Universal Service Fund

The Federal Communications Commission’s Wireline Competition Bureau reminds eligible telecommunications carriers (ETCs) of their primary responsibility to ensure the eligibility of Americans seeking Lifeline support. Even as the FCC implements reforms to the Lifeline program to further protect the Universal Service Fund from waste, fraud, and abuse, ETCs are, and will remain, responsible for any fraud that forms the basis of their claims for Lifeline reimbursement.

Although there has been great progress extending broadband’s reach to more and more Americans, there remain too many households and communities that are not enjoying the benefits of broadband. Research shows, for example, that families earning under $25,000 a year are about half as likely to have the Internet at home as families that are the most well-off. The Federal Communications Commission’s Lifeline program brings the many benefits of reliable, robust Internet access to low-income households. That means better access to job listings and workforce training, to education and healthcare, and allows people to fully engage in today’s society. In 2016, the FCC outlined plans for a Lifeline National Eligibility Verifier that would relieve from carriers the responsibility of checking on households’ Lifeline eligibility. We urge the FCC to move swiftly to implement those plans and ensure the program’s financial health.

The Lifeline program gives affordable access to broadband and telephone services in rural and urban areas alike. It provides a lifeline for working families to employment opportunities, elderly people to health care, veterans to critical services, children to education and everyone to 911. Low-income households across the country should not be punished for recently discovered discrepancies that do not reflect the behavior of the vast majority of program participants. The following are statements from advocates in support of the Lifeline program

On June 29, the U.S. Government Accountability Office published a report on the Federal Communications Commission’s Lifeline program’s application process. The GAO investigated multiple Lifeline providers and failed to confirm the eligibility of roughly a third of participants.

A Summary of the Report can be found here: Additional Action Needed to Address Significant Risks in FCC’s Lifeline Program

Lifeline Advocates Urge FCC Chairman Pai to Stand by his First Statements as Chairman and Safeguard the only Federal Program Targeting the Digital Divide

FCC Chairman Ajit Pai: "“Last year, I led an investigation into the Lifeline program that revealed serious weaknesses in federal safeguards. Today’s GAO report confirms what we discovered then: Waste, fraud, and abuse are all too prevalent in the program. Commission staff and the Office of Inspector General have already been developing recommendations to better safeguard taxpayer funds. I stand ready to work with my colleagues to crack down on the unscrupulous providers that abuse the program so that the dollars we spend support affordable, high-speed broadband Internet access for our nation’s poorest families.”

FCC Commissioner Mignon Clyburn: “We have a statutory obligation as a Commission to ensure all Americans, including low income consumers and those living in rural and insular areas, have affordable voice and broadband access. Recognition of this responsibility goes hand-in-hand with my long stated belief that we must aggressively root out waste, fraud, and abuse in all of our universal service programs, including Lifeline. In recent years, the Commission has taken numerous steps to achieve this goal, including setting up a national eligibility verifier, adopting a periodic recertification requirement and ensuring that people who are signed up are actually using their service. The Lifeline program already has a very low improper payment rate of 0.45%, and it must be noted, that many of the issues highlighted by the GAO’s report will be addressed by the national eligibility verifier. I am pleased that the work on this effort is proceeding as planned, and will work with my colleagues to address all of the GAO’s recommendations. Today the FCC’s Lifeline program remains the only means-tested universal service program, where only the consumers who cannot afford to be connected are given the ability to do so. So while we invest in the infrastructure needed to bring connectivity into every community in America, we must not forget that ‘if we build it, they will come’ only holds true if the services are affordable. Some may use the limited findings of this report as justification to cut back on the Lifeline program even further, but that would be catastrophic for those most in need. The answer is not denying access to those who cannot afford connectivity and access to critical services like 911, the next steps should include rolling up our sleeves and addressing any imperfections that remain. We have a choice to make: be short-sighted and weaken a program designed to assist our nation’s most vulnerable or fix what may be broken so that this agency is actually upholding its Congressional mandate to ‘make available, so far as possible, to all the people of the United States…a rapid, efficient, Nation-wide, and world-wide wire and radio communication service with adequate facilities at reasonable charges…for the purpose of promoting safety of life and property….’ Instead of widening the digital divide, let us have an honest conversation about how to make voice and broadband even more affordable and accessible for economically challenged Americans.”

FCC Commissioner Michael O'Rielly:“I am not surprised by the revelations in GAO’s latest examination of the Lifeline program. It’s why I sought to address fraud, waste and abuse prior to expanding the scope of the program and pushed unsuccessfully for a host of needed reforms, including the adoption of a budget for the program. I have little confidence, at this point, in the changes adopted by the Commission over the last number of years, or in the ability of USAC to stem the tide of problems. More significant reform is needed, including completely rethinking USAC."

