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MMTC to FCC: Get ETCs Out of Lifeline Verification

The FCC has signaled it wants to get eligible telecommunications carriers (ETCs), which includes cable operators, out of the business of administering the eligibility and verification parts of the Lifeline telecom subsidy, soon to be migrating to broadband, and the Multicultural Media, Telecom & Internet Council is definitely on the same page.

In a new report released Thursday (March 24), MMTC said that it agrees ETCs should be out of the verification business but also said the FCC has underestimated the administrative costs to those ETCs, which is even more reason to get them out of the paperwork business.

According to the report, 65 cents of every dollar of the subsidy goes to administering it. That is compared to the FCC's estimate of 41 cents for administrative costs. That, says report coauthor Olga Ukhaneva of Georgetown University, translates to $977 million in administrative costs, or 59% more than the FCC's estimate.

The administrative costs are not born by the recipients but by the ETCs, it does not reduce the subsidy, but it does reduce its effectiveness, the report says, by making the program unattractive to many potential ETCs and reducing competition for the subsidy.

Since the point of the subsidy is to encourage broadband providers to offer service to low-income residents, the less of it eaten up by administrative costs, the bigger a carrot it is for those ETCs.

The report suggests one way of reducing the costs of administration is to transition the verification of eligibility for the subsidy to a coordinated framework piggybacking on the USDA's SNAP food subsidy program, whose overhead costs are only about 6%, they said.

The FCC plans to vote March 31 on proposed Lifeline reforms, including migrating it to broadband or bundled broadband and voice and getting ETCs out of the verification business.