Lifeline Enrollment Down Almost 30% Under Pai, Set to Continue Fall, OTI Told

Panelists opposed FCC proposals, including to ban wireless resellers. They said the commission and Universal Service Administrative Co. should ensure a Lifeline national verifier has an application programming interface and access to key databases to confirm eligibility for the low-income USF subsidy program. Panelists diverged on the need for a program funding cap and minimum service standards. The FCC can't comment due to the shutdown, said a spokesperson. USAC didn't comment.

T-Mobile's planned buy of Sprint raises concerns about the Lifeline impact, said Yosef Getachew, director of Common Cause's Media and Democracy Program. He said Sprint is a major Lifeline retail provider and also works with resellers, while T-Mobile isn't as active. A T-Mobile takeover could undercut Sprint's Lifeline activities, and let the combined company "price out" smaller resellers. A Sprint spokesperson pointed us to the companies' FCC public interest statement, which said in a page 51 footnote: “New T-Mobile will also continue the Lifeline services currently provided by T-Mobile and Sprint.” T-Mobile didn't comment.

Lifeline subscribers were 11.96 million at year-end 2016 (Pai became chairman three weeks later), and dropped 22.3 percent to 9.29 million by Sept. 30, 2016, show USAC FCC filings (here and here). Heitmann cited figures to us that showed 12.68 million Lifeline subscribers in December 2016 and 9.11 million in December 2018, a 28.2 percent drop.

Pai quickly undercut Lifeline by blocking broadband provider designations, which "sent a signal" to the market, said Heitmann, National Lifeline Association counsel. He said the commission has taken other actions that undermined the program, including its ban on resellers receiving enhanced, tribal support of $34.25 per subscriber monthly and its proposed ban on resellers receiving the regular monthly support of $9.25 a subscriber.

Heitmann said his 30 percent projected drop in Lifeline subscribership under Pai is based on the "best-case" scenario in early de-enrollment numbers in states with mandatory use of the national verifier (NV). He said the recertification failure rate was almost 30 percent in Colorado, a "good state" with NV access to Medicaid and Supplemental Nutrition Assistance Program enrollment databases for verifying consumer eligibility. In Wyoming, which lacks NV access to those popular low-income program databases, the failure rate is over 90 percent, he said. Once consumers get kicked out, it's difficult to resubscribe, he said. The FCC's proposed reseller ban would make the projected decline much worse, he said.

Speakers said the FCC should approve petitions by Q Link Wireless and TracFone to direct USAC to ensure the NV has API capability to engage in machine-to-machine communications with providers and has access to key databases. Heitmann said USAC says it's negotiating national access to Medicaid databases. He said carriers currently can't help consumers much with enrollment in hard-launch states because of the "blind process." An existing portal for agents to provide consumers help is "terribly flawed," he said.

Heitmann supported capping the program at its authorized $2.25 billion annual level to defuse political criticism. He said that would leave about $1 billion of "headroom" to grow under the cap, which could be revisited if it's hit. Some opposed a cap. The FCC didn't propose an amount but is looking at a cap of $800 million to $1.5 billion, said Incompas Policy Adviser Chris Shipley. Heitmann said minimum service standards are a "ticking time bomb" and "got to go." National Consumer Law Center supports standards but is willing to discuss "the details," Staff Attorney Olivia Wein said.

Panelists said most concerns about Lifeline waste, fraud and abuse are overblown and have been addressed by existing safeguards, which could be further bolstered by an improved NV process. The current recertification and re-enrollment process are impractical, they said.