FCC Chairman Looks to 'Reboot' Lifeline Regime

By Peter Bernstein June 01, 2015

In case you missed it, on May 28, U.S. Federal Communications Commission (FCC) Chairman Tom Wheeler set forth a series of proposals in a Notice designed to restructure and modernize the FCC’s Lifeline program. The objective is simple, the institution of an efficient and effective way to help low-income consumers afford access to essential communications services including broadband along with further combating waste and better targeting the program to those who need it most.

The proposals have been put out for comment and set for a vote by the other commissioners at its June 18 meeting. If approved, there will be a period of public before the commissioners would vote on a final order.

A 21st Century vision of providing Lifeline services

While the original enabling language that created the FCC in 1934 set out as its mandate to provide universal service at affordable rates, and the Lifeline Program since 1985 has given low-income Americans access to the basic voice services, it would be fair to say in a digital and broadband-centric world that the program has gotten long in the tooth and is in real need of an update. 

In fact, as the notice of the proposals highlights:

  • While over 95 percent of households with incomes of $150,000 or more have access, only 48 percent of those making less than $25,000 have service at home.
  • Nearly 50 percent of low-income Americans have had to cancel or suspend smartphone service due to financial hardship.  Because low-income consumers disproportionately use smart phones for Internet access, this puts them at a disadvantage at a time when broadband access is essential for access to education and information, for managing and receiving health care, for daily tasks like accessing government services, checking bank balances, finding bargains on goods and services, and more.

This is not the first time updating Lifeline has gotten FCC attention. In 2012 the program was adjusted to assure financing and better administration.  The result was a reduction of Lifeline spending of almost 24 percent when the rules become fully effective in 2013-14. However, there remains much work to be done as universal broadband access has gone from nicety to necessity. As the Chairman notes, it is time to “reboot.”

In a nutshell here is what has been placed on the table:

  • Ensuring minimum service standards for voice and broadband.  The Notice proposes to establish minimum service standards for both voice and broadband, to ensure that both Lifeline subscribers and ratepayers are getting the best possible value from the service delivered. The Notice seeks comment on what those standards should be.
  • Resetting Lifeline Eligibility Administration.  Lifeline providers are currently responsible for ensuring the eligibility of their Lifeline customers, a situation that invites waste and burdens providers.  The Notice proposes to remove providers from this process and seeks comment on other ways to verify eligibility, such as establishing a neutral third party administrator.  The Notice also seeks comment on how to ensure that the program targets those most in need of the support.
  • Increasing Competition.  Competition among providers on price and service offerings would benefit Lifeline subscribers and would ensure ratepayer dollars support an efficient program. The Notice seeks comment on how to encourage providers to participate in the program.  The item also asks how to encourage participation by the states.

Building on 2012 Lifeline Reforms

The FCC adopted comprehensive reforms in January of 2012 to crack down on waste, fraud and abuse and protect ratepayer dollars, which include:

  • Requiring documented proof of subscriber eligibility, and annual recertification of eligibility.
  • Clarifying Lifeline subscriptions are limited to one per household.
  • Establishing the National Lifeline Accountability Database to eliminate and prevent duplicate subscriptions.
  • Independent audits of carriers every two years.

The Chairman is circulating a Report and Order that would build on and strengthen these reforms by:

  • Requiring providers to retain documentation regarding the eligibility of their Lifeline customers to facilitate oversight and audits.
  • Extending all record retention requirements from three to ten years.
  • Increasing program transparency by making key performance data easily available to the public.

In case you also missed it, the comments on the Notice came fast and furious and followed typical practices when these things happen.  Consumer groups hailed the effort while the industry chimed in with the obligatory statements about rebooting Lifeline being a laudable goal and how they are looking forward to working with the FCC on refining the proposals.

A word of caution is advised.  Kind words do not signal smooth sailing ahead.  For example, NTCA, the Rural Broadband Association, signaled more was needed. “As always, NTCA welcomes carefully constructed, well-coordinated updates that look to solve the challenges of universal service in all of its forms," said NTCA CEO Shirley Bloomfield. “At the same time, in high-cost areas, the Lifeline program and other USF programs can only be effective to the extent that a network for consumer use is there in the first instance and if the services offered on that network are reasonably comparable in price and quality to those in urban areas."

Plus, there are already rumblings about funding mechanisms including since universal broadband at affordable rates should be a national goal, bordering on a right, some are already wondering if the best way to get there is with the imposition of a national tax.  Let’s just say as with all FCC actions, it is a long way from notice to rule with a lot of speed bumps on an uncertain roadway.

As Chairman Wheeler commented on his blog: "Getting Lifeline reform right won’t be easy…I look forward to working with my colleagues to resolve the difficult questions before us." 

Edited by Stefania Viscusi
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