Trapped in Digital Darkness: FCC and Congress Make Joint Effort to Modernize Lifeline

Throughout much of 2014, there were rumblings, from back channels inside both the Federal Communications Commission (FCC) and Congress, that the Lifeline program (a landmark government initiative providing discounted monthly telephone service for eligible low-income subscribers) was on deck for a much-needed overhaul.

In March of this year, not long after the FCC proposed sweeping new rules to safeguard the “Open Internet”, the rumblings only grew louder. Then, earlier this month, both the FCC and members of Congress introduced new plans to comprehensively reform and modernize the program that, outside of important updates in 2012, has been virtually unchanged since its inception 30 years ago. Finally, earlier today (Thursday, June 18) the FCC voted (3-2 along party lines), to “formally consider” a plan to expand the breadth and depth of the subsidy.

In 1985, a bipartisan congressional group created the Lifeline program with a statutory mandate directing the FCC to help low-income Americans access communication services that are vital to everyday life. Telecommunication Service providers pay for this and several other programs through contributions into a “Universal Service Fund”. However, it is important to note that providers often choose to pass this cost onto their customers.

When the Lifeline program began 30 years ago, the Internet did not exist – at least not in the same fashion that it does today – so “vital communications” referred, in large part, to wireline telephone service. Of course, the telecomm industry has changed a great deal over the past three decades, and access to broadband internet is now ubiquitous and as essential to daily life, if not more so, than wireline telephone was back in 1985.

Managing and receiving healthcare requires internet access; the same is increasingly true for accessing other government services. If you have applied for a job in the past five years or so, you know that doing so without the internet is next to impossible. Regular tasks like managing a bank account, paying taxes or bills, and even bargain hunting, are made much more efficient with fast and reliable access to the internet. A recent study suggests that broadband access helps a typical U.S. family save almost $9,000 per year.

The trouble is that in the U.S. there exists a stark and growing digital divide between the “haves” and the “have-nots”. There are those who enjoy dependable access to broadband internet while exerting about as much thought as it takes to flush the toilet, turn up the thermostat, or flip a light switch. For this reason, these folks are better equipped to harness the tools and resources needed to succeed, by any standard measure, in the modern world. Then there are those who, due to no fault of their own, remain left out of the equation. Consequently, this group is less able to navigate the very same channels.

In fact, a recent study suggests that 30% of Americans have not yet adopted broadband. So while 95% of U.S households with incomes at or exceeding $150,000 have access to broadband at home, almost half of those making less than $25,000 do not. Low-income families, in turn, disproportionately rely on smart phones to access the internet; yet all too many (50% according to recent FCC reports) suspend or cancel service due to financial hardship.

All this is to say that unless Congress re-directs the FCC through the “Broadband Adoption Act of 2015” to take meaningful steps to modernize the Lifeline program for a changing 21st century, a growing number of low-income families in the U.S. will stay, as FCC Commissioner Mignon Clyburn said earlier this morning, “trapped in digital darkness and abandoned on the wrong side of the digital divide”.

Thankfully, today’s vote signals a greater likelihood that the Commission’s plan to “re-boot” Lifeline will come to bear sooner rather than later. Please Note: The FCC seeks public comments on the proposed changes to Lifeline, which you can read below in summary form.

• First, the plan’s feature goal is to ensure minimum standards for both voice and internet service. The objective here is to guarantee that both Lifeline subscribers and general ratepayers receive the best value for the services delivered.
• Second, the Commission highlights the need to overhaul the process by which Lifeline deems subscribers eligible. At this time, service providers are solely responsible for monitoring and evaluating subscriber eligibility – an arrangement thought by many to “invite waste” and unnecessarily burden providers. The Commission recommends employing a neutral, third party “National Verifier”.
• Finally, the Commission endorses greater competition among providers on price and service offerings, as well as greater buy-in from the states. A more robust market will not only benefit Lifeline subscribers, but also help to ensure that ratepayer dollars benefit a more effective and relevant program.

While this morning’s vote is a promising sign for longtime advocates of Lifeline reform, it is important to remember that Congress will make the ultimate decision as to whether there is additional funding available to enact any changes to the program. CUB will continue to offer updates and “Calls to Action” as the decision making process unfolds.

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