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

AT&T's Quinn Agreed With the FCC That Reform Was Needed, But Wasn't Sure the FCC Was the One That Should Be Administering the Fund

By John Eggerton -- Multichannel News, 1/31/2012 2:24:00 PM

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.

AT&T 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.

"While 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 regard."

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

US 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."

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

"Today's 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."

Republican 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.

Matsui 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.

"I 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."

Matsui's 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

She 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.

The 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."

At 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.