sen McCaskill said. Both Sens McCaskill and Johnson suggested diverting funds from Lifeline towards programs focused on expanding rural internet access.