By a 3-2 vote along party lines, the FCC approved reforms to the Universal Service Fund (USF) Lifeline program yesterday that extend Lifeline support to fixed and wireless broadband services and prescribe other regulatory remedies to combat fraud, waste and inefficiency.

Lifeline was instituted by the FCC in 1985 to provide eligible low income households with a monthly subsidy to offset the cost of fixed telephone service.  Wireless voice services were added to the Lifeline program within the past decade.  In the words of an agency press release, the FCC’s decision to extend Lifeline support to broadband is intended to close the “digital divide” in rural and low-income areas by enabling Americans “to share in the 21st century opportunities that access to the Internet provides.”

The rules adopted yesterday are considered to be a mirror image of proposals outlined by the FCC in a related Notice of Proposed Rulemaking (NPRM) issued last June.  As specified in the NPRM, the order maintains the current monthly Lifetime subsidy of $9.25 per household which may now be used for fixed and mobile broadband as standalone services or as part of a service bundle that includes voice telephony.  The order also prescribes minimum speed standards for fixed and mobile broadband services as well as a minimum monthly data allowance of 150 GB for fixed broadband and 500 MG of 3G wireless broadband which will be raised on a yearly basis.  To combat fraud and abuse, the order creates a third-party “national verifier” that would confirm consumer eligibility for Lifeline assistance and thus remove that function from the hands of carriers.  Over the objections of FCC Republicans Ajit Pai and Michael O’Rielly, the FCC also adopted an annual program budget of $2.25 billion which could be increased upon completion of an analysis by the FCC’s Wireline Competition Bureau, if and when spending reaches 90% of the yearly budget.  (Pai and O’Rielly-both dissenters against the order—had pushed to cap the annual budget at $2 billion.) 

Observing that, “Internet access has become essential for full participation in our modern economy and our society, but 64.5 million Americans are missing out,” FCC Chairman Tom Wheeler proclaimed that, “by dramatically improving Lifeline’s management and design, and putting the program on sound fiscal footing moving forward, we will help low-income Americans all across our nation connect to . . . the opportunities of the broadband revolution.”