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Industry Has Mixed Reaction to FCC's Lifeline/Linkup Reform

Response from industry and the Hill was swift,
and mixed, to the FCC's vote to reform the lifeline/linkup low-income phone
subsidies program and migrate it to broadband.

senior VP Bob Quinn agreed with the FCC that reform was needed, but wasn't sure
the FCC was the one that should be administering the fund.

the steps the FCC announced today are commendable, we fear the speed of reform
is getting far outpaced by the actual dollar growth of the fund itself,"
he said. "Policymakers must begin to discuss whether it continues to make
sense for an independent agency to administer a fund this size with no
Congressional oversight or decision-making input to the appropriate size of the
fund. Counterpart programs for both energy and food are not administered in
this manner. They are subject to the Congressional budgetary processes and are
not funded by taxing the users of those services -- no one must pay an 18% tax
on the electric bill to fund the low income electric programs. One has to
wonder why communications consumers are treated differently in this

Commissioner Robert McDowell raised the same issue in calling for swift action
on reforming the contribution side of the subsidy.

Telecom called the changes the FCC did institute "sound" and gave the
FCC a shout-out for overhauling the system. "Today's order to reform and
modernize the Lifeline fund maps out concrete steps to eliminate waste and
duplication," said USTelecom President Walter McCormick. "It is
important that the commission follows through on these steps, in particular
ensuring that a national eligibility database is up and running as soon as
possible. The order also sets in motion a process to study a transition to the
broadband marketplace, as envisioned in the National Broadband Plan."

on the Hill, Communications Subcommittee Democrats Anna Eshoo and Doris Matsui,
both from California, had nothing but
encouraging words for the commission.

vote to reform and modernize Lifeline is an important milestone for a program
which has helped provide low-income consumers with affordable phone service for
nearly 30 years," said Eshoo. "I applaud Chairman Genachowski for
spearheading these critical reforms which are expected to save up to $2 billion
over the next three years.... The establishment of a broadband adoption pilot
program will help close our nation's digital divide, while addressing a key
recommendation of the FCC's National Broadband Plan."

Commissioner Robert McDowell was not as sanguine about both the $2 billion
savings -- which he suggested was probably an overstatement -- and the pilot
program, which would already be taking a bite out of those savings. FCC
Chairman Julius Genachowski countered that it would only be a
"fraction" of the savings, though he did not say whether that meant
one tenth or nine tenths.

issued her congratulations even before the item was outlined or the vote taken,
but that may have been because the vote was delayed by more than an hour by
last-minute negotiations over how to set and monitor the program's budget. She
also focused on the pilot program and savings.

applaud the FCC's vote today to bring the USF Lifeline Assistance program into
the 21st century, and commend Chairman Genachowski for leading on this critical
issue," she said. "In addition to reforming the program to save an
estimated $2 billion in the coming years, the FCC has also committed today to
establishing a broadband adoption pilot program. This is an initiative I have
been advocating for since I first introduced legislation in 2009 to expand the
Lifeline program for universal broadband adoption, and I am very pleased that
this will soon become a reality."

support is no surprise. She introduced legislation that would provide
low-income homes with broadband, saying that bill was the basis for the FCC's
announced pilot program

also gave a shout out to plans to fund digital literacy outreach to schools and
libraries, which will also tap into the planned savings from cutting back on
waste, fraud and abuse, including duplicative subsidies.

FCC declined to cap the lifeline program or put it on an immediate budget,
instead saying it would study the reforms first. That was just the ticket for
the Civil and Human Rights Coalition, which said in a statement that "had
the FCC capped the number of recipients or imposed an arbitrary budget before
even piloting a modernization of the program, it would have hamstrung the
initiative before it got started."

the FCC meeting Tuesday, Commissioner Mignon Clyburn said she was not
supportive on a cap, and would have to see what budget was eventually proposed.
"I cannot guarantee anyone that I will support any particular budget" before
the data on the impact of FCC reforms is collected and analyzed.