On March 8, 2016, FCC Chairman Tom Wheeler and Commissioner Mignon Clyburn unveiled a fact sheet summarizing their plan to “re-orient” the Lifeline program towards broadband service and a recap of the existing reforms implemented since the FCC began revamping the Lifeline program in 2012.
The new reforms also aim to provide additional checks against waste, fraud and abuse, as well as make significant changes concerning voice services - including phasing out support for standalone mobile voice service. The pair announced that they had circulated a draft order to the other FCC commissioners ahead of a planned vote at the FCC’s March 31, 2016 meeting. Draft orders are not made public, so the fact sheet is the first glimpse into some of the details of what is in the current draft, which could change over the coming weeks.
Echoing a theme expressed in the FCC’s 2015 FNPRM, Chairman Wheeler and Commissioner Clyburn are touting their proposed plan as a way to help bridge the digital divide. They noted in their fact sheet that “affordability [is] still the largest single barrier to broadband adoption in low-income households.” In a blog post published the same day, they expressed concern that “nearly one in five Americans is still not benefitting from the opportunities made possible by the most powerful and pervasive platform in history.”
The proposal, as described by Chairman Wheeler and Commissioner Clyburn, would keep Lifeline support at $9.25 per customer per month, but under the new program, it would be made available to support fixed or mobile broadband access. The fact sheet states that the proposal would also promote “appropriate Lifeline-supported mobile devices with Wi-Fi functionality,” although it was not clear whether any additional funds would be available for that purpose.
Based on the details released so far, there are significant differences in how support will be structured for fixed vs. mobile broadband, and in the conditions that fixed and mobile providers must meet to receive the support. Those conditions include minimum standards for usage allowances and speeds that would have to be met by providers in order to receive support. For fixed broadband, broadband speed standards would be based on what most consumers receive, and would initially require speeds of 10 Mbps download and 1 Mbps upload. There would also be a minimum usage allowance of 150 GB.
For mobile broadband, the Commissioners’ envisioned plan would phase in service standards for broadband. To receive the $9.25 subsidy, providers would initially need to offer 500 MB per month of 3G data. However, the minimum offering would become 2 GB per month by the end of 2018.
Mobile providers that offer voice, on the other hand, would be required to offer unlimited minutes for voice service by Dec. 1, 2016 - a substantial change from the fixed number of minutes that carriers have offered in the past. Although that alone represents a major change, the plan proposes an even more significant shift, namely a three-year phase-down of support for voice-only mobile service offerings (termed “standalone” in the fact sheet). Support for voice-only mobile would be reduced to $7.25 on Dec. 1, 2017, further reduced to $5.25 one year later, and then eliminated entirely as of Dec. 1, 2019. Thereafter, mobile providers seeking support for voice would need to bundle it with broadband service to receive any support.
The fact sheet from Chairman Wheeler and Commissioner Clyburn also proposes steps to address what they consider the Lifeline program’s remaining vulnerabilities. The Commissioners describe these steps as building on the success of the FCC’s 2012 reforms, which they report have decreased annual Lifeline disbursements from about $2.2 billion in 2012 to $1.5 billion in 2015. Specifically, they propose a neutral third-party National Eligibility Verifier to take over eligibility verification in an effort to guard against waste, fraud and abuse, and to reduce the burden on providers. The verifier would qualify participants by verifying income or participation in a reduced number of federal assistance programs that support electronic validation. Specifically, the Commissioners identified SNAP, SSI, Medicaid, Veterans Pension, and Tribal-specific programs as those best suited to the new eligibility determination mechanism. The fact sheet also indicates that additional program data would be made public - including subscriber counts and recertification data - to increase transparency.
In addition, Chairman Wheeler and Commissioner Clyburn asserted that their plan would provide a streamlined nationwide mechanism for Lifeline Broadband Providers to enter the program, as opposed to the current system in which providers must obtain authorization for each state, thereby incentivizing greater program participation.
The preview of the proposed reforms reveals a new direction for the Lifeline program, but also raises many thorny questions. Although the fact sheet suggests that modernizing the program rules will incentivize participation by providers, it does not address the financial incentives or disincentives that providers will face. For example, how will the requirement that providers make significant investments to offer unlimited voice service by the end of this year (which has not been offered at the current support level) be harmonized with the planned phase out of standalone voice support?
In addition, the fact sheet does not address whether providers could afford to offer broadband (standalone or bundled with voice) that meets the proposed service standards for $9.25 per month, particularly as the standards for speed and usage increase. Nor does it reveal whether Chairman Wheeler and Commissioner Clyburn expect that providers’ plans will require out-of-pocket payments by subscribers to cover the increased costs of service– or to what extent such customer payments would drive low-income participants from the program - an impact that could threaten the Commissioners’ goal of bridging the digital divide. Those with an interest in the Lifeline program will be watching closely to see how these issues are addressed in any order eventually adopted by the FCC.