Lifeline Cost Controls, Move to Broadband, Detailed in Order Released by FCC
The FCC’s Lifeline reform order, released Monday, lays out in detail the mechanism the FCC has put in place to impose controls on the program. The order asserts the reforms will save “an estimated $2 billion over the next three years” but also acknowledges that without changes, the size of the program would likely soar to $2.4 billion in 2012 and $3.3 billion in 2014, from $1.7 billion last year. But the order makes clear that the commission’s overarching ambition is to expand the Lifeline program to cover broadband. The FCC also released a further rulemaking notice asking more questions.
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The controls in the program, and whether they're adequate, were a key subject of debate as members of the FCC discussed the order leading up to a vote at last week’s FCC meeting (CD Feb 1 p1). Commissioner Robert McDowell had pushed hard for tight controls. Commissioner Mignon Clyburn made clear she wants to see the program cover broadband. Both ultimately voted for the order, though McDowell dissented in part.
In a key passage, the order said the FCC’s goal is savings in the program of $200 million this year, versus the status quo. The order directs the Wireline Bureau to “closely monitor the impact of the reforms adopted today in meeting that savings target, and to provide each Commissioner a report no later than the first anniversary of the adoption of this Order evaluating the impact of today’s reforms.” Staff are also charged with “determining whether the reforms have succeeded in meeting the savings target; and, if they have not, analyzing the causes, providing options for realizing those savings, and making specific recommendations for corrective action to realize those savings,” the order said.
The FCC also establishes “minimizing the contribution burden on consumers and businesses” as one of the three goals of the Lifeline program. “This goal is consistent with our longstanding recognition that our efforts to advance universal service must be balanced against the universal service contribution burden on all consumers, particularly those consumers who are just above the threshold of ‘low-income’ that we adopt as a uniform floor for the program in this Order,” the order said.
But the order also establishes “ensuring the availability of broadband service for low-income Americans” as a stated goal of the Lifeline program. The other goal, the first enumerated, is ensuring the availability of voice service to low-income people who otherwise might not have a phone. Voice service is critical but “access to affordable, robust broadband service is equally important,” the order said. “Indeed, the evidence indicates that increased broadband adoption and usage increases educational and economic outcomes for low-income consumers."
The order uses the word broadband 494 times and establishes a pilot program “that will focus on testing the necessary amount of subsidies for broadband and the length of support.” The proposed pilots were the subject of a McDowell dissent. The pilot program will run 18 months, including three months to give eligible telecommunications carriers time to get their back-office functions ready, and is to include wireless broadband. Staff are instructed to choose “a diversity of projects, with different amounts and duration of subsidies, different types of geographic areas (e.g., rural, urban) and different types of broadband networks (e.g., fixed and mobile) and technologies,” the order said. “To the extent possible, the pilot program will seek to collect data on a number of variables, such as the impact of income, age, ethnicity, gender, and family size and make up on adoption rates.” Preference is to be given to services that offer speeds of at least 4 Mbps for downloads and 1 Mbps for uploads.
The order also provides a detailed snapshot of the Lifeline program, revealing the growing importance of wireless offerings. “Wireless Lifeline enrollment has greatly increased, consistent with the same trend toward wireless service in the general population,” the order said, noting that by its latest count 92 percent of Americans have a wireless phone. In 2010, competitive providers, mostly wireless, got nearly 55 percent of total program support, the order said. Pre-paid wireless carriers account for more than 40 percent of all Lifeline support.