FCC Commissioner Ajit Pai proposed a $1.75 billion Lifeline annual subsidy cap as the commission heads toward a scheduled vote Thursday on extending the USF low-income support program to broadband service and streamlining administration. He also proposed Tuesday to reduce payments to Lifeline providers if program support exceeds the budget, eliminate "enhanced" Lifeline tribal subsidies in more densely populated areas, and strengthen Lifeline minimum broadband service standards. A draft order would set a budget of $2.25 billion, indexed for inflation, that could be adjusted if spending reaches 90 percent of that amount (see 1603080024).
The FCC appears likely to modify Lifeline mobile voice proposals that have raised concerns, but the specifics remain unclear, some public interest and industry officials told us Monday. Cheryl Leanza, United Church of Christ policy adviser, said she believes there will be some "moderating" changes. "I would be surprised if they didn't alter the proposal in some way. It's hard to say exactly how," she said, but "I wouldn't say it's going to change radically." Public Knowledge counsel Phillip Berenbroick said he "wouldn't be shocked" to see the FCC show some flexibility on proposed minimum service standards and their implementation timeline.
The FCC should carve out Alaskan wireless carriers from a proposed 3G minimum broadband standard for mobile services in the upcoming Lifeline order (see 1603240052), Alaskan carrier General Communication Inc. said in an ex parte filing posted Friday in docket 10-90. GCI met Tuesday with Stephanie Weiner, aide to FCC Chairman Tom Wheeler. “By our best estimate, Remote Alaska contains at least 100 communities with a combined population of more than 40,000 that have access only to a 2G network,” GCI said. “A few years ago, many of those consumers had no wireless service at all. As Alaska wireless providers continue to build out and upgrade service in rural Alaska, the Commission should not make it more difficult for such communities to afford the best service available.” GCI said the simplest option is to exclude all facilities-based Alaska wireless carriers from the 3G minimum requirement. Or, it could apply the minimum standard only where commercial 3G service is offered, it said. “As a last resort,” the FCC could request waivers from carriers that offer 2G service in certain areas, said the cable and telecom provider. “That solution, however, would create uncertainty, cause delay, and unnecessarily tie up Commission and carrier resources.” GCI, a backer of the so-called Alaska Plan for a looming FCC rate-of-return USF overhaul (see 1602250025), also lobbied on that broadband deployment proposal.
Enacting the Rural Health Care Connectivity Act (S-1916) “would increase direct spending and revenues by $197 million and $215 million, respectively, resulting in a net reduction in the deficit of $18 million over that period" of 2017-2026, the Congressional Budget Office estimated in a report released Friday. The Senate Commerce Committee approved the bill in November. The legislation would enable some skilled nursing facilities (SNF) to attain eligibility for USF Rural Health Care (RHC) program grants. “CBO estimates that an average of 1,650 public and nonprofit SNFs in rural areas would be eligible for grants during that period and that participation rates and grant awards would be similar to those for existing RHC programs,” the report said. “Based on information from the FCC, CBO estimates that participation rates would reach 75 percent over a period of several years and that certain non-rural entities affiliated with those participants also would receive funding. Grant awards would vary in size depending on the recipient’s location and choice of benefits.” CBO said the bill would up the cost of an existing mandate for telecom companies. “CBO expects that telecommunications companies would generally pass most of the cost of the fee increase on to consumers,” it said.
Some wireless parties are increasingly hopeful the FCC will relax Lifeline proposals to impose minimum broadband and voice service standards and phase out support for stand-alone mobile voice by late 2019. "We're getting a strong vibe that they're likely to change," said Davis Wright attorney Danielle Frappier, who represents True Wireless and TerraCom. She said the concerns of wireless interests, public interest advocates and others appear to be registering with agency officials. "To their credit, they've taken those filings seriously and are rethinking it. I think they're doing the right thing," she told us Thursday.
The FCC should reform Lifeline USF, which is overly complex, said CenturyLink in a filing Tuesday in docket 11-42 on meetings with aides to Chairman Tom Wheeler and Commissioner Mignon Clyburn. The complexity has caused consumer confusion and frustration with the "bureaucratic nature of the program," while saddling providers with administrative burdens and regulatory costs that discourage participation, the telco said. If Lifeline support is extended to broadband, program administration should be streamlined for all providers and not just new entrants, "especially by promptly shifting eligibility verification to a third party and by not requiring offering of all Lifeline broadband options in all areas," it said. "The company also cautioned against making participation mandatory for any providers or applying a rigid 10/1 Mbps minimum service level for wireline Lifeline broadband service, as it would limit options for consumers who may prefer less expensive options or who live in rural areas where only lower download and/or upload speeds are currently available."
