FCC Proposes Major Overhaul of Lifeline Program Including Support for Broadband

Earlier today, the FCC adopted an order and further notice of proposed rulemaking (referred to below as “Order and FNPRM”) that will revise some aspects of the Lifeline program and proposes to make even larger changes, including supporting broadband.

The text of the Order has not been released, but the FCC announced that it contains several new rules that will affect the way ETCs must operate, including:

• Adopting a rule that ETCs’ claims for Lifeline support must be based on a monthly “snapshot” of the number of subscribers;
• Requiring ETCs to retain documentation demonstrating that the subscriber has the requisite income level;
• Eliminating the ILECs’ obligation to provide resold Lifeline service; and
• Clarifying what ETC data must be made public by the FCC.

In addition, the FCC has proposed additional changes on which it seeks comment, including:

• Making broadband service eligible for Lifeline support;
• Enacting minimum service standards for both voice and broadband Lifeline-supported service;
• Making permanent the current monthly subsidy rate of $9.25;
• Transferring responsibility for determining the eligibility of subscribers away from carriers and to an as-yet undetermined “neutral third party”;
• Coordinating with state and federal assistance databases to aid in determining eligibility;
• Enhancing consumer protection (details not specified); and
• Adopting new metrics to measure the effectiveness of Lifeline reforms.

It may also make or at least propose changes to the definition of tribal lands in Oklahoma that qualify for additional Lifeline subsidies.

The Order and FNPRM was supported by Commissioners Clyburn and Rosenworcel and Chairman Wheeler, while Commissioners Pai and O’Rielly strongly dissented.

Commissioner Clyburn expressed her support for the Lifeline program, particularly after the success of 2012 reforms, but also argued for the need for new changes, some of which are known to be addressed in the Order and FNPRM:

• Subscribers shouldn’t be required to turn over financially-sensitive information in public
• ETCs should offer more than “de minimis” service
• Reduce unnecessary administrative burdens
• Neutral 3rd party should determine consumer eligibility
• FCC should leverage other benefits programs and work with state programs to determine eligibility

Commissioner Rosenworcel used her remarks to support the rulemaking and discuss the “Homework Gap,” a term she has coined to refer to circumstances in which students who lack broadband access are assigned schoolwork that requires such access.  She also expressed her support for two items in the FNPRM: minimum service standards and transferring responsibility for customer eligibility verification to a third party.  She noted that the NLAD would benefit from additional improvements.

Commissioner Pai presented a vigorous dissent, claiming that the Lifeline program “had lost its way” since its advent under the Reagan administration, noting that the 2012 budget was more than 23 times the budget at end of that administration.  He singled out the current definition of tribal lands in Oklahoma as the source of alleged fraud, waste, and abuse.  He also complained about the lack of a proposal for a cap or specific budget in the FNPRM and the lack of a requirement that customers contribute some amount, such as 25%,  in order to receive Lifeline service.  Commissioner Pai reiterated some of his past criticisms of the Lifeline program by noting that many participating households might subscribe to phone service and broadband even without Lifeline support and recommending that Lifeline eligibility standards be tightened to limit the number of households who can participate.

Commissioner O’Rielly also dissented and accused the majority of increasing spending as much as possible before the USF contribution reform proceeding offers a proposal for how to limit spending.  He also complained about the lack of a proposal for a budget, though neither he nor Commissioner Pai suggested how a cap or budget would work in practice.  He also expressed disappointment that the FNRPM does not include a minimum contribution from subscribers.  Commissioner O’Rielly argued that tying eligibility to other assistance program databases could be problematic, noting that a subscriber’s SNAP subscription status may be highly variable and that some state assistance programs have standards that are too lax.

Chairman Wheeler expressed disappointment at the two Republican commissioners’ dissenting votes, arguing that Lifeline has the potential to accomplish bipartisan goals such as increasing economic opportunity.  He noted that that all of the rules criticized by the dissenters were enacted by previous FCC majorities, and applauded the effects of the reforms begun under Chairman Genachowski and continued when Commissioner Clyburn was an acting Chairman.

We will provide an updated overview when the text of the Order and FNPRM are released.