Lifeline Work Picks Up; McDowell Notes Costs; Clyburn Likes Pilots

Both commissioners noted the proceeding seeks to stem waste, fraud and abuse. That’s something other officials have said, as Lifeline spending rose sharply in Q4 to $525 million (CD Jan 23 p1). FCC members vote on the order at Tuesday’s meeting. The status of the item is “very fluid and probably will be for the next day or two” as eighth-floor offices review the order and consider proposing changes, McDowell said at the MMTC conference. He and Clyburn declined to discuss specifics of the draft.

There’s merit to considering broadband pilot programs during a time of “transition” for USF, Clyburn said. “The potential” is “for pilots to say what’s working, what can work,” she said. Where “we still have a challenge” is that about 60 percent of those eligible for Lifeline don’t get the subsidy, Clyburn said. “It’s gotten a little better with some of these products, especially on the mobile side, who are eligible to participate,” she continued. “One of the things that I will keep in mind is I will not embrace anything that will make that number harder, that will increase the barriers to sign up for service.” There’s “an incredible opportunity to modernize” this, she added. “The fund has to move” with technology and the transition toward Internet Protocol, as about 30 percent of U.S. consumers have “decided to cut the cord” on plain old telephone service, Clyburn said.

Both FCC members said it’s important to serve the poor with phone service. McDowell has some funding worries, his comments indicated. “This is not a taxpayer subsidy” since it “does not come out of the U.S. Treasury,” but “it is all phone consumers subsidizing” the poor, he said. “If we spend more in one part of the fund, it means we are taking more elsewhere.” Since the USF contributions aren’t means tested, “we're taking from all consumers,” McDowell said: “So we ought to make sure we are true to the spirit and principles of the fund as laid out by Congress in 1996” in the Telecom Act.

Clyburn and McDowell had different ideas for addressing what moderator Deborah Tate, a former FCC member who served with McDowell, called the spectrum crunch. Both current commissioners noted NTIA is working on a report about freeing up some government spectrum. “We need to finalize the AWS rules,” McDowell said of that work, “to pair up one band or chunk of spectrum with another chunk of spectrum so that we can have an auction as soon as possible of that band.” NTIA is working “hard,” he said. Clyburn noted of the NTIA work that “if there’s some wiggle room there that maybe can contribute to the marketplace” by adding spectrum for commercial use, that’s good.

McDowell expressed concerns about spectrum caps and government encumbrances on spectrum auctioned by the FCC. “Excluding some players from the marketplace in the hopes that a new carrier will come in and be a nationwide player,” through the caps, “doesn’t work,” he said. McDowell pointed to AWS spectrum bought by cable operators, which “could never really figure out how to use it, and now they are selling that spectrum to Verizon” Wireless. “You need flexible-use standards. You need light encumbrances. You want to make sure that spectrum is not being warehoused, you want it built out in a short time frame.” Police and other first responders can use current products and government funds to build out 700 MHz spectrum, McDowell said of the D block. “We want public safety to have every tool they need, but I'm not sure giving them” tens of megahertz “to serve 2 million users is the best” purpose for frequencies, he said. “We're going to be having the same conversation five years from now.” The Public Safety Bureau is “continually working on rules” for public safety interoperability, Clyburn noted.

The CES made clear consumer electronics require “more spectrum,” Clyburn said. “These are some of the things that we need to come to grips with.” She discussed potential spectrum solutions that may be worth consideration in the U.S., to “ensure that more and more players are able to take advantage of this marketplace, which is quite capital intensive.” A model in Canada, which the U.S. might not “want to embrace all of,” has a “carve out” of sorts “for smaller players,” Clyburn said. “Let’s talk about some of those things, should we place a limit on what amount of spectrum some players can bid on.” Since the goal is to encourage competition, “if it’s strictly the persons with the largest wallet” buying frequencies, “they bottle up everything” and “then we're not going to have competition.” Those are tough issues worth a look, Clyburn said.

Clyburn and McDowell hope the FCC completes studies on minority ownership issues, so the commission can come up with rules that comply with the Supreme Court’s Adarand decision that limits government programs aimed at particular groups. MMTC Executive Director David Honig said from the audience at the conference that he hopes the FCC will make 2012 the year of civil rights at the agency. He asked about the group’s petition for multilingual emergency alert system warnings that’s been pending “for six and a half years.” That “type of engagement” sought in the petition among various EAS players “would be best at the state level,” Clyburn said. “It’s up to all of us to be partners in progress, but it’s up to us to know what our strengths are.”