The Lifeline Program’s Perilous Journey
There are times when the proceedings at the Federal Communications Commission (FCC) are like watching The Perils of Pauline. Such was the case on March 31, 2016, when efforts to reform and improve the Lifeline program in a bipartisan and unanimous manner were railroaded into oblivion after numerous delays in convening a scheduled hearing.
Given the opportunity to agree to reasonable reforms and correct longstanding flaws in the Lifeline program, Pauline’s hero Harry wasn’t able to help, and Dudley Do-Right wasn’t available to “save the day.” Instead, FCC Chairman Tom “Wheeler Dealer” bulldozed through his plan, which will result in increased costs for consumers and ultimately hurt those that the Lifeline program is intended to help.
The Lifeline and Linkup programs are the two low-income support programs funded by a hidden tax on phone bills called the Universal Service Fund (USF) fee. The Lifeline program was created in 1985 in order to provide subsidized telephone services to low-income households. In 2008, Lifeline was expanded to allow telephone companies to provide discounted wireless service to eligible individuals.
In October 2010, the Government Accountability Office (GAO) published a report on the Lifeline and Link-Up programs that uncovered multiple instances of fraud and abuse, including violations of the one phone line per household restrictions, and recipients profiting from sales of Lifeline-subsidized phones and service. GAO also noted that there had been sudden and drastic cost increases to the program following the 2008 wireless expansion.
In response to the GAO report, the FCC issued the Lifeline Reform Order (Reform Order) on June 29, 2011, to address the program’s programmatic waste, fraud and abuse. The reform order also provided for a broadband pilot program. On March 24, 2015, GAO found that many of the FCC’s reforms were not working, and the agency still needed to do more to address deficiencies within the Lifeline program. GAO also determined that the FCC lacked an evaluation plan for the data it had gathered from the broadband pilot program.
On March 8, 2016, despite the GAO report findings, Chairman Wheeler issued a proposal to “reform” the Lifeline program by adding subsidized broadband Internet service at the amount of $9.25 per month per eligible household and increase the annual budget for Lifeline from $1.75 billion to $2.25 billion per year, without an annual spending limit or cap.
Before the scheduled March 31, 2016 meeting on the chairman’s proposal (meaning there would be a vote by the commissioners), Commissioner Ajit Pai offered analternative plan. He recommended an annual budget capped at $1.75 billion, which would provide enough funding to offer Lifeline-supported Internet access to every qualifying household that is not currently online, as well as maintain landline voice service. He also proposed including an enforceable budget mechanism which would automatically reduce payments to carriers when estimated costs of the program would exceed the budget in order to prevent unchecked spending increases. The alternative would also have eliminated enhanced subsidies to counties with more than 50 people per square mile.
Commissioners Pai and Michael O’Rielly, the two Republicans, went into the meeting believing that they had an agreement on Pai’s proposal with Democratic Commissioner Mignon Clyburn. But after numerous delays in convening the meeting, the compromise was abandoned and the FCC voted 3-2 along party lines to approve the chairman’s original Lifeline and Link Up Reform and Modernization Order (WC Docket No. 11-42).
In an oral statement at the meeting, Commissioner Clyburn explained the three and a half hour delay and one of the reasons she allegedly did not agree with Commissioner Pai’s compromise: “I have been consistent in saying that a cap should not be imposed. … I continue to hold that view.”
The frustration of Commissioners Pai and O’Rielly were clearly evident at the meeting, with O’Rielly surmising that “I approached the table in good faith with the belief that I could trust the word of a Commissioner. Now it seems that even that basic foundation has gone out the windows of the Eighth Floor. What has happened will do irreparable harm to our ability to engage going forward.”
It now appears that the FCC has devolved into a partisan dictatorship unwilling to seek compromises that protect consumers and reduce costs for taxpayers.
But perhaps Harry can still come to the rescue, in the person of Rep. Austin Scott (R-Ga.). He has introduced H.R. 4884, the Controlling the Unchecked and Reckless Ballooning of Lifeline Act of 2016 (CURB Lifeline Act of 2016). The bill would “curb” the escalation of costs to the Lifeline program by phasing-out the mobile voice-only program, which has seen the most frequent program abuse; protect consumers from unwarranted increases in the USF fees by imposing a cap on Lifeline spending at $1.5 billion; and, prohibit the use of the Lifeline subsidies for purchasing devices, including smartphones, tablets, or laptops.
The Internet is used for more than just keeping up with the on goings of social media. People around the world use it for homework, shopping, banking, work, job hunting, and even tax preparation; encouraging increased availability of broadband services to low-income and underprivileged households in this country is a laudable effort.
But the FCC’s Lifeline order will not achieve that goal. Instead, the FCC and Congress should work together to remove the regulatory burdens that increase the cost of broadband deployment across the country, so that providers can reduce overall consumer costs. Instead, because nothing is ever free, the FCC order will increase the cost of telecommunications services to consumers with perilously higher USF fees.
By Deborah Collier April 2016 WasteWatcher