It’s indisputable: A broadband internet connection is vital to full participation in our society and economy. Increasingly, government services and job opportunities can only be accessed online. Indeed, homework assigned to seven out of 10 K-12 students in the US requires internet access, according to a recent study. The internet provides access to necessary information and a way to stay connected to friends and family, be they around the corner or around the world.
Gigi Sohn(@gigibsohn) is a Mozilla fellow and former counselor to FCC chair Tom Wheeler. Amina Fazlullah (@amina_fazlullah) is a Mozilla fellow and policy advisor to the National Digital Inclusion Alliance.
But accessing this critical network is unattainable for the poorest Americans. Data from Pew Research shows that a little over half of American adults with household incomes under $30,000 have a home broadband connection, and one in three have a smartphone.
This is why in 2016, the FCC modernized the Lifeline program, which gives low-income Americans a monthly $9.25 subsidy for communications services.
Created during the Reagan administration and expanded during George W. Bush’s presidency, Lifeline historically applied only to landline, and then mobile, phone service. The 2016 FCC modernization established structures for more efficient administration and mechanisms to spur competition among providers. It mandated the creation of a National Lifeline Eligibility Verifier system to ensure that only those eligible to receive Lifeline do so. And it carefully began to shift the Lifeline subsidy to include broadband internet access.
These efforts elicited vociferous dissent from then-commissioner, now FCC chair Ajit Pai, who has portrayed the Lifeline program and the people who benefit from it as hopelessly corrupt. Now he is proposing to make changes that will, for all intents and purposes, destroy the program. He aims to severely reduce both the supply of and demand for Lifeline-supported services.
One of Pai’s first acts as chair was to chill competition and innovation in the Lifeline program. Pai reversed a decision made by former FCC chair Tom Wheeler that allowed nine new Lifeline providers into the program. In the process Pai got rid of new competitors who could drive down prices and improve services.
Now, Pai proposes to limit Lifeline even further. Eliminating a Wheeler-era designation that welcomed new broadband providers into the program, the FCC said in December, will “better reflect the structure, operation, and goals of the Lifeline program.” But if the goal of the program is to ensure that low-income Americans have affordable access to broadband, reducing competition in the program will do the exact opposite.
It gets worse. Pai proposes to make the Lifeline subsidy available only to those companies that own their facilities, like the wires, towers, and other infrastructure that make up networks. The problem here? Seventy-five percent of Lifeline customers get their service from businesses that resell the capacity of companies like Sprint and T-Mobile. When the FCC opened the Lifeline subsidy to mobile phones back in 2008, these resellers came roaring into the market, increasing competition and reducing prices so that many subscribers pay little or nothing for service. Eliminating the carriers favored by three-quarters of the market will ensure that Lifeline prices will increase and quality of service will decrease.
If resellers are forced out of the Lifeline program, some low-income Americans may find themselves unable to use their Lifeline subsidy at all. This result could have dire consequences—some Lifeline customers may find themselves without access to critical services like 911.
Under the guise of reducing what the FCC recently described as “waste, fraud, and abuse that undermines the integrity of the program and limits its effectiveness,” Pai has introduced a series of bureaucratic hurdles that will ultimately serve to discourage low-income Americans from signing up for Lifeline. What will most reduce demand, however, are his proposals to place a hard cap on the Lifeline budget and reconsider the $2.25 billion budget passed in 2016.
Currently, if the Lifeline disbursements in any year meet or exceed 90 percent of that year’s budget, the FCC’s Wireline Bureau must issue a report with recommendations for next steps to ensure that citizens wouldn’t lose benefits. Pai instead proposes a hard budget cap where subsidies will automatically be reduced—or in some cases, eliminated—for Lifeline recipients. And in cases where Lifeline spending either does or is projected to exceed the budget, Pai proposes to pit the rural poor against the urban poor by prioritizing disbursements to rural residents.
Further, Pai proposes to reduce the budget by looking at what the FCC calls “historical disbursement levels,” which were $1.5 billion in 2015. The Wheeler-era FCC increased the budget because it believed that its policies to increase competition and improve quality of service would lead to greater demand. This is the opposite of what Pai wants. By eliminating 75 percent of the supply of Lifeline service, making the process for subscribing more burdensome and leaving open the possibility that some Lifeline-eligible subscribers won’t see a dime, demand will decline. This in turn could reduce the budget even further. This cycle could repeat year after year until there is little or no Lifeline budget at all.
This only scratches the surface of the many ways Pai has proposed or already done damage to the Lifeline program. And while it may be easy to think that this issue doesn’t affect you personally, remember that a network is most valuable when everyone can access it. When asking your member of Congress to save net neutrality, ask him or her to save Lifeline, too.
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