To Bridge the Digital Divide or Not…That Is the Question as the FCC Cuts Back Its Lifeline Program

Since Chairman Pai took over the leadership of the FCC, he has emphasized that one of his main goals has been to "close the digital divide and bring the benefits of the Internet age to all Americans." So it comes as no surprise that the FCC has taken several measures recently to overhaul the Lifeline program under the tagline "Bridging the Digital Divide for Low-Income Consumers." These measures include approving a Fourth Report and Order, Order on Reconsideration, Memorandum Opinion and Order, a Notice of Proposed Rulemaking, and a Notice of Inquiry. The November changes to the Lifeline Program were mainly cutbacks; reducing available subsidies, as well as limiting eligible participants and carriers.

The Lifeline program was established in 1985 to provide discounts on phone service to certain U.S. households to assure that they had access to vital communication services, despite low-income levels. The program was expanded in 2016 to include broadband access. Additionally, in 2016, the FCC revamped the Lifeline program with changes such as including more carriers and simplifying the certification process for eligible telecommunications carriers (ETCs) to participate in the program (you can read more about the changes here).

Over the years, the Lifeline program has received criticism concerning its effectiveness (which you can read about in previous blog posts here). This past summer, a report published by the Government Accountability Office provided statistics discovering that over one million Lifeline subscribers were not eligible to participate in the program. Chairman Pai used this report to emphasize the decision to cut back the Lifeline program, saying that, "the reforms that we implement and propose today seek to accomplish two important objectives: 1) curtail the waste, fraud, and abuse that continue to plague the Lifeline program and 2) make Lifeline more effective at bridging the digital divide on behalf of low-income Americans."

The question, however, is whether these changes will achieve these goals or if the cutbacks will be more detrimental to those once eligible subscribers who will no longer be able to benefit from the Lifeline program. The conflicting views of the Commissioners come as no surprise with Commissioners O'Reilly and Carr supporting these measures, while Commissioners Rosenworcel and Clyburn oppose. To express her disagreement Commissioner Clyburn stated that, "This proposal does nothing to make the lives of those who qualify better, and no amount of Orwellian doublespeak in the docket's title will suggest otherwise. Make no mistake: this is will the Widen the Digital and Opportunity Divide item."

Below are more details on each measure.

Fourth Report and Order, Order on Reconsideration, and Memorandum Opinion and Order

Here, the FCC focuses on improving the Lifeline program for residents on tribal lands. In 2015, the FCC sought comments in the Second Further Notice of Proposed Rulemaking relating to the many issues of Lifeline support on tribal lands. One such issue, as noted in the FCC Order, is the allocation of subsidies to residents of tribal lands, where there are deficiencies in voice and broadband networks. According to the Order, "Because of an overly-broad definition of the geographic areas eligible for the enhanced subsidy, however, many areas where this enhanced subsidy is currently available are not lacking in either voice or broadband networks." Therefore, a major reformation for the Tribal Lifeline policy is limiting the eligibility to receive subsidies to residents in rural areas where more support is needed and according to the FCC "typically have the least choice in communications services." (FCC defines "rural" as all areas with a population less than 25,000.)

The FCC also now requires the Universal Service Administrative Company (USAC) to develop a tool to allow Lifeline service providers to determine whether or not a subscriber resided in a rural area. The new reforms also require USAC to provide maps that would help to identify tribal lands and to incorporate maps that would help to verify residency on rural tribal lands. USAC must make the map and data available at least 60 days before the effective date of this Order's rule changes for enhanced Lifeline support on tribal lands.

Prior to these new changes, the Lifeline and Link Up programs provided a subsidy of up to an additional $25 per month for services provided to qualified residents. This was open to all tribal lands, and a Link Up reduction of up to $100 for the cost to initiate supported service for qualified residents on all tribal lands.

Under the new rules, Lifeline providers will also be required to independently verify and document subscribers' rural tribal residency according to the map and data sources. Subscribers will no longer be able to provide self-certification to providers verifying that they reside on tribal lands. According to the FCC, that practice "makes the program vulnerable to fraud and abuse and resulted in a $2 million settlement with one provider for claiming enhanced tribal support for subscribers who did not reside on Tribal Lands."

Finally, the Order limited enhanced support to facilities-based service providers.

Notice of Proposed Rulemaking

The Notice of Proposed Rulemaking seeks comments on the following:

• To encourage investment in deployment and reducing waste, fraud, and abuse by targeting Lifeline support to facilities-based providers. The FCC seeks comments on how to ensure that Lifeline support is only provided to ETCs that provide broadband service over facilities-based network and on the impact of the proposal on the availability and affordability of Lifeline broadband services. The FCC also seeks comments on how to define "facilities" to support its efforts to discontinue Lifeline Support for Non-Facilities Based Service.
• To protect the program by restoring the traditional role of the states in approving the participation of Lifeline-eligible providers. The Communications Act gives primary responsibility for designation of eligible telecommunications carriers to the states. However, in the 2016 Lifeline Order, the FCC "established a framework to designate providers as Lifeline Broadband Providers (LBPs), eligible to receive Lifeline reimbursement for qualifying broadband internet access service provided to eligible low-income consumers." This change led the National Association of Regulatory Utility Commissioners and a coalition of states led by the State of Wisconsin to legal action. Both argued that preempting states to designate providers as LBPs violated the Communications Act and the Administrative Procedure Act.
• To protect ratepayers, who pay for Lifeline through an assessment on their phone bills, the NPRM hopes to set a self-enforcing budget cap on the program.
• To improve provider incentives to offer high-quality services by establishing a maximum discount level for Lifeline-supported services.

Notice of Inquiry

Finally, the Commission seeks comments on how to target more funds to areas and households most in need of help in obtaining digital opportunity. These areas include rural and tribal areas, as well as low-income urban areas that are likely to be underserved by providers.

The deadline to submit comments is Jan. 24 and reply comments are due by Feb.23.