Senators Weigh Concerns With Lifeline Expansion

“It might be that we would want to put some legislation in, but we just haven’t had a chance to digest the hearing,” Subcommittee Chairman Roger Wicker, R-Miss., told us later Tuesday. There was “obviously a great deal of support for the program,” Wicker remarked. “At the same time, there’s some concerns about making sure the ones who are eligible are getting the benefits.”

During the hearing, both Wicker and subcommittee ranking member Brian Schatz, D-Hawaii, pressed witnesses on the FCC’s attempt to form a national eligibility database. No FCC representative testified, so many senators directed questions to GAO’s Michael Clements, acting director-physical infrastructure issues. “Some reform efforts remain incomplete,” said Clements, who helped write a recent GAO report questioning Lifeline assessments. “The FCC has fully implemented eight of the reforms.”

Wicker pressed Clements on how many Lifeline subscribers are currently ineligible for the benefits. “We don’t know how many are ineligible,” Clements told Wicker. Free State Foundation President Randolph May said a database is needed to know how many are ineligible. “I don’t have a hunch,” May told lawmakers. “I think that’s helpful information to the subcommittee,” Wicker said. Schatz asked about the timeline for a database, and he and Clements considered the challenges of marshaling all the data needed, in part due to different systems at the state level. “That sounds enormously difficult and time-consuming and maybe not possible at all,” Schatz said. There are 15 states including Florida that have eligibility databases currently, Ronald Brise, a commissioner on the Florida Public Service Commission and testifying on behalf of NARUC, told the subcommittee.

Schatz is pleased with the FCC’s proposal and has no objection to moving forward on broadband, but the FCC needs to use lessons from voice “and not repeat those mistakes” and find ourselves eight years from now “trying to clean up another mess,” he said. “It seems that all of the tough issues are on the table for discussion,” Schatz considered, mentioning eligibility, the subsidy amount and possible need for a Lifeline budget. Lifeline is the only program operating without a budget today, Schatz said. He also wondered about implications of any transition to broadband subsidization, such as its costliness compared to voice, whether faster service will be more expensive and the need to consider training.

Senate Commerce Committee ranking member Bill Nelson, D-Fla., underscored the need for Lifeline to address both broadband and voice service. “Basic voice service is essential as well” and any update “should keep in mind the need for the balance between the voice and the broadband,” Nelson said. “I have stated this as we have visited with the FCC.” Nelson added he’s confident the agency will keep that balance in mind and lauded the FCC’s latest proposal: “I commend the FCC for beginning this inquiry.” Nelson also invoked a phrase frequently used by FCC Commissioner Jessica Rosenworcel, saying “obviously we must close the homework gap.”

“Sooner or later, we’re going to have to get real about this,” Sen. Joe Manchin, D-W.Va., said. Despite labeling himself an advocate of Lifeline, he worried that his constituents didn’t know about or support the program. Manchin hears about people using Lifeline phones for “illicit purposes rather than legitimate purposes” in West Virginia, he said. “They’re just sick and tired. And there’s no confidence. … They just think it’s overall tax dollars going to the program. There’s no support. I hear no support.” He worried there’s “going to be a lot of abuse” in a transition to broadband.

Most other Democrats defended the FCC’s progress. “There still are the myths and the boogeyman on waste, fraud and abuse,” said Sen. Richard Blumenthal, D-Conn., praising the FCC’s steps taken despite acknowledging some additional steps remaining. “I assume a cap is not one of them.” No concerns should prevent the transition to broadband. “We’ll do it by legislation if necessary.” Blumenthal backs a partisan bill that other Democrats in both chambers introduced Monday that would transition the fund to support broadband (see 1506010050). Sen. Cory Booker, D-N.J., is a sponsor and mentioned the legislation during the hearing as well.

“We need to look at having a cap and a co-pay for this program,” Sen. Deb Fischer, R-Neb., said, considering bigger questions on whether eligible telecom companies should be mandated to participate, a need to clarify the state role, the scope of permissible marketing and transition to broadband. “This is a regressive tax. Let’s not forget that.” Fischer worried that USF fees “will increase” or “potentially we’ll see a crowding out of the other programs” under the USF. Fischer also pressed witnesses on whether the FCC should release the text of its Lifeline item before commissioners vote at the June meeting.

CTIA has concerns about a hard cap because the low-income Lifeline program is structured differently, directed to individuals as opposed to carriers and means-tested, said Vice President-Regulatory Affairs Scott Bergmann, noting other programs are based on other proxies. “The best thing that the commission could do is addressing the issue of determining eligibility," Bergmann told the subcommittee, declining to say capping the Lifeline fund is the right idea.

“Do we have sufficient information based on this pilot?” Sen. Kelly Ayotte, R-N.H., asked Clements about the FCC’s pilot program on applying Lifeline subsidies to broadband.

“The pilot had some weaknesses,” Clement replied. “The pilot did provide some information and the FCC came out with a staff report recently.” The participation was generally low, Clements said. Ayotte worried about broader broadband access problems. “The just basic infrastructure isn’t there because they live in rural America,” Ayotte said. “How do my constituents deal with that challenge?” Clements considered that Lifeline may create “additional demand” that could drive industry interest. May mentioned the purpose of the FCC’s Connect America Fund and the need to focus on unserved areas in expanding broadband access.

House Communications Subcommittee Chairman Greg Walden, R-Ore., slammed the Lifeline expansion Tuesday, speaking to reporters. He mentioned the lack of a budget or the database on eligibility. "They've got a long way to go in terms of fixing what's there before they get a green light to move forward in other areas," Walden said. "Certainly I have colleagues who would like to terminate the program. I have colleagues who would like to restore it back to hard lines, hard wire, and do away with the cellphones. I have colleagues who want to expand it. ... It's out of control right now. I think there's still too much fraud, I think it has cost issues and at a minimum, the funds, each of them, have to be capped."