Divided FCC Approves Lifeline Broadband NPRM, Administrative Actions

Democratic Chairman Tom Wheeler said he was "baffled" by the Republican opposition to modernizing Lifeline for broadband and addressing administrative problems that started under a GOP-run commission, and said they would worsen the fiscal problems unless remedied. Commissioner Mignon Clyburn knocked an "unwillingness to compromise" and said, "The FCC cannot wait" in its efforts to close the chronic digital divide. Commissioner Jessica Rosenworcel was the least combative, focusing on the role Lifeline broadband support could play in closing the "homework gap" affecting low-income students who lack high-speed Internet access in the home.

Republicans said they were open to considering Lifeline broadband proposals but wanted stronger measures to constrain spending and combat abuses. Commissioner Ajit Pai called a Democratic offer to establish a budget but only through 2016 a "joke." He said expanding support to broadband without effective controls could cause the $1.6 billion fund to double. Commissioner Mike O'Rielly said the majority seemed intent on boosting Lifeline spending as much as possible before a new administration and the FCC could take charge, and before the commission could overhaul the industry contribution systems paying for USF. "My low expectations for this item were met," he said.

The Lifeline NPRM seeks comment on maintaining the current $9.25/month subsidy for Lifeline recipients, an FCC release said. The NPRM also sought comment on proposals for "adopting minimum service standards for voice and broadband service; whether broadband should be a required offering of Lifeline providers; how to encourage more competition to improve price and service; and how to encourage more participation by the states." Rosenworcel said the Lifeline broadband proposals would start to address the problems of low-income students who had no broadband access and sometimes go to fast food restaurants and other places with free Wi-Fi service to do their homework. "They research and write their papers with fizzy drinks and fries," she said.

The NPRM also proposes to overhaul the process of verifying consumer eligibility by lifting responsibility from Lifeline service providers. Chairman Wheeler said carriers shouldn't be asked to determine eligibility. "That's the fox guarding the hen house," he said. The NPRM considers various ideas including "establishing a third-party 'national verifier,' coordination with other federal needs-based programs, and considering the use of direct subsidies to consumers through vouchers," the agency release said. Clyburn voiced support for shifting administration to a "neutral third party."

The orders make "immediate reforms to reduce waste, fraud and abuse," including "requiring providers to retain documentation of consumer eligibility, which will improve oversight and audits," the release said. That was less specific than a fact sheet Wheeler put out recently that said the draft order would extend all record retention requirements from three to 10 years, a proposal that drew strong pushback from AT&T, CenturyLink and Verizon, which said it would burden carriers and risk consumer privacy (see 1506110023). The NPRM also sought comment on a budget for the program, the release said, without elaborating.

An FCC Wireline Bureau attorney at the meeting said the orders also set up a process for bringing the definition of "tribal lands" in Oklahoma in line with the definition being used by the Bureau of Indian Affairs. Pai said virtually all of Oklahoma was currently considered "tribal lands," where Lifeline recipients receive $34.25/month of support instead of $9.25/month. That meant almost 99.9 percent of Lifeline recipients in Oklahoma receive the larger subsidy, causing Oklahoma to receive $128 million in annual support, second-most in the country even though the state only ranks 28th in population. But he said the FCC actions didn't do enough to fix the problem.

Clyburn said the FCC "must not wait, remain idle or play it safe" when it comes to implementing the congressional mandate to ensure low-income consumers have affordable access to advanced communications services. She said a bipartisan FCC in 2012 had eliminated duplicative subsidies and taken other steps to crack down on waste and fraud, and she said the NPRM proposals would further counter abuses. She said in an effort to reach a bipartisan compromise, she not only offered to support seeking comment on a budget of $1.6 billion, but also offered to support proposing a budget if the FCC could seek comment on an appropriate budget. "Even this was not enough and I find that unwillingness to compromise ... unfortunate," she said, without naming names.

The Republicans blamed the Democrats for the lack of a compromise. Pai said Lifeline had suffered from "massive waste, fraud and abuse" in recent years and become "a mess." He played a news clip from a Denver TV station showing how a reporter was able to gain access to a free phone and Lifeline service by borrowing a food-stamp card and other documents from people at a tent where Lifeline subscriptions were being offered. But he said the FCC was unwilling to consider setting a Lifeline budgetary cap that would impose fiscal discipline on the program, which is the only USF mechanism without a cap. He said a Democratic offer to establish a budget through 2016 was a "joke" because it had a major "loophole" and it would end before the proposed broadband changes would take effect. He also said the FCC had declined to require Lifeline recipients to "put skin in the game" by requiring minimum payments from subsidy recipients, one of a number of proposals pushed by Sen. Claire McCaskill, D-Mo., at a recent hearing where FCC commissioners appeared.

O'Rielly said the FCC should have been able to agree unanimously on an NPRM, which isn't even final action, but he said Democratic views had "evolved" since the Senate hearing. He couldn't support the item without a serious proposal for a hard cap or at least a budget, preferably at $1.6 billion per year, though he was open to collecting more information and considering other possible budget numbers. But he said the FCC was unwilling to make a serious proposal. (At a news conference afterward, he said there were four votes for some sort of a cap, and asked: "At what point does a minority of the majority become tyranny?”) He also listed a litany of other criticisms, including that the FCC had not taken steps to ensure discounted Lifeline service rather than free service in some cases.

Wheeler agreed the vote should have been 5-0. "It was a shame it was politicized," he said. He said he was surprised by the Republican opposition, given bipartisan agreement on broad objectives for reducing income inequality, fomenting job growth, providing educational opportunities for youth, and promoting the American dream in a digital economy. But he repeatedly said the Republican complaints about abuses were occurring under rules that had been installed under a previous (i.e., Republican) administration. He also said all the talk about a cap was rhetoric designed to distract attention from taking concrete steps to correct the program's design flaws.