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Senate Vets FCC Lifeline Programs

The Senate Commerce Committee's Communications Subcommittee put the FCC's Lifeline subsidy program through its paces Tuesday (June 2).

At issue in a hearing on how to reform the program -- something the FCC has been doing since at least 2012, with more proposed changes last week -- was whether those reforms were enough, how successful they had been or could be, and what else needed to be done.

Both sides of the aisle agreed the program needed modifying, with Democrats united in support of expanding it from phone service to broadband, but Republicans were less sure about the increased costs of such an expansion as well as preventing waste, fraud and abuse.

Republicans were looking for some more cost-containment -- like a budget on the program -- before expanding eligibility to broadband, while Democrats argued that the FCC could do both at the same time and had already made strides with targeted reforms meant to increase efficiency and prevent waste, fraud and abuse.

Lifeline is a subsidy, paid by phone customers, to provide basic communications connectivity to low-income Americans. The FCC last week proposed adding broadband to phone service as eligible for the subsidy (of a little more than $9 per month).

At the hearing, Michael Clements, acting director, physical infrastructure issues, for the Government Accountability Office (GAO) talked about a recent GAO study that concluded there are a number of issues with the program.

Among those they cited were the FCC's lack of progress: While having made progress on some 2012 reforms, the agency still had three of 11 reforms to complete; the FCC had not evaluated the effectiveness and efficiency of the program; and a pilot program the FCC conducted to test expanding the program to broadband had a low turnout. The FCC has agreed to come up with a way to better evaluate the program.

Sen. Roger Wicker (R-Miss.), chairman of the subcommittee, talked about the expansion of the subsidy from $800 million in 2009 to $2.2 billion in 2012. Though he conceded reforms since then had reduced that figure to $1.7 billion, he also said problems and issues lingered, including how to verify eligibility and the low pilot program participation. He said before expanding the program, it was necessary to identify and address the remaining problems.

Sen. Richard Blumenthal (D-Conn.) stood up strongly for the FCC's reforms to date, calling them a "serious and sustained effort" that the FCC should get credit for. He said that while there are still modifications that need to be made, including moves to reduce waste, fraud and abuse, that should not prevent the FCC from extending the program to broadband, as it has proposed, and that Congress would legislate that move if necessary.

Randolph May of the Free State Foundation, one of the witnesses at the hearing, said he supported Lifeline as a targeted program, but also said the FCC needed to undertake more reforms, and meanwhile should take a cautious approach to expanding the program, saying there were some reforms the GAO had suggested back in 2010 that the FCC had still not made. Blumenthal reiterated that the FCC had made changes, perhaps not to May's satisfaction, and that government agencies can do two things at once.

One Democrat who had lots of issues with the program was Joe Manchin (D-W.Va.). He said that it was being abused and he did not see a lot of support for the program in his state, in part because its benefit had not been sufficiently explained. He said the question needed to be asked whether the fund should be capped or benchmarks set before it was expanded.

The FCC has sought comment on putting the fund on a budget, but Scott Bergmann, CTIA VP, regulatory affairs, suggested some reasons why the FCC had not capped the fund. He said CTIA was definitely concerned with the size of the fund, given that 44% of low income and high-cost subsidies come from wireless carriers and their customers, a figure he said would soon be 50%. But he said his concern about a hard cap was that it was targeted to individuals, not carriers, and was means tested.

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.