The Future of Broadband

FCC Aims to Subsidize Internet Service for the Poor

The agency wants to expand its Lifeline subsidy, which is derisively referred to as the “Obamaphone” program.

WASHINGTON, DC - MARCH 12: FCC Commissioner Mignon Clyburn testifies before the Senate Committee on Commerce, Science and Transportation during an FCC oversight hearing on March 12, 2013 in Washington, DC. FCC members warned that a planned 2014 incentive auction of broadcast TV spectrum for mobile broadband use could encounter setbacks.   
National Journal
Brendan Sasso
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Brendan Sasso
March 11, 2015, 4:03 p.m.

The Fed­er­al Com­mu­nic­a­tions Com­mis­sion plans to soon be­gin work­ing on a pro­pos­al to sub­sid­ize In­ter­net ser­vice for low-in­come con­sumers by ex­pand­ing its Life­line pro­gram, which is mocked by con­ser­vat­ives as the “Obama­phone” pro­gram.  

All three Demo­crats on the five-mem­ber com­mis­sion have pub­licly said they want to use fed­er­al money to help en­sure that all Amer­ic­ans can af­ford to get on­line. Life­line—which des­pite the Obama­phone nick­name was cre­ated dur­ing the Re­agan ad­min­is­tra­tion—cur­rently sub­sid­izes only phone ser­vice.

“The Life­line pro­gram, es­tab­lished in the mid ‘80s, has been stuck in the mid ‘80s,” Demo­crat­ic FCC Com­mis­sion­er Mignon Cly­burn told Na­tion­al Journ­al dur­ing an in­ter­view Wed­nes­day on C-SPAN’s The Com­mu­nic­at­ors. Cly­burn said she is hop­ing the agency will un­veil a pro­pos­al by this sum­mer to ex­pand the pro­gram to cov­er In­ter­net ac­cess.

(RE­LATED: FCC Fi­nally Un­veils Net-Neut­ral­ity Rules)

Life­line sub­sid­izes about $10 of phone ser­vice per month for qual­i­fy­ing con­sumers. Un­der Cly­burn’s plan, that amount wouldn’t ne­ces­sar­ily in­crease, but con­sumers could choose to have it cov­er the data on their smart­phone or their home broad­band con­nec­tion.

FCC Chair­man Tom Wheel­er in­dic­ated at a pub­lic meet­ing last Decem­ber he agrees that Life­line should cov­er In­ter­net costs, and Jes­sica Rosen­wor­cel, the oth­er Demo­crat­ic com­mis­sion­er, is par­tic­u­larly fo­cused on en­sur­ing that chil­dren from poor fam­il­ies have In­ter­net ac­cess at home so they can do their on­line home­work.

But sub­sid­iz­ing broad­band ac­cess for the poor has the po­ten­tial to ex­plode in­to an­oth­er par­tis­an con­tro­versy. The money for Life­line comes from gov­ern­ment fees on con­sumers’ monthly phone bills, and con­ser­vat­ives have de­cried the pro­gram as a waste­ful gov­ern­ment handout.

Last Con­gress, 67 House Re­pub­lic­ans co-sponsored a bill that would have curbed the pro­gram to only cov­er land­line phones, and 44 House Re­pub­lic­ans signed a let­ter call­ing for the pro­gram to be scrapped al­to­geth­er. “Obama­phone wel­fare sym­bol­izes how the cul­ture of gov­ern­ment de­pend­ency is weak­en­ing Amer­ica,” Rep. Mar­sha Black­burn of Ten­ness­ee said at the time.

(RE­LATED: Can Net Neut­ral­ity Sur­vive the Im­pend­ing On­slaught of Law­suits?)

Even sup­port­ers of the $1.7 bil­lion pro­gram ad­mit that it has been plagued by fraud and ab­use. The FCC and the Justice De­part­ment have tried to crack down in re­cent years on com­pan­ies scam­ming the pro­gram.

Dur­ing the C-SPAN in­ter­view, Cly­burn ar­gued that the FCC should over­haul the pro­gram so that the phone and In­ter­net pro­viders aren’t the ones re­spons­ible for de­term­in­ing if cus­tom­ers are eli­gible for the sub­sidies. That sys­tem en­cour­ages the com­pan­ies to lie to re­ceive more sub­sidies, she ar­gued.

“This pro­gram is lit­er­ally what it says,” she said. “It is a life­line, an op­por­tun­ity for those who have sig­ni­fic­ant fin­an­cial chal­lenges to be able to keep in touch with their doc­tors, with their edu­cat­ors, with their com­munit­ies, with their loved ones. And it is vi­tal that we re­form that to meet the cur­rent needs of our most vul­ner­able cit­izens.”

She said she be­lieves it’s pos­sible to cov­er broad­band ser­vice without in­creas­ing the over­all size of the pro­gram—which would avoid in­creas­ing the fees on con­sumers’ phone bills.

There is some hope that over­haul­ing Life­line could be a bi­par­tis­an is­sue. Mi­chael O’Ri­elly, one of the two Re­pub­lic­an FCC com­mis­sion­ers, out­lined his own plan last month for up­dat­ing the pro­gram to in­clude broad­band. He would also im­pose a vari­ety of re­straints and over­sight mech­an­isms to keep down costs.

But in the wake of the bit­terly par­tis­an fight over net neut­ral­ity, there might not be much good­will left between the FCC’s Demo­crats and Re­pub­lic­ans. 

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