House to Examine Lifeline Reform Proposals

Matsui’s Broadband Adoption Act would require the FCC to expand Lifeline to help Americans subscribe to most broadband services while changing its rules to reduce waste and abuse, according to an analysis of the bill. “It is imperative that the Lifeline program be reformed and modernized to account for broadband services,” Matsui said in a news release. “We must ensure lower-income Americans have a greater opportunity to participate in the digital economy, whether it be for workforce training, education, finding a job or creating the next big idea.” The bill was cosponsored by House Commerce Committee Ranking Member Henry Waxman, D-Calif.; Communications Subcommittee Ranking Member Anna Eshoo, D-Calif.; and Reps. Diana DeGette, D-Colo.; Zoe Lofgren, D-Calif.; Jan Schakowsky, D-Ill.; G.K. Butterfield, D-N.C.; and Ben Ray Lujan, D-N.M.

Matsui’s legislation includes provisions to require the FCC to implement “stringent accountability measures,” Matsui said, such as the development of a national eligibility database aimed at eliminating duplication and abuse. Eligible households include those who qualify for social service programs like Medicaid, Supplemental Nutrition Assistance Program, Head Start, the Supplemental Security Income program or the National School Lunch Program, among others. In the bill, assistance for broadband services would be considered technologically neutral and eligible consumers would choose whether they want to receive support for broadband, mobile, landline telephone or a bundle of the services, said a bill summary. Participating broadband service providers would not be required to be an eligible telecom carrier to receive support but must be authorized to participate by the FCC, the bill said. The proposal would also require the FCC, in calculating the amount of support, to routinely study the prevailing market price for service and the prevailing speed adopted by consumers of broadband service, the bill summary said.

The bill came ahead of Thursday’s hearing entitled “The Lifeline Fund: Money Well Spent?” which will take a close look at whether the growth of the program is “unsustainable,” according to a copy of the majority memo that circulated Tuesday. “Because all Americans ultimately pay for Lifeline through recurring charges on their phone bills, managing the program is important, especially in these economic times,” the majority memo said. Some House Republicans have previously criticized examples of waste and abuse in the program. Lawmakers including Rep. Tim Griffin, R-Ark., have introduced legislation to end Lifeline subsidies for cellphones. The government spent $2.2 billion in 2012 on Lifeline, nearly triple the $800 million spent in 2009, the memo said.

Republicans said they plan to ask why the cost of the program has increased so dramatically and whether carriers are subsidizing phone service without checking subscribers’ eligibility, among other questions. Despite the goal of serving the needs of low-income Americans, “as many as 41 percent of those receiving Lifeline support either could not demonstrate eligibility for the subsidy or refused to respond to requests for certification,” the memo said. “Some subscribers have eight or more subsidized phones, with one subscriber saying that to get one ’she just goes across the street and gets it,'” the memo said. “Other material showed another man claiming to have a bag full of 20 subsidized phones that he sells ‘for about 10, 15, 20 bucks,'” the memo said.

Republicans said the FCC’s 2012 Lifeline reforms are “commendable and may be slowing growth,” but “may not contain the absolute size of the fund over time,” according to the memo. Specifically the memo noted how the commission’s changes would require all subscribers to annually recertify their eligibility, restrict the program to one subsidy per household, and set an interim base subsidy amount of $9.25 per month, among other modifications. Despite the changes, the memo asked whether the program is targeting funds to low-income Americans with unmet telecom needs and if there are further alterations that could be implemented to “better target the funding to eligible customers,” the memo said. Witnesses scheduled to testify at the hearing are: Geoff Feiss, general manager of the Montana Telecommunications Association; Jessica Gonzalez, vice president-policy and legal affairs at the National Hispanic Media Coalition; Billy Jack Gregg, telecommunications consultant at Universal Consulting; CTIA Vice President-Regulatory Affairs Christopher Guttman-McCabe; Philip Jones, president of the National Association of Regulatory Utility Commissioners; and Julie Veach, chief of the FCC Wireline Competition Bureau.

The Broadband Adoption Act garnered support from FCC Chairman Julius Genachowski and Commissioner Mignon Clyburn. “In overhauling the Lifeline program last year and setting the program on a path to save over $2 billion, our bipartisan, unanimous reforms also made greater broadband adoption an express goal for Lifeline and established a pilot program to look at alternative models for supporting it,” Genachowski said in a news release. “Our work will complement the legislation introduced today, ensuring that low income Americans are connected while protecting this critical program from waste, fraud, or abuse.” Clyburn called the legislation “welcome guidance for proceeding with the expansion of the trial,” in a news release. Matsui’s legislation also “directs the FCC to address duplicates and eligibility in the program through a database. While these solutions are underway, we must do all that we can to expedite their introduction so that the program is as efficient and effective as possible,” Clyburn said.

Some wireless, cable and consumer groups hailed the bill as a means to more efficiently connect all Americans to broadband. Competitive Carriers Association CEO Steven Berry said: “Allowing consumers to choose the technology they desire for communications services should be a guiding principle for all Universal Service Fund programs. When given this choice, regardless of the program, consumers will increasingly choose mobile for voice and broadband access.” NCTA said the legislation “adopts appropriate universal service reforms and focuses greater attention on digital literacy and competitively neutral strategies to promote broadband adoption.”

Public Knowledge Vice President-Government Affairs Christopher Lewis said the bill “ensures that the essential communications network of the 21st century maintains the fundamental and historic value of affordable access for all Americans,” in a news release. “Telephone networks everywhere are upgrading to provide voice over all-IP broadband networks. Congress and the FCC must ensure that the Lifeline program continues to provide low income Americans access to these networks that connect them to critical 911 services, employment opportunities, and the broader civic community,” he said. Wade Henderson, CEO of the Leadership Conference on Civil and Human Rights, said the bill is an “important step toward narrowing the digital divide.” When “those most in need of the advantages of high-speed Internet do not or cannot use it because of cost, reducing the high cost of broadband service is a concrete step our nation can take toward an inclusive economic recovery,” he said.