As it signaled last month, the FCC has voted to restructure the Universal Service Fund's lifeline subsidy as it is migrated from traditional phone to broadband service. The vote was 3-2, with the Republicans dissenting over what they said was a lack of fiscal reforms to accompany the structural ones.
Lifeline provides subsidies, paid by telecoms and, ultimately, their subscribers, for essential communications services for low-income Americans. The proposals do not deal with the contribution side — whether broadband operators will have to pay into the subsidy, too. That is the subject of a separate proceeding, with the FCC awaiting input from the USF Joint Board.
The Lifeline "reboot" includes adding broadband service to the subsidy, having a third party establish eligibility for the program (which FCC chairman Tom Wheeler called having Lifeline providers verify "the Fox guarding the henhouse"), establishing minimum services standards for both phone voice and broadband that are sufficiently robust for modern demands (the FCC is seeking input on what those should be), a database to weed out ineligible recipients and more.
The FCC is keeping the Lifeline subsidy at $9.25 per month, for either phone or broadband, but seeks comment on whether that is the right price.
FCC commissioner Ajit Pai dissented from the decision, saying it lacked the fiscal reforms to the program that needed to go hand-in-hand with the other proposed reforms. That included a budget for the spending. He said expanding the program without a budget could leave American consumers "on the hook" for the increase.
Pai said that at the last minute,Wheeler proposed a $1.6 billion budget that would only extend through 2016, which Pai called a joke since he said the migration would not even be implemented until then. He said he and fellow Republican commissioner Michael O'Rielly countered with a $1.6 billion budget through 2018, which he said was rejected.
Commissioner Michael O'Rielly said the vote should have been 5-0, but was not, in part, because there were not sufficient safeguards against waste, fraud and abuse, including a spending cap. He also said he could not support the funding mechanism for adding broadband because he did not agree that broadband was a telecommunications service.
Wheeler said he agreed it should have been 5-0, and was unhappy that it had become politicized. But he said that there is a need for job growth and educational opportunities, and the Lifeline reform tries to deliver on those goals, for which he said there was universal agreement in both political parties. He said a vote against the item was a vote against cleaning up the "invitation to waste, fraud and abuse."
Wheeler said he was proud to cast his vote with the majority.
Commissioner Jessica Rosenworcel said there were many reasons to support the item, but that closing the "homework gap" was a key one.
"Today, we start a process to modernize Lifeline and incorporate broadband into the program," she said. "We ask questions about putting in place minimum standards to make sure the program is cost-effective and fair. In addition, we seek to streamline the eligibility process and reduce the potential for fraud by taking enrollment out of the hands of carriers.
We also seek input on a number of other commonsense changes to improve program administration and reduce waste, including improvements to the National Lifeline Accountability Database," she added.
TracFone, the largest provider of wireless Lifeline service, said it was "uniquely qualified to work with the FCC in the further evolution of the Lifeline program," and added that "TracFone has strived tirelessly since 2008 to ensure that a substantially increased number of qualified American households get the benefits that they are eligible to receive."