Wheeler/Clyburn Lifeline Draft Order's Budget Draws O'Rielly Scrutiny, Questions
A proposed $2.25 billion Lifeline USF budget became an immediate flash point after an FCC draft order circulated Tuesday that would extend the program’s support for low-income phone service to broadband coverage and streamline consumer eligibility verification duties and provider participation requirements (see 1603080024). The draft order, which is expected to be considered at a March 31 meeting, would index the budget to inflation and require the Wireline Bureau to notify the FCC when program funding reaches 90 percent of the budget and analyze the causes of the spending growth, “followed by Commission action within 6 months,” said an agency fact sheet.
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
The fact sheet “raises more questions than answers,” said a statement from Commissioner Mike O’Rielly, who said he hadn’t yet reviewed the entire 150-page draft. “It’s impossible to tell whether the ‘budget mechanism’ is actually a budget in any real sense of the word. It is unclear what ‘Commission action’ would take place when spending gets close to the amount specified -- would the full Commission get a vote? And what is the rationale to justify increasing spending on this Universal Service program -- but not others -- by $750 million, an increase of 50%? These are the answers I will be looking for as I review the Order. But since they are not actually given in the information made public so far, under the current rules I will be barred from discussing them. This fiasco seems to add fuel to my arguments for releasing the document to the public or at minimum to stop censoring Commissioners with rules that aren’t being applied equally.”
The proposed broadband and administrative changes should encourage more eligible low-income consumers to sign up for the Lifeline subsidies, which are generally $9.25 per month, senior FCC officials told reporters on a call. That would cause the current $1.5 billion program to grow, so the draft proposes a $2.25 billion budget to create some "headroom," they said.
FCC Chairman Tom Wheeler and Commissioner Mignon Clyburn backed expanding Lifeline to broadband and bolstering administrative efficiencies and protections against waste, fraud and abuse, but didn't expressly address the budget issue in a blog entry. "The chairman and staff look forward to discussing any and all comments that Commissioner O’Rielly and his staff may have between now and the Commission meeting on March 31,” a Wheeler spokeswoman emailed us.
Commissioner Jessica Rosenworcel’s office said it’s reviewing the draft. Rosenworcel supported the agency’s NPRM in June (see 1506180029) and has continued to back extending Lifeline support to broadband -- to address a “homework gap” affecting schoolchildren without high-speed service -- and making administrative efforts to address waste, fraud and abuse (see 1602050066). Commissioner Ajit Pai’s office didn't comment, but he had joined O’Rielly in voicing concerns about Lifeline spending and the lack of a proposed budget in the NPRM.
Wheeler and Clyburn said the draft would "help close the broadband affordability gap," first by reorienting Lifeline's traditional voice subsidies toward broadband and setting minimum service standards. Second, the draft would improve the program's management and design by streamlining its rules and eliminating "outdated or unnecessary regulations to reduce administrative burdens and make it easier for broadband providers to participate," they said. Third, it "shuts the door" to a remaining program "vulnerability" by establishing a national eligibility verifier "as a powerful check against waste, fraud and abuse." They said the national verifier would use existing programs, such as the Supplemental Nutrition Assistance Program and Medicaid, to determine whether consumers are eligible for Lifeline support. The Universal Service Administrative Co. will run the verification system, working in tandem with industry vendors and state agencies that administer various assistance programs for low-income persons, said the senior agency officials on the call.
The draft would allow Lifeline support for stand-alone broadband, bundled broadband and voice, and standalone voice at the outset, said the fact sheet. Minimum standards for fixed broadband service would initially require speeds of at least 10/1 Mbps (down/up) and a minimum usage allowance of 150 GB per month. Mobile broadband requirements would start at 3G data speeds and 500 MB per month allowance, increasing to 2 GB per month by the end of 2018. Mobile voice would have to provide unlimited minutes by Dec. 1, but support for standalone mobile voice would be phased out by Dec. 1, 2019. Fixed-only voice service would continue to be supported due to "affordability challenges," said the fact sheet.
Sen. Cory Booker, D-N.J., Free Press, Public Knowledge, and the Schools, Health and Libraries Broadband Coalition issued statements supporting FCC action. SHLB said it was pleased, but more needs to be done to solve the "digital divide."