The Universal Service Lifeline program that pays part of monthly phone costs for low-income households came under scrutiny at a Congressional hearing last week. The hearing, titled “The Lifeline Fund: Money Well Spent?” was conducted by the Energy and Commerce Committee’ Subcommittee on Communications and Technology.

The Lifeline program, administered by the FCC, is funded by communications service providers as a percentage of their interstate revenues and pays $9.25 per month toward the cost of wired or wireless service. The program has grown considerably in recent years – a phenomenon that some people attribute to the advent of prepaid plans that appeal to low-income users.

When a program like this increases in size, it tends to get people riled up – and in an effort to address those concerns, the FCC early last year made several reforms to the program. The commission eliminated a separate program called Linkup that paid part of telephone service installation costs and reduced the monthly Lifeline payment from $10 to the current $9.25.

Perhaps more importantly, the commission put in place a program to improve the process through which funding recipients are qualified. The commission says it has saved hundreds of millions of dollars through these reforms.

Last week’s hearing brought together a diverse group of stakeholders who offered additional insight on the Lifeline program.

Jessica Gonzalez, vice president of policy and legal affairs for the National Hispanic Media Coalition, emphasized the positive aspects of the program. She offered examples of unemployed people who were able to find new jobs because potential employers were able to reach them via their Lifeline-subsidized phones.

Others were less enthusiastic.

For example, Geoff Feiss, general manager of the Montana Telecommunications Association, raised the question of whether the $9.25 per month support level was appropriate for both wired and wireless service. Previously, the commission said the $9.25 monthly payment was based on carriers’ average monthly charge, but it’s not clear whether that included wired and wireless carriers.

The program’s paradox

Perhaps the most compelling testimony at last week’s hearing came from Billy Jack Gregg of Billy Jack Gregg Universal Consulting, who pointed out an important paradox about the program. Despite the program’s growth, the number of households currently enrolled is only 58 percent of the total number of qualified households nationwide, and in six states, 10 percent or less of qualified households are enrolled in the program. In six other states, however, the total number of households covered by the program exceeds the total number of qualified households.

Gregg suggested that one way to address the situation would be to cap the amount of support that households in an individual state can receive at the amount associated with 100 percent of eligible households, leaving it to the state to sort it out.

Proposed legislation

The subcommittee hearing occurred just days after several members of Congress introduced legislation to allow Lifeline support to be used for wireline, wireless or broadband service.

“We must ensure lower-income Americans have a greater opportunity to participate in the digital economy, whether it be for workforce training, education, finding a job or creating the next big idea,” wrote Congresswoman Doris Matsui, one of the bill’s supporters, in an announcement about the bill.

That’s a concept that seems to be gaining support at a time when broadband has become so important for so many reasons. And backers of the legislation were smart not to propose a broadband program that would be in addition to the existing voice-based program – an idea that undoubtedly would have been less popular.

Before the idea of re-defining the program to include a broadband option can succeed, however, I suspect policymakers will have to address issues such as those that Gregg raised.

As Gregg put it, it’s important to make sure the program supports “access, not excess.”