Bitterly Divided FCC Votes New Lifeline Reforms

The FCC has voted to reform its Lifeline low-income broadband subsidy program.

That came in a politically divided vote, one of a number of such votes at the Nov. 16 public meeting.

The FCC revamped the program under the previous, Democratic, chair, in what was also a contentious and politically divided vote with the Republican majority vociferously in opposition. This time it was the Democrats on the short end, and they were not happy about it.

The multipart item, which was circulated last month, includes an order, a proposed order and an inquiry. The FCC, in the order part,"clarifies" that premium WiFi and other similar services do not qualify as mobile broadband under the subsidy; increases the portability of Lifeline service among carriers; and targets support for rural areas on tribal lands only to those lands.

The FCC also issued an accompanying notice of proposed rulemaking (a proposed order) that seeks comment on, among other things, a self-enforcing budget mechanism, or cap (it suggests $820 million), which was the most contentious issue in the previous Lifeline revamp. It also proposes ending pre-emption of states' role in eligible telecommunications carrier designations, targeting Lifeline to facilities-based broadband capable networks offering voice and broadband (the FCC has been migrating its telecom subsidies from voice to broadband over the past several years).

It also seeks comment on improving the Lifeline program's eligibility verification and recertification process. One of the things FCC chair Ajit Pai did early on in his tenure was to revoke the most recent round of certifications until the FCC addresses the verification issue. Pai's stated goal is to prevent waste, fraud and abuse, something he has long targeted in the program, though critics of the deal suggested it was a draconian hit on lower-income residents denied service.

Related: Pai Gets Pushback on Lifeline Eligibility Rollback

Finally, the order includes a notice of inquiry -- sort of a fact-finding prelude to a possible rulemaking proposal - -seeking comment on better targeting the funds to areas and people most in need of the money.

Back in June, the Government Accountability Office released a report that identified big problems with the Lifeline program. For example, GAO was unable to confirm whether 36% of the 3.5 million individuals it reviewed (or some 1.2 million) actually participated in any of the qualifying programs, like Medicaid, that they stated on their applications for the subsidy.

“States play an important role in preventing waste, fraud, and abuse in federal programs, in addition to ensuring that people have access to essential communications services,” said Sen. Roger Wicker (R-Miss.). “By its action today, the FCC is taking steps to ensure states have a say in the Lifeline program.”

Commissioner Jessica Rosenworcel, who supported the previous revamp, was sharply critical of the majority's decision this time around.

"This is not real reform," Rosenworcel said. "This is cruelty. It is at odds with our statutory duty. It will do little more than consign too many communities to the wrong side of the digital divide.

"Instead of thinking about the future and doing something modern, today the FCC sets out to slash this program from front to back," she added. "Instead of honoring our statutory duty to support low-income consumers, we cast them aside and cut them off."

Commissioner Mignon Clyburn said she was essentially in mourning. "This item does not bridge the digital divide as it purports," Clyburn said. "It is a bridge to nowhere. It proposes to shirk one of the four pillars of our universal service promise – affordability – but I can only hope that this commission and its majority sees the error of its ways before it does further harm to those Americans trapped in economic distress."

But Republicans saw the proposal as addressing the waste, fraud and abuse problems, including better targeting the program.

"I am glad that we’re now taking action to increase accountability while at the same time considering ways to target Lifeline support to consumers and communities that need it most," said commissioner Brendan Carr, who supported the changes. He cited the GAO report as supporting the need to reform the program, as its concerns were cited by both sides of the political aisle.

Commissioner Michael O'Rielly said the reforms were vital and "necessary fixes" to bring the program back in line with statute. He said the FCC had to do better to protect taxpayer money, including instituting a real budget, which would deter oversubscription and abuse. O'Rielly said all federal programs should be targeted, and that Lifeline fails miserably in that regard.

He said Lifeline was meant to be a discount program, not a free program. He said some portion of users are destitute and can't afford to pay anything, but many others can and should pay. He said there should be some way of requiring a minimum contribution.

Pai seemed unphased by his harsh critics. He cited the GAO report and the "deeply disturbing" problems it uncovered, including hundreds of millions of dollars in waste per year. He said there was an urgent and bipartisan call from the Hill to act.

He said the item would do two things: (1) curtail waste, fraud and abuse, and (2) make the program more effective at bridging the digital divide.

Pai said the honor system is not the way to protect taxpayer dollars.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.