Wheeler Circulates Lifeline Broadband Makeover

FCC chairman Tom Wheeler is circulating his proposal to modernize the FCC's Lifeline subsidy program to migrate it to broadband.

The chairman is billing it as a "reboot" of the program to bring it into the 21st century. The Lifeline program is part of the Universal Service Fund and provides subsidies for communications services to low income households.

For the first time, the $9.95 per subsidy—the order does not increase the subsidy—can be used to support stand-alone mobile or fixed broadband service as well as bundled voice and data packages.

The program keeps the 10 Mbps downstream/1 Mbps upstream benchmark for service, and a minimum monthly usage allowance of 150 GB for fixed service and 500 MB per month of 3G data for mobile, increasing to 2 MB by the end of 2018.

Support for standalone mobile voice will be wound down to $7.25 per month as of December 2017, $5.25 per month as of December 2018, and nothing after that. But mobile voice will still be supported as part of a mobile broadband bundle.

To help combat waste, fraud and abuse, the order would establish a National Eligibility Verifier and says it will minimize the impact on ratepayers—the subsidies wind up on consumer bills—by setting a budget of $2.25 billion, indexed for inflation.

Now the challenge is for the FCC to pay for the new broadband subsidy without imposing a tax on broadband customers. Currently the subsidy is paid by customers of "telecommunications" carriers, a designation the FCC has applied to ISPs in the Open Internet order. Wheeler has said it will be tough to find the money from a declining traditional telecom base, but has also recognized that having ISPs start paying into the fund would raise the price of broadband to their customers and could discourage adoption.

“Chairman Wheeler’s Lifeline modernization proposal is a critical step toward making broadband affordable for all Americans," said Phillip Berenbroick, counsel for government affair at Public Knowledge. "Access to broadband Internet service has become a necessity in modern America -- we use broadband to communicate with loved ones, connect to education and health care, and to participate in our democracy and the global economy. Chairman Wheeler’s proposal, if adopted, will help close the digital divide and connect low-income Americans to the essential communications medium of the 21st century.

"Broadband is essential to full participation in today’s economy and society," said the Communications Workers of America. "Students need home broadband to do their homework, and job applications are now online. While 92 percent of households with incomes over $100,000 have broadband service, only 47 percent of households with incomes below $25,000 subscribe to broadband. Updating the Lifeline program to include broadband will help close the digital divide and foster digital equality."

The FCC outlined the changes in the following fact sheet:

"Provides support for robust broadband

o   Allows Lifeline support for stand-alone mobile or fixed broadband Internet access service

o   Lifeline consumers may also receive support for bundling of fixed or mobile voice and broadband

o   Supports mobile voice with unlimited talk through the end of 2019, after which Lifeline providers of mobile services will be required to include broadband as part of any supported service. 

o   Support for fixed-only voice service remains in light of ongoing affordability challenges

o   Helps close the homework gap by promoting appropriate Lifeline-supported mobile devices with Wi-Fi functionality

o   Requires a mid-2019 program review and report by the FCC’s Wireline Competition Bureau                                                                                                          

"Ensures that Lifeline subscribers receive services meeting 21st Century needs:

o   Sets minimum standards for broadband to enable consumers to fully participate in digital society:

o   Fixed speed standard based on what a substantial majority of consumers receive (currently 10 Mbps downloads/1 Mbps uploads)

o   Sets minimum monthly fixed broadband usage allowance standard of 150 GB

o   Phases in minimum standards for mobile broadband service, starting at 500 Megabits per month of 3G data, increasing to 2 gigabits/per month by the end of 2018

o  Requires unlimited minutes for mobile voice service, starting inDecember 1, 2016, reflecting typical plans in the market

o   Anticipates technological advances in the convergence of mobile voice and data. Support for standalone mobile voice will be gradually phased down over three years: reduced from $9.25 per month to $7.25 on Dec. 1, 2017, $5.25 on Dec. 1, 2018, and no support after Dec, 1, 2019

o  Mobile voice remains eligible for full support as part of a mobile voice and data bundle

"Frees up the Lifeline marketplace to encourage participation by broadband providers, increasing availability and consumer choice

o   Unlocks Lifeline for broadband services by providing streamlined, nationwide entry for a new category of providers, called Lifeline Broadband Providers

o   Establishes third-party National Eligibility Verifier, reducing cost to providers of verifying subscriber eligibility  

o   Modernizes rules to improve program flexibility, reduce burdens, and incentivize participation by providers

"Builds on 2012 reforms and closes any remaining vulnerabilities to curb waste, fraud and abuse

o   Establishes a National Eligibility Verifier as neutral third-party entity that removes the opportunity for providers to enroll ineligible subscribers

o   Refines list of federal programs that may be used to validate Lifeline eligibility to those that support electronic validation, are most accountable, and best identify people needing support (SNAP, SSI, Medicaid, Veterans Pension, Tribal), along with income-based eligibility

o   Increases transparency by making program data publicly available and understandable, including subscriber counts by provider and uniform disclosure of annual subscriber recertification data

"Establishes budget mechanism to minimize impact on ratepayers

o   Sets budget of $2.25 billion, indexed to inflation, sufficient to allow for increased participation generated by support for broadband service

o   Requires FCC’s Wireline Competition Bureau to notify Commission when spending reaches 90 percent of the budget and to prepare an analysis of the causes of spending growth, followed by Commission action within 6 months.

o   Maintains current $9.25 monthly household subsidy."

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.