Gigi Sohn, counselor to FCC Chairman Tom Wheeler, attempted to address concerns that have been expressed about the commission's Lifeline USF proposals to extend low-income support to broadband service and streamline program administration. Mobile voice would continue to be a Lifeline-supported service, but under a draft order it would have to be bundled with broadband after Dec. 1, 2019, she said Wednesday at New America's Open Technology Institute. "To give Lifeline providers time to adjust, we will phase down support for stand-alone mobile voice over a multi-year period. We plan to eliminate the subsidy for stand-alone mobile voice starting on December 1, 2019, although the Commission will examine the market in mid-2019 to determine whether there needs to be an adjustment," she said in prepared remarks. "We believe that three years will be enough time for the market to adapt and for promising technologies to develop, and that by the end of 2019, there will be affordable bundled mobile voice and data plans that meet, and hopefully exceed, Lifeline’s minimum service standards." But if the FCC is wrong, she said, it "has a safety valve by which it can examine how the market has evolved between now and 2019, and preserve a subsidy for stand-alone mobile voice if it’s deemed necessary." Minimum service standards for voice and data are needed to ensure Lifeline users aren't stuck with "second-class service," while ensuring service is still affordable, she said. Sohn also said state commissions will continue to play a "critical role" in Lifeline, despite an optional new path for broadband providers to be certified to receive support nationally. Providers would still be able to go to the states for Lifeline approval state by state. California approval will be necessary to receive a sizable state Lifeline subsidy there, she said. The FCC proposed a Lifeline budget of $2.25 billion, indexed to inflation, which is enough to allow some growth. While the agency expects some growth due to the broadband coverage, "we don't expect it to be precipitous," she said. Sohn said if Lifeline spending reaches 90 percent of the budget, the Wireline Bureau must notify the commission and prepare an analysis of the causes of the spending growth, "followed by Commission action within six months." That creates another "safety valve," Sohn said. Monday, other senior FCC officials used the agency's blog to defend the proposal amid criticism from some carriers and others (see 1603220044).
Major FCC policies could fundamentally tilt the communications playing field in favor of Internet edge and tech companies and against broadband providers, NCTA President Michael Powell said Wednesday. If the commission succeeds in its net neutrality, broadband ISP privacy and set-top box initiatives, the regulatory “bias” will facilitate the ability of edge/tech companies to enter telecom and video markets while restricting the ability of cable and telco providers to compete in the Internet space, said Powell, a former FCC chairman, at a Free State Foundation conference.
The FCC defended its proposed Lifeline minimum service standards against a continuing barrage of objections. Two senior FCC officials said a draft order eyed for a March 31 vote seeks to ensure low-income consumers get increasing high-speed Internet access and not just voice service, but it phases in mobile broadband standards to give Lifeline providers time to adjust their business models. "Each year, starting in December 2016, the phase-in increases the amount of 3G data beginning with 500 MB and then increasing to 1 GB and beyond. We believe this 'glide path' would offer a meaningful broadband experience to low-income households at a highly affordable level," said Wireless Bureau Chief Jon Wilkins and Wireline Bureau Chief Matt DelNero in a blog post Monday on "Lifeline: Striking the Right Balance."
CTIA and the Competitive Carriers Association were joined by the Computer & Communications Industry Association and Incompas in a joint letter to the FCC raising concerns about the wireless implications of the agency’s proposed Lifeline rules (see 1603170044). Parts of the proposed order “appear to ignore technological and market characteristics of providing mobile wireless voice and broadband service to low-income consumers,” the groups told the FCC. “If adopted, these proposals will disrupt successful aspects of the Lifeline program, hinder the ability of mobile wireless providers to offer services, and harm millions of low-income consumers who depend on Lifeline support.” By requiring that only mobile Lifeline plans offer unlimited voice minutes by December, “the Commission will substantially increase the prices that eligible low-income consumers must pay to connect with educational, health, occupational and public safety services, including 9-1-1, through mobile wireless voice services,” the groups said. No wireless carrier offers unlimited voice minutes for the $9.25 per month in support from the Lifeline program, they said. The FCC “will effectively reverse a long-standing policy against requiring co-payments and put Lifeline service out of reach from low- income consumers that lack the disposable income or banking capabilities to make a monthly payment,” the groups said. The FCC has tried to avoid flash cuts and disruption in reforming other parts of USF, the groups said. In contrast, “the Commission’s Lifeline reform approach will impose significant changes on low-income consumers by December of this year, with more significant changes each year for three years,” the groups said. An FCC spokesman earlier defended the agency’s approach. He said proposed minimum standards “are not phasing out voice from the Lifeline program, but rather are phasing in broadband as an essential element of any Lifeline service.”