Pai Order Would Change MSS Increase Formula, Reduce Dec. 1 Boost

A draft order circulated to eighth-floor offices Thursday would reduce a Dec. 1 increase of the Lifeline program’s minimum service standard for mobile broadband. Currently, the MSS is to go from 3 GB monthly to 11.75 GB monthly on that date. The draft would instead shift it to 4.5 GB per month. It will “permanently clean up the mess” from the 2016 order that instituted the formula leading to the larger increase, Chairman Ajit Pai said. The agency waived a similar increase, from 3 GB to 8.75, in 2019. The metric has to rise to keep up with consumer data use, but increases that are too large prevent providers from keeping Lifeline affordable, Pai said.

The draft order’s text wasn’t made public, and some stakeholders we queried didn't want to discuss it much. The release said it would alter the MSS calculation formula. The change would make the year-to-year changes more predictable, “better account for the needs of smaller-than-average households,” and allow the Wireline Bureau to use the latest data sources for the calculations, the agency said.

Mobile broadband companies and groups recently asked the FCC to block the shift to 11.75 GB, but the increase to 4.5 GB is more than the total freeze on the MSS sought by TracFone and the National Lifeline Association. “Even an increase to 4 or 5 GB” would force Lifeline providers to impose increased costs on users that would “present an unsurmountable barrier to program participation for new Lifeline subscribers,” NLA told aides to Commissioners Geoffrey Starks, Michael O’Rielly and Jessica Rosenworcel in calls last week, per a filing in docket 17-287. T-Mobile urged waiving the planned increase or establishing a “reasonable” MSS.

Increasing the minimum data reduces the ability of providers to offer no-cost service, the carriers said. “Record evidence shows that even a 1 GB increase in the mobile broadband MSS will deprive Lifeline customers of a no-cost offering,” said TracFone. “A sizable portion of the Lifeline population is unbanked.” If the FCC “really wanted to do all that it could to ensure that Lifeline eligible consumers can participate in Lifeline” during the pandemic, “it would suspend entirely the mobile broadband minimum service standards pending a fresh rulemaking,” said NaLA.

Increasing the standards to some degree while addressing industry concerns about a sudden steep shift makes sense because consumers are using more data than ever, said R Street Analyst Jeffrey Westling in an interview. If Lifeline users can't get a data plan for their needs, the money spent on it would be wasted, he said.

Public interest entities also expressed concern about raising the MSS during the pandemic and economic crisis. “This proposal will mean the end of free Lifeline services just when they are needed most,” emailed Cheryl Leanza of the United Church of Christ. “I hope that the Chairman will revise this plan before it is voted to be responsive to the unprecedented moment when affordable and free communications services are more important than they have ever been,” Leanza said. “If the FCC does not self-correct, Congressional action on this matter could be the only solution.” Free Press didn’t comment. It supported the waiver last year over similar concerns.

NARUC OK'd a resolution at last summer's meeting asking the FCC to essentially keep unchanged Lifeline metrics until the commission did a market study (see 1907240043). Pai "is moving in the right direction" by not proposing big changes, said NARUC General Counsel Brad Ramsay in an interview now. "This is a positive sign. And I hope the commission is considering doing a cost study to ensure the current business plans that seem to be serving a large number of Lifeline customers well aren’t undermined by commission action."

The FCC's announcement has "compelling selling points," but it’s "based on the wrong premise and ends with the wrong conclusion," said NaLA Chairman David Dorwart in a statement. The “predictable increases” don't mean it "will be affordable for the 6 million Lifeline subscribers who have free/no co-pay service" or the tens of millions more who would qualify, he said. There's "no evidence" suggesting a 50% minimum mobile data boost "with no corresponding increase in subsidy support" could "be provided without forcing a co-pay," Dorwart added: NaLA and TracFone say "plans including this much data retail for $25-40 and would require a co-pay for the portion not covered by the anemic $9.25 federal subsidy" monthly. The NaLA chair wants commissioners to change the draft so the minimum remains the same, pending the agency's study.