Pai Defends FCC Moves to Revoke Lifeline Broadband Designations, Close Digital Divide

“Unfortunately, many of the media headlines have sensationalized this story and given some an entirely misleading impression of what is going on," Pai wrote. "One would think that we had ended Lifeline broadband subsidies altogether. So I want to set the record straight about the modest steps we have taken and why.”

Pai said the bureau action affected only nine of more than 900 providers participating in the Lifeline USF low-income broadband/telecom service subsidy program. The bureau set aside two recent orders and revoked the LBP designations of Spot On Networks, Boomerang Wireless, KonaTel, STS Media (FreedomPop), Applied Research Designs, Kajeet, Liberty Cablevision of Puerto Rico, Northland Cable Television and Wabash Independent Networks. Pai noted the companies' applications hadn't been rejected, but were again pending.

“All but one of the newly designated providers covered by the order do not yet have any customers," Pai wrote. The bureau said it would reconsider their LBP applications without streamlined treatment and it delayed Boomerang's revocation by 60 days to minimize disruption for its existing subsidized broadband subscribers.

Pai said the previous FCC "disregarded the well-established process for approving applications like these." He noted National Tribal Telecommunications Association objections to several LBP designations from providers that hadn't notified tribal authorities despite FCC rules. He said two of the designations were approved before 30-day comment periods concluded. "Whatever one thinks of these applications, that was plainly improper," he wrote.

Company Concerns

Lawyers representing the providers said their clients are concerned, though one found silver linings.

John Heitmann, who represents Boomerang, FeedomPop and Konatel, told us his clients "are extremely disappointed in the blanket LBP revocation order, but they are heartened by Chairman Pai’s apparent acknowledgement in today’s blog that Lifeline has a central role to play in addressing the affordability aspect of the digital divide." All three companies "relied and invested heavily to launch services as LBPs, and we hope to work with Chairman Pai and the FCC staff to ensure that consumers are not harmed by the revocation action and so that those investments are not wasted and are instead quickly unleashed,” emailed Heitmann, a Kelley Drye attorney.

Danielle Frappier said other providers seeking LBP status "may be stuck in their existing territories," restricting competition. "Resellers either need an approved FCC compliance plan (then a state license) or one of the new FCC [LBP] designations in order to enter the program or expand into a new territory," emailed Frappier, a Davis Wright attorney who represents AR Designs, Liberty and Northlands. "About two-thirds of the Lifeline compliance plans have remained pending with the FCC since December 2012. That’s four years. Without approval of these plans and LBP designation, the smaller, entrepreneurial companies reselling the service of the ‘big’ companies aren’t permitted to provide service in new areas." She said Pai's statement that the LBP providers didn't have customers is true only if counting Lifeline customers. "Some of these companies have significant customer bases with customers who may be eligible, but have not been able to sign up for Lifeline," she said. As for tribal notification, she said the FCC Lifeline order and a public notice didn't say that was a requirement and some applicants didn't seek to serve tribal areas.

Pai detailed other concerns, including that the designations came in the final days of the last administration, over the objections of two of the four commissioners and despite post-election congressional requests the FCC refrain from controversial actions during the transition to new leadership. He said the agency needs to ensure USF dollars are spent wisely, noted a national Lifeline verifier hasn't been established, and said his investigations revealed "serious weaknesses" in existing safeguards. He also said there's a "serious question" as to whether the FCC has LBP legal authority, given state challenges in court.

Don't ‘Cheerlead’

Free Press Policy Director Matt Wood was the most critical.

“Chairman Pai thinks he can set the record straight with more crooked words and made-up numbers," Wood said in a statement. "Like his boss in the White House, Pai should spend less time worrying about his media coverage and more time on his job. And his job is not to cheerlead for more corporate welfare for the biggest internet access providers in the form of tax breaks for their existing deployment plans. His job is to bring the benefits of open networks to all, something he’s failing at so far. Pai can dissemble all he wants, but the reality is that last Friday he alone took the promise of free high-speed access away from low-income workers, students, veterans and tribal communities around the country. His disdain for the Lifeline program is reflected in his defensive comments, a clear indication that he will make every effort to dismantle the FCC’s 2016 modernization order and delay its benefits. Chairman Pai's track record here betrays his phony commitment to digital equality.”

The Education and Libraries Networks Coalition criticized the LBP revocations: It "will significantly hamper efforts to help close the homework gap for thousands of low-income and rural students." But Bruce Mehlman, Internet Innovation Alliance co-chairman, defended Pai for rolling back "midnight regulation." It's "a breath of regulatory fresh air," he said. "As the Commission only had four of its five members at this time, regulations were issued without the support of a majority of Commissioners and, sometimes without informing all commissioners in advance. That’s no way to run a regulatory agency. ... There’s a new sheriff in town, and the rules, thankfully, are changing." The LBP controversy "appears to be nothing more than theatre and overreaction," he emailed.

Despite the "hyperbolic headlines," Pai vowed to do "everything within the FCC’s power to close the digital divide. I am committed, both by belief and by law, to ensuring that the agency is focused on the 21st century version of our 20th century charge: ‘to make available, so far as possible, to all the people of the United States, without discrimination on the basis of race, color, religion, national origin, or sex, a rapid, efficient, Nation-wide, and world-wide wire and radio communication service with adequate facilities at reasonable charges.’ We’ve made progress over the past few weeks, and we’ll do more in the time to come to benefit all Americans.”