FCC moves to reform low-income Universal Service programs

Just a month after proposing broad reforms to the high-cost portion of the Universal Service fund, the Federal Communications Commission yesterday proposed reforming the low-income portion of the fund, known as Lifeline/Linkup. In a unanimous vote, FCC commissioners adopted a notice of proposed rulemaking that proposes reforms in three key areas:

- Enhancing measures to prevent fraud and abuse, such as eliminating funding for services that are unused for 60 days and eliminating the initiation fee for unusually high turn-up charges assessed only on lines subsidized through the program
- Making the system more accountable by, for example, requiring more rigorous eligibility checks
- Taking measures to contain growth in the size of the fund, including evaluating a cap on the program

Long-term, the commission proposed the establishment of a national accountability database to verify consumer eligibility. The NPRM also recommends the implementation of a pilot program to test strategies for shifting the Lifeline/Linkup program to support broadband.

About 35 states allow Lifeline funding to go toward wireless service. But although some parties have lobbied for expanding that option to all 50 states, that move is not among the NPRM recommendations.

Participants get $10 a month
The Lifeline program pays up to $10 a month toward phone service for lower-income users and Linkup pays up to $30 on connection charges. According to FCC Commissioner Robert McDowell, payments made through the low-income fund have increased from $162 million in 1997 to $1.3 billion in 2010. Yet, according to fellow commissioner Michael Copps, as of 2009 only 36% of eligible people were using Lifeline assistance. Copps and Commissioner Mignon Clyburn argued that capping the fund would not be appropriate considering that so many eligible people do not participate in the program.

The Lifeline/ Linkup programs are funded through mandatory contributions from telecom service providers, which they pass on to their end users. Concerns have grown that growth in the size of Universal Service programs, including the low-income program, put an undue burden on consumers.

As for the proposed broadband pilot test, several commissioners expressed concerns that such a program would also need to educate people about the usage and benefits of broadband. Pointing to research showing that relevancy, not cost, is the primary barrier to broadband adoption, FCC Commissioner Meredith Atwell Baker said, “Money alone will not solve this problem.”