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FCC Approves Reform of Lifeline/Linkup Program

The FCC has taken another step toward moving
phone subsidies to broadband service.

FCC approved Tuesday, with a mix of partial concurrences and dissents, a
rulemaking and notice of inquiry to reform its Lifeline/Linkup program, which
provides subsidies phone service to eligible low-income participants.

reforms include starting the migration of the fund to broadband, as the FCC
last fall voted to do with the Universal Service Fund's high-cost fund (which
subsidizes service to rural and other hard-to-reach areas). It also essentially
gets rid of the linkup portion of the program, which incentivized sign-ups by
companies, or what FCC Chairman Julius Genachowski called a "bounty"
for companies that were not working.

was unanimous support for broadband migration, as well as limiting waste, fraud
and abuse.

there was disagreement over whether some of the planned savings from reducing
waste, fraud and duplicative payments should be used to fund pilot broadband
migration programs--Commissioner Robert McDowell concurred, which is short of
approval--and the manner in which the FCC will require 100% recertification of
current eligible subs--a concurrence from Clyburn. The meeting was even delayed
for over an hour as some last minute negotiating went on, recalling the days of
FCC Chairman Kevin Martin.

Chairman Julius Genachowski said following the meeting that the way they were
able to come to agreement on a way forward with reforms was to agree on target
savings, but also a way to measure those savings. Commissioner Mignon Clyburn
said at the meeting she had problems with capping the program.

dissented from the portions of the rulemaking that used the FCC Sec. 706
authority to buttress the move of the subsidy to broadband. That section
requires the FCC "to encourage the deployment of advanced
telecommunications to all Americans." McDowell has been leery of the FCC's
use of that broad mandate to justify broadband regulation.

the major components of the reforms are creating a national accountability
database to weed out duplicative support and a database to check eligibility;
confining that subsidy to one per household -- Commissioner Mignon Clyburn had
issues with that and only concurred in that part; audits for eligible carriers receiving
more than $5 million in subsidies; cutting back support for service with high
activation fees; targeting $200 million in savings for 2012, and up to 2
billion over three years -- MCDowell said he was not convinced the number would
be that high.

McDowell said that the reforms put an exclamation point on the need to reform
the contribution side of the subsidies, pointing out that some consumers, not
all of them well-heeled cross subsidize the low-income participants.

also criticized the pilot program proposal for already spending the some of
that $200 million savings, saying it was "fiscally imprudent" to
launch programs that could boost costs. The chairman countered that he thought
it would be "irresponsible" not to begin testing ideas for migrating
low income to broadband.

said she was concerned about the impact of putting a budget on the program, the
difficulties for some subs to comply with a certification requirement, and the
limit of one subsidy per household. She concurred, rather than voted yes, on
that limit, and thanked the chairman for teeing up in the notice of inquiry the
possibility of a "modest increase" in the subsidy for low income
homes with multiple adults who might need more than one subsidized line.