O'Rielly Says FCC Should, but Probably Won't, Set Hard Budget for Lifeline USF
The FCC seems disinclined to cap or control Lifeline subsidies as part of an effort to modernize the USF program supporting low-income telecom service, Commissioner Mike O’Reilly said in a blog post Thursday. “Failing a major change in direction, the FCC is preparing to massively expand the size and scope of the Lifeline Program without the necessary inclusion of a hard budget or financial constraints,” he said. “Such irresponsible action will balloon a program plagued by waste, fraud, and abuse and result in higher phone bills for every American -- including those already struggling in the current economy. In sum, it’s a recipe for disaster, and I can’t and won’t be part of it.”
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The commission is eyeing a March 31 vote on a Lifeline order that's expected to extend low-income support to broadband service and overhaul administration of the program, which industry parties and consumer groups have backed in high-level terms (see 1603010068). The tentative agenda for the March 31 meeting is due Thursday. Representatives of FCC Chairman Tom Wheeler and other commissioners didn't comment on the O’Rielly blog. When the FCC approved a Lifeline NPRM in June proposing broadband coverage and administrative changes, Commissioner Ajit Pai joined O'Rielly in advocating for fiscal controls. Commissioner Mignon Clyburn decried an "unwillingness to compromise" (see 1506180029).
O’Rielly said Lifeline spending of $1.63 billion in 2014 would skyrocket if -- absent new budgetary constraints -- more people join the program beyond the 32 percent to 40 percent of eligible recipients that are currently believed to be enrolled (the FCC data show the former). He said full participation would boost Lifeline funding to the $4.1 billion to $5.1 billion range.
O’Rielly said the USF contribution rate could jump to as high as 26.7 percent as the extra Lifeline expenditures would require bigger contributions from telecom providers paying into the fund, and carriers generally pass their costs on to consumers. Because Lifeline subscribers are exempt from USF fees, growth in program participation would reduce the number of people available to cover USF costs, increasing the contribution rate even more for others, he said.
“The benefits of a firm budget are undeniable,” O’Rielly said. “Setting a top line figure allows proper balancing of Lifeline with other USF programs, and limits the overall cost to consumers. It is also the first line of defense against a rapid increase in the program’s size. Moreover, it acts as a deterrent to providers and recipients to prevent oversubscription or abuse -- it’s the difference between handing out candy at Halloween and leaving a candy dish at the door.”
O’Rielly rejected arguments he said are being made against a hard budget. He said the notion that the next administration can worry about right-sizing the program “is fraught with problems and is intellectually bankrupt.” He said the idea the FCC can’t determine the correct budgetary figure “simply ignores the fact that the Commission has budgets for each of the other three USF programs.” He suggested using the recent $1.63 billion funding level for five years. He also disputed the argument that people have the right to Lifeline support: “At no time in the history of the Lifeline Program, or any USF program, has it ever met the prerequisites to be classified as an ‘entitlement,’ as with Medicaid or Medicare.” He also said USF contribution reform wasn't an answer: “While I agree that the Commission should move contribution reform, it is disingenuous to treat it as a solution to unrestrained Lifeline spending.”
“In the end, shouldn’t we expect more from the Commission than runaway Lifeline spending?" wrote O'Rielly. "Rejecting the enactment of a budget based on erroneous and misleading arguments would continue the FCC’s recent reckless practices that seek to take more money and freedom from Americans.”