Low-Income Internet Subsidies Will Have New Verification

(Rob Kunzig/Morning Consult)

Federal Communications Commission Chairman Tom Wheeler unveiled a new rule Tuesday to expand a federal phone subsidy program to include internet access for low-income Americans. The changes, to receive a commission vote on March 31, will implement a new third-party verifier to determine eligibility.

The idea is to make the new federal internet benefit like other traditional welfare programs, such as food stamps. The final order should pass with the five-member commission’s Democratic majority.

The new plan is still in draft form and could change before the vote. It would incorporate broadband service into the commission’s Lifeline program, which now gives subsidies to low-income Americans for phone service. If it passes, those beneficiaries will be able to use those subsidies for a single internet connection or bundled voice and data services, a move that aims to address the country’s digital divide.

The changes also offer an opportunity for the commission to address fundamental problems with the program now. One of the biggest changes on tap is the creation of the National Eligibility Verifier that would independently determine whether people can receive the Lifeline subsidies. Now, it is up to the companies to make that assessment. Industry lobbyists and interest groups say because those companies have a stake in a person’s eligibility, it leads to many customers incorrectly being deemed eligible for the program.

A senior FCC official briefing reporters on Tuesday about the rule said putting an independent party in charge of determining eligibility would remove the problem of “self-interested providers.” The official added that the new verification entity is “designed to reduce administrative burdens and foreclose the last remaining major opportunity for fraud.”

The official also explained how the agency could work with the new system. The FCC would designate the current universal service administrator — the entity that runs all the phone access programs — to set up a single national database of all Lifeline participants. It would also set up a database of everyone who is eligible for Lifeline, even if they aren’t currently subscribed.

Because Lifeline eligibility is based on a person’s eligibility for other programs such as food stamps or Medicaid, the goal would be to integrate that database with state databases on other welfare beneficiaries. Then companies could simply type in a customer’s name and sign that person up, which is preferable to reviewing numerous eligibility documents that they probably aren’t qualified to parse.

The verification piece of the FCC’s rule won a key endorsement Tuesday afternoon. Comcast’s Senior Executive Vice President David Cohen said the cable giant supports the commission’s move to include internet access in Lifeline and “streamline the rules for program entry and provider participation.”

Comcast isn’t now part of the Lifeline program, but it probably will be after these changes are implemented. The drafters of the FCC rule say their goal is to attract internet providers, such as Comcast, whose core business isn’t phone service.

In a blog post, Cohen applauded the FCC’s decision to overhaul its low-income access program “in a financially responsible and cost-effective manner. … The commission’s proposal that eligibility and recertification functions currently performed by service providers are instead handled by a national verifier will help in this regard.”

Verizon Communications is a Lifeline provider in Maryland and Washington. In Virginia, Lifeline subscribers can get service through Cox Communications and T-Mobile. Different providers are active in different American states.

Other big tech companies that are involved in Lifeline have said it should be easier for new firms to participate in the program. The FCC listened. “The theme of streamlining entry into the program and really reducing the administrative burden required to get in, we are hoping will apply to large and small companies alike,” the FCC official said.

The new plan also aims to transform Lifeline into a simple internet subsidy over time, phasing out voice-only benefits, assuming that voice and mobile data will become increasingly intertwined. The final order would require that by 2020, any company that provides Lifeline service will include an internet connection.

The order would direct participating companies to lower stand-alone mobile voice subsidies from $9.25 per month (the current price) to $7.25 on Dec. 1, 2017. It would lower to $5.25 on Dec. 1, 2018. After Dec, 1, 2019 there would be no support.

Wheeler unveiled the item, co-written by him and Commissioner Mignon Clyburn, to the press Tuesday, an unusual move ahead of a commission vote. Because details of pending rules often change ahead of a vote, the contents are often hushed ahead of a meeting. He also circulated the item to all five FCC commissioners.

The commissioners might have gotten short shrift on timing. At least one commissioner’s office didn’t have the rule in hand when FCC officials were briefing reporters. “Reporters are given better access to what is going on at the FCC than FCC Republicans are,” tweeted Matthew Berry, chief of staff to FCC Republican Commissioner Ajit Pai.


Morning Consult