FCC Approves to Reform Lifeline/Linkup Program

Reforms Include Starting the Migration of the Fund to Broadband, Getting Rid of Linkup Portion of Program

By John Eggerton -- Multichannel News, 1/31/2012 1:15:00 PM

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

The 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.

The 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.

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

But 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.

FCC 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.

McDowell 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.

Among 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.

Commissioner 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.

McDowell 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.

Clyburn 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.