Lifeline Disbursements Continue Decline in 2014

Data released by USAC in its 2014 Annual Report show an 11 percent decline in Lifeline disbursements from 2013 and a 27 percent decline from 2012 – the program’s peak funding year.  These figures, illustrated in the table below, demonstrate that claims about the “explosive growth” of the Lifeline program are based on old data that does not take into account the FCC’s significant reforms of the program.  In fact, program funding in 2014 was 9 percent below the 2011 level.

We believe the steady decline in Lifeline funding can be attributed to several factors:

• Implementation in early 2014 of the National Lifeline Accountability Database (NLAD), which all but eliminates duplicate Lifeline funding for individuals or households.
• The annual re-certification process, which requires Lifeline providers to secure an affirmative response from each subscriber that he or she remains eligible to receive Lifeline benefits.
• New rules that require subscribers to provide documentary proof of eligibility at the time of enrollment.
• The increased health of the U.S. economy, including, most significantly, a decrease in the unemployment rate.
• The FCC’s 29-month de facto moratorium on new Lifeline resellers. (The FCC has failed to act on any of the numerous compliance plans submitted by Lifeline resellers since December 2012.)

As shown in the chart below, the Lifeline program remains the second smallest of the four Universal Service Fund programs, well below the High Cost program – which alone consumes almost half of the Fund – and the E-Rate program (which grew even larger in 2015 due to a dramatic expansion of its budget).

The FCC’s February 2012 Lifeline Reform Order, which implemented the program reforms listed above, was intended to produce significant cost savings.  Lifeline continues to receive a large amount of attention and criticism due the highly-partisan political climate in Washington, but USAC’s data shows that the FCC’s reforms have been largely effective in producing the intended cost savings.