NARUC, TracFone Object to FCC Lifeline Proposals; Comcast, Others Supportive

NTIA urged the FCC to expand Lifeline to broadband while ensuring voice service remains available for low-income persons, the Department of Commerce agency said in a filing Wednesday in commission docket 11-42, which came as President Barack Obama unveiled a ConnectALL broadband initiative (see 1603090082). NTIA also backed establishing a national third-party verifier "to determine low-income consumers' eligibility to receive easy-to-use portable Lifeline benefits, either through a direct benefit or other means." The FCC draft proposes to have the Universal Service Administrative Co. run the national verifier in collaboration with industry vendors and state agencies administering other low-income assistance programs, senior FCC officials had said.

NARUC said the states play a key role in determining provider participation in Lifeline. The proposal from Chairman Tom Wheeler and Commissioner Mignon Clyburn “would strip States of that role, contrary to the intent of Congress. “This step can only increase the abuse of the Lifeline program,” said NARUC President Travis Kavulla of Montana in a release from the state regulatory group. He said there's still time for the FCC to revise its approach before a planned March 31 vote. He cited some “positive” proposals, including possible compensation for existing state efforts to establish consumer eligibility databases.

The draft provisions also were slammed by NARUC Telecom Committee Chairman Chris Nelson of South Dakota. “Even if it can be justified on appeal, the proposal to trade State oversight, which assures service quality for Lifeline subscribers, to lure non-State certified carriers into the Broadband Lifeline business seems a poorly reasoned policy choice,” he said in the NARUC release. “It can only lead to more fraud and abuse, reduced service quality and protection for Lifeline recipients, and the slow demise of State matching programs.”

The FCC Tuesday said the draft would create a national process for parties to be designated as Lifeline broadband providers. The new process wouldn't eliminate state “eligible telecom carrier” designations for USF participation, including for Lifeline, but would give providers a new streamlined path for nationwide entry with fewer administrative burdens, said the senior agency officials on a call with reporters Tuesday.

An FCC spokesman emailed us Wednesday: "The streamlined process for Lifeline Broadband Providers will require providers to demonstrate that they are financially stable and experienced in providing broadband service, and with a history of broadband offerings and compliance with our rules. These criteria are also designed to increase competition and affordable options for Lifeline consumers by bringing many broadband providers into the program. The streamlined process will not be applicable to the many of the wireless resellers that have been the focus of many of our compliance problems.”

TracFone backed Lifeline broadband but said the draft “threatens to force millions of Americans out of the program.” The Lifeline provider said the program was greatly improved when companies started offering free wireless service and phone options to consumers. “Disappointingly, the minimum service standards the FCC has proposed for wireless phone connectivity are not possible without burdening participants with a co-pay -- a fee many users simply can’t afford,” emailed a company spokesperson. “FCC pilot programs have shown that even a small co-pay would drastically reduce Lifeline participation. Eliminating no-charge voice services would exclude the nation’s most in-need populations and violate the mission of the Lifeline program.” The spokesperson said TracFone hopes to work with the FCC to improve the draft order.

The FCC spokesman said in response: "There is a clear trend of declining price per minute and per MB in the mobile space in the broader market, and we see no reason that Lifeline subscribers shouldn’t get that same benefit. The minimum broadband standards phase in over time, and we’re confident that as market trends continue that there will be extremely affordable options that meet our new standards.”

“Reforming this program in an efficient and effective manner is an important step forward to expand access to broadband,” said David Cohen, Comcast senior executive vice president, in a blog post. “We support the Commission’s efforts to simplify and streamline the rules for program entry and provider participation.” But he said the FCC must continue to tackle waste, fraud and abuse and ensure the program is run in a “financially responsible and cost-effective manner.”

Research showed the main barrier to broadband adoption is not cost “but rather is a bucket of digital literacy issues, including a perceived lack of relevance of the Internet and a lack of understanding as to its value or usefulness," said Cohen. He said Comcast’s Internet Essentials broadband adoption program helped connect more than 500,000 low-income families. “The success of Internet Essentials is due to its design as an integrated wrap-around solution that marries low-cost high-speed Internet access with training and education and access to a low-cost computer,” he said. “The program is structured as a partnership between Comcast and thousands of school districts, libraries, elected officials, and nonprofit community partners to address the multiple barriers to adoption.”

The Benton Foundation, Common Sense Media and National Consumer Law Center issued statements giving the FCC draft positive reviews. They added to previously supportive statements from Sen. Cory Booker, D-N.J., Free Press, Public Knowledge and the Schools, Health and Libraries Broadband Coalition. Some statements are here.