FCC Splits 3-2 on Lifeline; Republicans Target Abuse and Budget; Democrats Cry Foul

FCC commissioners voted 3-2 to approve a Lifeline item to begin to revamp again the low-income subsidy program, going in a different direction than a 2016 overhaul. Chairman Ajit Pai and Republican colleagues said the combined orders and notices would crack down on program abuse and better target funding to those consumers and areas that really need it, while promoting facilities-based deployment. Dissenting Democrats said the actions and proposals would effectively gut the program and widen the digital divide. Congressional Democrats also hammered the moves.

The Lifeline item adopted at Thursday's meeting appears very similar to the draft circulated by Pai (see 1710270013), based on a release and statements. That was as expected (see 1711140020). Three orders would target enhanced tribal funding to rural tribal areas, require independent certification of tribal residency and direct such support to facilities-based providers, cutting off resellers. The orders would also scrap "port freezes" locking Lifeline customers into provider services for a year, and clarify that "premium Wi-Fi" and similar systems don't qualify as Lifeline mobile broadband services, which require 3G or better.

An NPRM seeks comment on creating a self-enforcing Lifeline budget cap, setting a maximum subscriber discount level, targeting funding to facilities-based providers in general, taking further steps to improve consumer eligibility verification and recertification processes, and ending both the federal designation of Lifeline broadband providers and pre-emption of states' role in designating certain "eligible telecom carriers." A notice of inquiry would seek comment on additional ways to more efficiently target funds to those urban, rural and tribal communities that most need funding help.

Pai said the actions and proposals seek to "curtail the waste, fraud, and abuse that continue to plague the Lifeline program," and to "make Lifeline more effective at bridging the digital divide on behalf of low-income Americans." He and other Republicans cited GAO findings of problems in program management. "GAO discovered 1,234,929 Lifeline subscribers who apparently were not eligible to participate in the program, as well as 6,378 individuals who apparently reenrolled after being reported dead. That limited sample alone constituted more than $137 million in abuse each year," he said. The orders' targeted measures will reduce such abuses and improve service, including on tribal lands, he said, noting lawmakers of both parties urged him on.

Commissioner Mignon Clyburn called the Lifeline item "absurd" and "punitive." She said all her suggestions for changes were "flatly rejected," and the actions and proposals lack "empathy," cost-benefit analysis, and consultation with tribal authorities. "This item does not bridge the digital divide as it purports; it is a bridge to nowhere," she said. "It proposes to shirk one of the four pillars of our universal service promise -- affordability -- but I can only hope that this commission and its majority sees the error of its ways before it does further harm." She suggested the Republicans could cap the annual budget as low as $820 million.

Clyburn took heat for a 2016 budget compromise that fell apart at the last moment. "FACT: Commissioner Clyburn reneged on bipartisan Lifeline deal she made in 2016. Made agreement and broke it," tweeted Pai Chief of Staff Matt Berry. "Takes real chutzpah for Comm. Clyburn to complain about not being met halfway when we met her 75% of way last year and she broke her word!" he added.

Jessica Rosenworcel said the FCC casts aside and cuts off low-income subscribers from the broadband access they need “This is not real reform. This is cruelty," she said. "It is at odds with our statutory duty.”

O'Rielly focused on reforms: "establishing a real, enforceable budget for the program; targeting the subsidies to those consumers who would not otherwise have service; and returning the program to its original purpose of providing discounted -- not free -- service by requiring a minimum contribution from as many recipients as feasible. These are reasonable requests that I will continue to press for and will expect to see in any final rules."

The FCC "has a responsibility to both the ratepayers who fund Lifeline and to the consumers who benefit from it to ensure our program goals are being met," Carr said. "I am glad that we’re 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."

House Commerce Committee ranking member Frank Pallone, D-N.J., and House Communications Subcommittee ranking member Mike Doyle, D-Pa., both blasted the Lifeline draft, during a Thursday subcommittee hearing (see 1711160058). Commission Republicans “are voting to kill the Lifeline program as we know it, effectively taking wireless phones out of the hands of the people who need them the most,” Pallone said. “That’s cruel, particularly when some of those Americans live in places that are still recovering from natural disasters. I hope they reconsider and work with Congress.” Pallone and Rep. Doris Matsui, D-Calif., led a letter from 23 House Democrats Wednesday raising concerns that the draft proposals “would have the effect of converting the only means-tested program that helps low income Americans afford phone service into a duplicative version of existing FCC deployment programs.” House and Senate Democrats sent Pai two other letters Wednesday raising concerns.

Sens. Richard Blumenthal, D-Conn., and Cory Booker, D-N.J., led a letter criticizing the proposal to “limit carrier participation to only facilities-based providers.” That “would affect 75 percent of participants who subscribe to mobile voice or broadband services provided by resellers,” the senators said. Reps. Gregory Meeks, D-Fla., and Gwen Moore, D-Wis., led a letter from 56 House Democrats criticizing the proposed budget caps as “extremely harmful, as these changes could inflict arbitrary limits on participation or slash funding to eligible participants; and unnecessary because the program has been shrinking for the past 5 years.”

Senate Commerce Committee ranking member Bill Nelson, D-Fla., slammed the draft as harming millions: “Instead of trying to dismantle the Lifeline program in piecemeal fashion, the FCC should be working to make it better.”

Among the groups decrying the Lifeline item were the Communications Workers of America, Free Press, the National Hispanic Media Coalition, New America's Open Technology Institute, Public Knowledge and United Church of Christ.