FCC proposes Lifeline update to include affordable broadband, help close digital divide

Plan calls for new entity to verify eligibility through databases to reduce fraud

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Federal officials are taking steps to help close the digital divide by updating the 30-year-old Lifeline program to help low-income Americans afford broadband as well as voice communications.

Tom Wheeler, chairman of the Federal Communications Commission, joined FCC Commissioner Mignon Clyburn on Tuesday in proposing the Lifeline update, which will come to a full commission vote on March 31.

The two penned a blog entry on the FCC website. "Internet access has become a pre-requisite for full participation in our economy and our society, but nearly one in five Americans is still not benefitting from the opportunities made possible by the most powerful and pervasive platform in history," they wrote.

Lifeline currently helps about 13 million Americans with affordable voice communications, according to senior FCC officials who spoke on the condition their names not be used. The goal is to allow around 5.5 million more to receive both broadband and voice assistance, out of a potential pool of approximately 40 million total who would be eligible under current guidelines. An initial budget of $2.25 billion has been proposed.

Under the plan, a low-income household could apply the current level of $9.25 per month in Lifeline support to standalone broadband service, or to bundled voice and data service plans. The Universal Service Fund (USF) supports Lifeline, paid mainly by USF fees on consumers' bills.

The USF fees vary, but U.S. carriers currently pay about 18% of their interstate and international end-user revenues to the USF. The average cost per household for USF is now between $2.88 and $3.52 a month, with Lifeline taking about $1.75 of that total, according to the FCC. There are four USF programs including Lifeline.

One provision in the updated Lifeline plan calls for carriers to support mobile devices with Wi-Fi hotspot capability to help provide Internet access to students when at home -- to help close the so-called "homework gap." This refers to situations where low-income students don't have the ability to access school assignments and lessons because they don't have an Internet connection at home.

The plan would also set a number of minimum broadband standards, including download speeds based on what the substantial majority of consumers receive -- now about 10Mbps. Unlimited minutes for voice calls and a minimum of 150GB of fixed broadband (such as cable Internet service) would be provided. Also, a minimum mobile broadband standard would be imposed, starting at 500MB per month and increasing to 2GB per month by the end of 2018.

A major provision of the updated Lifeline plan sets up a new entity, called the National Eligibility Verifier, to act as a neutral party to determine electronically which households are eligible for Lifeline.

Lifeline has been criticized in the past for fraud and waste. The Verifier approach is designed to make sure only low-income people actually receive Lifeline funds. In 2012, the FCC set up a Lifeline subscriber database to prevent multiple Lifeline subscriptions in a household, which has reduced spending from $2.1 billion in 2012 to $1.5 billion in 2016, according to FCC officials.

By setting up the Verifier and battling fraud, the FCC is hoping to ensure that the money goes to broadband use for more low-income Americans, not waste, an official said.

The Verifier approach will use state and national databases of people who have registered under various programs such as Medicaid and Supplemental Nutrition Assistance Program (SNAP) to determine eligibility, although applicants will also be able to supply other income information to help determine if they are eligible.

One benefit of the Verifier approach is that individual carriers and cable companies would not have the burden of administering the eligibility process and protecting against fraud. FCC officials believe this approach will greatly increase the number of carriers -- as well as first-time participating cable companies -- offering Lifeline support.

The FCC's latest data from 2014 shows that there were 30 major Lifeline supporting companies that year. They included the top provider -- America Movil, based in Mexico -- with $436 million in support in 2014, with SoftBank Corp. (the majority owner of Sprint) in second with $272 million and AT&T in third with $164 million. Verizon was seventh with $47 million.

The Verifier would be administered by the Universal Service Administrative Company (USAC). In turn, USAC is likely to select another entity to be the Verifier, and might not do that job itself, FCC officials said. USAC operates under the direction of the FCC.

FCC officials said that while the $9.25 monthly Lifeline subsidy might not sound like a large enough sum to help reduce the digital divide, they noted that the updated plan would make the program run more smoothly and could attract more providers. This could lead to competition on rates for low-income households. The idea would be to establish a competitive Lifeline broadband marketplace for affordable service, a senior FCC official said.


Copyright © 2016 IDG Communications, Inc.

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