Under Pai, one of the commission’s main objectives and talking points has been the closing of what is often called the “digital divide,” a lack of access to communications services in rural and low-income areas of the country. Advocates for low-income consumers say that eliminating resellers would only deepen that divide.
The FCC’s justification for the elimination of resellers is an attempt to “encourage investment in broadband-capable networks.” That happens to be the mission statement of another USAC initiative, the High Cost program, which USAC says provides funds to companies expanding communications infrastructure in rural and high-cost areas.
By limiting the Lifeline subsidy to carriers that own their own networks, these companies will have an incentive to further expand their own networks and infrastructure, the FCC says.
The only problem? The Lifeline program’s budget is little more than $2 billion a year. That’s not nearly enough for the hefty price tag of continuing to expand broadband deployment. Reaching rural and more displaced areas of the country can cost telecommunication providers up to tens of billions of dollars, TracFone, one of the largest resellers participating in the Lifeline program, told the FCC.
Providers who own their networks, like Sprint and Verizon, have told the FCC that resellers are important to the Lifeline program, and the $9.25 subsidy would do little to expand deployment.
Sprint, the network owner that seems to gain the most from the elimination of resellers, has argued to the FCC that “Lifeline support is not, and cannot be, the financial determinant of capital intensive facility deployment decisions.”
“The [proposal] is really duplicitous because it makes a case for Lifeline as an infrastructure plan, which is something Lifeline was never meant to be,” said Phillip Berenbroick, senior policy counsel for Public Knowledge, a telecommunications consumer advocacy group. “It’s basically the first time in the history of the FCC … that the commission is making a concerted effort in backing away from its universal service mission.”
Berenbroick and other advocates say it makes little sense for the commission to threaten resellers with elimination citing accusations of waste, fraud and abuse, just as it begins implementation of the eligibility verifier.
The National Eligibility Verifier went live this June in six states and more are expected to be added later this year.
“Why would you repeal a lot of the great improvements based on allegations of waste, fraud, and abuse that would likely be cured by the national verifier?” said González of Free Press.
The commission's proposal, and the reforms that target resellers, would ultimately undercut the value of the verification system, said Dorwart of NaLA. “Who the hell’s coming through this $40 million-dollar system? It’d be like a Rolls Royce you take out three Sundays a year,” he said.
The budget for the Lifeline program is $2.3 billion as of this year, but the program does not have a cap, to allow the program more fluidity in the event there is another recession and an increase in Lifeline users. However, in the same proposal that eliminates resellers the commission sought comment on the implementation of a “self-enforcing budget” cap.
When asked what a transition of Lifeline customers from resellers to facilities-based providers would look like, the FCC responded that the commission had not yet made a decision on the proposal and was seeking comment. The filing period was extended several weeks and closed at the end of March.
The proposal included a “three-year support phase-down period for non-facilities” based carriers but little more.
It isn’t clear if the FCC has an idea as to what havoc, or economic inspiration, these reforms might bring. No economic analysis or research is noted or cited in the proposal. No one takes credit for, or supports, the reforms in the comments that have been filed.
The FCC does not have an accurate or updated list of resellers participating in the Lifeline publicly available, nor could they provide a template as to what affordable wireless coverage would look like if the proposed reforms pass.
Lifeline users can use a database on USAC’s website that matches the nearest available ZIP code with eligible carriers, but the database relies on providers self-reporting their location and service options.
The commission doesn’t know who’ll be left to provide affordable service, potentially leaving a considerable amount of Lifeline beneficiaries without any, or very limited, access to wireless services.
Last fall, 56 House Democrats, led by Rep. Gregory Meeks, D-N.Y., wrote a letter addressed to Pai citing concerns about the proposed changes to the Lifeline program. Several months later, in March, 10 Democratic senators, led by Sen. Jeff Merkley, D-Ore., wrote another letter to the chairman, asking for specific “data, analysis, academic studies, economic reports, etc.” to support his current proposal, including specifics as to what a transition would look like for subscribers that lose service.
“It is your obligation to the American Public, as the chairman of the Federal Communications Commission, to improve the Lifeline program and ensure that more Americans can afford access, and have means of access, to broadband and phone service.” the senators wrote. “Your proposal accomplishes the exact opposite — it takes resources out of the hands of the most vulnerable Americans.”
In May, Sen. Susan Collins, R-Maine, and Robert Casey, D-Pa., who lead the Senate’s Special Committee on Aging wrote another letter, urging the commission “to reject proposals to bar or discourage resellers from participating in the federal Lifeline Program.”
Pai responded to the letter, saying that the proposal sought comment on a “wide variety of measures to improve the administration of the Lifeline program” and that the commission would review the record to “determine the best path forward.”
Currently, the FCC passed on an opportunity to vote on the proposal this June and July but may vote later this summer. Dorwart hopes that Pai might punt the decision, or possibly “redefine the nature of what it means when he says you must be a facilities-based provider.”
But if it passes, Ogans-Recess will be one of many Americans no longer be able to use her subsidy for her current provider and will have to look for alternative, more expensive wireless providers. Or worse, have no options at all.
“It’s a Lifeline because it’s a life support. It’s a necessity,” said Ogans-Recess.
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