Bitterly divided FCC severs the Lifeline broadband scheme​

Martyn Warwick
By Martyn Warwick

Nov 20, 2017

© Flickr/cc-licence/US Dept. Agriculture

© Flickr/cc-licence/US Dept. Agriculture

  • Dogma trumps Internet inclusivity programme
  • Deepens the digital divide by cutting subsidy to poorest citizens
  • Programme funded by a levy on fixed line voice services...
  • ... even though the US is going wireless

Ever since the US Federal Communications Commission (FCC) came into being back in 1934 it has been a political football to be booted back and forth across the Democrat and Republican divide depending which party happens to be in the ascendancy at any given time. In the latest example of the blatant partisanship that has plagued the organisation for 83 years, the FCC Commissioners last week voted by three votes to two to pass a Republican plan to reform and "roll-back" the Lifeline low-income broadband subsidy scheme. Lifeline was established in 1985 under the administration of Republican President Ronald Reagan. It seems the Americans do do irony after all.

The FCC is directed by a five-member Board of Commissioners who are appointed by the President of the United States and confirmed in their posts by the US Senate for five year terms - except in a case where an unexpired term needs to be filled. The President also determines which of the Commissioners will be the FCC Chairman. Of the five member board, three Commissioners may be from the same political party.

One of the peculiarities of the FCC set-up is that members of  the Commission may continue to serve after their five-year period has expired in the event that their replacements have not been appointed. However they may not continue to serve beyond the end of the next session of the US Congress following the expiration of their term on the FCC board.

What this means in practice is that Commissioners can stay in post for up to 18 months after their five-year term in office has expired if the US President does not appoint a replacement. This strange quirk can be very convenient for a President of either political stripe. In January this year in one of the first acts of his Presidency, Donald Trump designated Pai as FCC Chairman (he had been appointed a Commissioner by President Obama in 2012). Before joining the FCC, Pai worked in various roles for (among others) the US Department of Justice and the telecoms industry including AT&T and Verizon Communications.

Mr. Pai has long wanted to impose a budget cap on the Lifeline programme which helps low-income families in America to get broadband services via a monthly household subsidy of US$9.25. His proposal, going under the remarkably titled, "Bridging the Digital Divide for Low-Income Consumers" calls for "a self-enforcing budget cap" to limit spending on the Lifeline project. However, rather than imposing a known financial limit (although $820 million a year has been mooted unofficially) Pai says "We intend for the program to automatically make adjustments in order to maintain a cap in the event that that budget is exceeded."

The net result of this will be that once the cap is reached (under whichever and whatever budgetary constraints may apply at any given time) Lifeline will not be able to pay subsidies to additional claimants who are poor enough (under federal poverty guidelines) to qualify for them. Official figures show that only some 34 per cent of households eligible to receive the Lifeline subsidy actually get it. Thirty eight million homes are known to be at or below the income level that triggers access to the Lifeline subsidy yet the scheme currently has 12.5 million monthly subscribers.

What's more, 33 per cent of US adults still have no access to the Internet in their homes and for those low-income families earning less than $20,000 per annum that percentage rises to 61 per cent. Lifeline is aimed at helping digitally deprived families and individuals including US military veterans, those on food stamps and Medicaid, native Americans on tribal lands and those at or below 135 per cent of the federally-designated poverty line.

Fewer ISPs will be able to offer subsidised broadband

The changes will also mean that fewer ISPs will be allowed to offer subsidised broadband access. Under Tom Wheeler, Pai's predecessor as the Chairman of the FCC, the organisation a list of approved Lifeline broadband providers across the length and breadth of the US. The list was designed to put an end to the extant slow and bureaucratic process whereby ISP had to seek approval to be Lifeline service providers from every individual state where they intended to operate.

However, once Ajit Pai took over, nine ISPs that the FCC had previously authorised to provide Lifeline service nationwide had their approvals withdrawn because the new man in charge argued that the US Congress gave state governments precedence over the federal regulator in approving Lifeline service providers.

Furthermore, Pai's proposal will stop resellers offering Lifeline services. Henceforth only "facilities-based providers," (i.e. those with their own networks) will be eligible to provide them. The FCC states "We propose limiting Lifeline support to broadband service provided over facilities-based broadband networks that also support voice service." The decision is made on the Alice Through the Looking Glass grounds that curtailing the Lifeline funds available to facilities-based providers will "improve the business case for deploying facilities to serve low-income households." Mr. Pai also contends that Lifeline is "rife with waste, fraud and abuse" and claims that most of that is down to resellers - although little empiric evidence has so far been adduced to support his assertion.

Critics of the FFC's current tack (and there are many) point out that by limiting Lifeline and introducing the ban on resellers being involved in the programme, it will make it difficult for those already in receipt of the subsidy via a reseller to find an ISP or telco willing to take them on as subscribers if the reseller has to leave the market. And then there's the arcane way by which Lifeline itself is actually funded - by a surcharge levied on landline voice services. How antiquated and unsustainable is that in a world that is increasingly wireless?

Voting and then commenting on the changes the FCC Commission followed the political agendas and interests of their own parties. Commissioner Brendan Carr, a Republican from Virginia, said, "I am glad that we are now taking action to increase accountability while at the same time considering ways to target Lifeline support to consumers and communities that need it most."

His Republican colleague, Michael O'Reilly for New York, added that the changes are a "vital and necessary fix to bring the Lifeline program back in line with statute. All  federal programs should be targeted and Lifeline fails miserably in this regard. Lifeline is meant to be a discount program not a free program."

For the Democrat side, Commissioner Jessica Rosenworcel of Connecticut commented, "This is not real reform. This is cruelty. It is at odds with our statutory duty. It will do little more than consign too many communities to the wrong side of the digital divide. Instead of thinking about tomorrow and doing something modern, today the FCC sets out to slash this program from front to back. Instead of honoring our statutory duty to support low income consumers, we cast them aside and cut them off."

The other Democrat Commissioner, Mignon Clyburn from South Carolina, added, If it is the goal of the current FCC majority to widen existing divides and ensure that our nation's most vulnerable are less likely to be connected, this item sets us on that path. It will harm those less fortunate, those who need to dial 911, stay in touch with their children's educators, keep a job, and stay healthy. The day we head down such a path, is a sad one indeed."

Email Newsletters

Sign up to receive TelecomTV's top news and videos, plus exclusive subscriber-only content direct to your inbox.