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Industry Trashes FCC Plan to Limit Lifeline to Facilities Providers

Posted by Andrew Regitsky

Mar 9, 2018 10:00:00 AM

GettyImages-909445168I admit it, I admire Ajit Pai. The FCC Chairman speaks and writes brilliantly, can charm any crowd and is steadfast in his belief that telecom regulation is harmful even while facing incredible public pressure, and sadly, even death threats.

However, after observing Pai for several years now, it is obvious he is his own worst enemy. His attempts to move directly from point A to point Z on every issue, infuriate the industry, while a compromise at point P would have enabled him to reach most of his goals without the public angst.

For example, he could have eliminated the most troublesome aspect of net neutrality by simply reclassifying broadband Internet access as an information service. However, he went too far by eliminating the "bright line" rules forbidding blocking, throttling and paid prioritization of Internet traffic. Now, unless Congress intervenes, net neutrality will be in court for years. Recently Pai, went overboard again, with his proposals to "fix" the flawed Lifeline program.

The Lifeline program is part of Universal Service administered by the Universal Service Fund Administrative Company (USAC). It provides low-income Americans with a monthly dial-tone line discount. Specifically, consumers can obtain a subsidy of up to $9.25 a month if their income is 135 percent or below the poverty line. Lifeline is available to eligible low-income consumers in every state, territory, commonwealth, and on Tribal lands. Tribal customers are also eligible to obtain $25 per month in additional subsidies.

Last fall, the FCC released a Notice of Proposed Rulemaking in Docket 17-287 in which it intends to remove much of the "waste, fraud and abuse" in the Lifeline program by limiting support to facilities-based providers.  This would mean that the estimated 70 percent of Lifeline customers that participate in the program through resellers (many of them wireless providers) would have their service disrupted, or their prices increase. Moreover, many of these consumers have no other options, especially in rural areas, for Lifeline service.

The industry finally got its chance to weigh in on the Pai Lifeline proposal on February 21, 2018 when comments were filed with the FCC. In a rare instance, the entire industry agreed that the proposal to limit Lifeline support to facilities-based providers only is a non-starter.

For example, even a large company like Verizon which presumably would benefit if low-income consumers were forced to use its facilities if resellers were eliminated from Lifeline, reacted very negatively to the proposal.

The Commission should not adopt its proposal to discontinue Lifeline support for services provided by resellers. Since the entry of resellers into the Lifeline market in 2009, low-income consumers have benefited from resellers’ innovative Lifeline plans and from Lifeline resellers’ focus on serving low-income consumers. An estimated 7.3 million low-income consumers – about 70 percent of Lifeline customers – currently obtain Lifeline service from resellers. The proposed exclusion of resellers from the Lifeline program would be highly disruptive to existing Lifeline beneficiaries, and is at odds with the Commission’s goal of supporting affordable voice telephony and high-speed broadband for low-income households... [D]iscontinuing support to resellers would undercut the main purpose of the Lifeline program, which is to address affordability. (Docket 17-287, Comments of Verizon filed February 21, 2018 at p. 8 and 9).

The National Association of Regulatory Utility Commissions (NARUC) adds:

There simply is no question that the overwhelming majority of the homeless and those with no fixed address will necessarily be the first to lose this vital communications lifeline if the FCC goes forward with this proposal. This approach will effectively target the poorest (and most needy) people in the program first and hit them the hardest. Even in the most optimistic scenario, many consumers that qualify for the service will no longer receive it. Moreover, even with a lengthy transition, this change will also necessarily cause widespread consumer angst and confusion. (Docket 17-287, Comments of NARUC at p. 21).

Verizon suggests that the Commission has already taken the necessary actions to limit most of the abuse in the Lifeline program caused by resellers.

[M]any of the concerns about the increase in waste that accompanied the expansion of the Lifeline program after 2009 have been addressed by the 2012 Lifeline Reform Order, which strengthened the application review requirements and established the National Lifeline Accountability Database to prevent duplicate subscriptions, and the 2016 Lifeline Order, which established the National Verifier. Since peaking at $2.1 billion per year in 2012, Lifeline disbursements have fallen steadily to $1.2 billion per year.34 Given the significant role that Lifeline resellers currently play in serving low-income consumers, the Commission should address any remaining concerns about waste in the Lifeline program by completing the National Verifier and targeting Lifeline audits to high-risk carriers, rather than by discontinuing support for resellers. At a minimum, the Commission should complete the implementation of the National Verifier before reassessing the role of resellers in the Lifeline program. (Docket 17-287, Comments of Verizon, at p. 9).

Please Ajit, I don't care how much waste resellers are bringing to the Lifeline program. You simply cannot measure that against the fact that so many Americans will lose phone service if you proceed with your proposal. If you want to be a successful FCC Chairman, you need to grow a heart along with your well-developed brain!


Topics: ajit pai, FCC, telecom