The Government Accountability Office (GAO) released a report finding that deceased individuals had enrolled in the program and noting that GAO could not confirm the eligibility of 36 percent of the subscribers it reviewed. Federal Communications Commission Chairman Ajit Pai issued the following statement in response: “Last year, I led an investigation into the Lifeline program that revealed serious weaknesses in federal safeguards. Today’s GAO report confirms what we discovered then: Waste, fraud, and abuse are all too prevalent in the program. Commission staff and the Office of Inspector General have already been developing recommendations to better safeguard taxpayer funds. I stand ready to work with my colleagues to crack down on the unscrupulous providers that abuse the program so that the dollars we spend support affordable, high-speed broadband Internet access for our nation’s poorest families"

The Federal Communications Commission has not evaluated the Lifeline program’s performance in meeting its goals of increasing telephone and broadband subscribership among low-income households, but has recently taken steps to do so. Lifeline participation rates are low compared to the percentage of low-income households that pay for telephone service, and broadband adoption rates have increased for the low-income population even without a Lifeline subsidy. Without an evaluation, which GAO recommended in March 2015, FCC is limited in its ability to demonstrate whether Lifeline is efficiently and effectively meeting its program goals. In a July 2016 Order, FCC announced plans for an independent third party to evaluate Lifeline design, function, and administration by December 2020. FCC and the Universal Service Administrative Company (USAC)—the not-for-profit organization that administers Lifeline—have taken some steps to enhance controls over finances and subscriber enrollment. Nevertheless, GAO found weaknesses in several areas. GAO makes seven recommendations, which FCC generally agreed with:
require Commissioners to review and approve, as appropriate, spending above the budget in a timely manner;
maintain and disseminate an updated list of state eligibility databases available to Lifeline providers that includes the qualifying programs those databases access to confirm eligibility; this step would help ensure Lifeline providers are aware of state eligibility databases and could also help ensure USAC audits of Lifeline providers can verify that available state databases are being utilized to verify subscriber eligibility;
establish time frames to evaluate compliance plans and develop instructions with criteria for FCC reviewers how to evaluate these plans to meet Lifeline’s program goals;
develop an enforcement strategy that details what violations lead to penalties and apply this as consistently as possible to all Lifeline providers to ensure consistent enforcement of program violations; the strategy should include a rationale and method for resource prioritization to help maximize the effectiveness of enforcement activities;
ensure that the preliminary plans to transfer the USF funds from the private bank to the U.S. Treasury are finalized and implemented as expeditiously as possible;
require a review of customer bills as part of the contribution audit to include an assessment of whether the charges, including USF fees, meet FCC Truth-in-Billing rules with regard to labeling, so customer bills are transparent, and appropriately labeled and described, to help consumers detect and prevent unauthorized charges; and
respond to USAC requests for guidance and address pending requests concerning USF contribution requirements to ensure the contribution factor is based on complete information and that USF pass-through charges are equitable.

The Federal Communications Commission’s Wireline Competition Bureau announces the updated standard levels for speed and usage allowances for Lifeline-supported services as required by the 2016 Lifeline Modernization Order. The Bureau specifically announces the newly calculated minimum service standards for fixed broadband. It also reminds providers of the updated minimum service standards for mobile broadband and mobile voice service, as established in the FCC’s rules. These standards will take effect on December 1, 2017. Finally, the Bureau announces that the budget for federal universal service support for the Lifeline program for calendar year 2018 will be $2,279,250,000. Beginning December 1, 2017, the Lifeline minimum service standard for fixed broadband speed will be 15 Mbps downstream and 2 Mbps upstream.

The Senate Communications Subcommittee on June 20 took a deep dive into the Federal Communications Commission's Universal Service Fund, with a focus on rural broadband deployment and telehealth. Chairman Roger Wicker (R-MS) signaled that he and Ranking Member Brian Schatz (D-HI) were reintroducing the Reaching Underserved Rural Areas to Lead [RURAL] on Telehealth Act, which would qualify some rural healthcare providers for USF funds. He said robust broadband connections are vital to the adoption of "lifesaving technology." Wicker, who previously has introduced a bill requiring the FCC to improve broadband data collection, said, "[E]nsuring broadband deployment to rural healthcare providers is a critical component of the USF program." He also said the importance of delivering broadband to rural areas cannot be understated, citing economic and digital innovation.

A change in leadership at the Federal Communications Commission has led to rising uncertainty about the future of efforts to boost broadband access, preserve an open internet, and protect online privacy—all issues affecting the K-12 sector. Atop education leaders' list of concerns is the E-rate, a $3.9 billion federal program that helps schools and libraries pay for telecommunications services. A wide cross-section of experts credits the FCC's 2014 overhaul of the program for helping.

T-Mobile’s business selling service to low-income users whose costs are paid, at least in part, through the Universal Service Fund (USF) Lifeline program is “non-sustainable,” said Braxton Carter, T-Mobile chief financial officer. T-Mobile Lifeline customers represent 4.4 million of the carrier’s 73 million subscribers and “we’re going to eliminate them from the base,” said Carter.

Carter attributed the change in direction to changes in the Lifeline program associated with requirements for voice and data service. The changes to the Lifeline data apparently relate to the FCC’s plan to raise the minimum monthly allotment to 2 gigabytes in 2018 from an initial 500 megabytes. “We don’t think Lifeline is a valuable or sustainable product for our base,” he said. Based on Carter’s comments, some or all of those customers apparently are sold through companies that buy service from T-Mobile on a wholesale basis. Meanwhile, smaller rural carriers have been reluctant to offer Lifeline broadband because the rate they would have to charge for the service would be in the range of $100, which the $9.25 discount wouldn’t go far to cover – a situation the rural carriers attribute to an insufficient USF program budget.