Commenters Pan Proposed Cap of Lifeline Fund
Most public officials, consumer advocates and industry executives opposed capping the Lifeline and Link-Up programs, in comments to the FCC. But Verizon backed the cap and suggested that the FCC create a voucher program and a central administrator to watch the fund, and the Mississippi Public Service Commission said the FCC should “seriously consider” a cap, “then a state-by-state cap for the low-income fund may offer some promise.” “In fact, an indexed national cap that considers the unique circumstances of each state, especially from the perspective of poverty rates, per capita personal income, levels and unemployment, is worthy of additional review,” the Mississippi regulators said. But the cap should be scrapped “if low-income persons will be deprived of needed support,” the Mississippi commission said.
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
The commission unanimously adopted a rulemaking notice in early March to begin its overhaul of the Lifeline program. But the commission was split between Democrats Michael Copps and Mignon Clyburn, who said they were skeptical about capping the funds, and Republicans Robert McDowell and Meredith Baker, who did not explicitly endorse a cap but each said they were hoping to stop the growth of the fund (CD March 4 p6). A decade ago, the low-income fund was $577 million; last year it was more than $1.3 billion.
Verizon suggested that the commission structure a Lifeline/Link-Up voucher program “[s]imilar to the DTV converter box coupon system.” “Under this approach, the Commission could adopt a Lifeline model where the Commission, through USAC [the Universal Service Administrative Co.], provides discount vouchers to qualified beneficiaries to spend at their election on qualified services -- whether wireless, wireline, broadband or multi-carrier -- offered by registered providers,” Verizon said in its comments. The vouchers “could also be a way to create a pilot program to evaluate broadband support,” Verizon said.
But non-profit consumer groups including the Benton Foundation, the Leadership Conference, Rainbow/PUSH and the National Association of Telecommunications Officers and Advisors, as well as New York regulators, all opposed the proposed cap. NATOA said “with the proposed expansion of the programs to include broadband service, imposing an artificial cap now without a full understanding of its impact on broadband adoption may serve only to increase the digital divide now facing low-income Americans.”
CenturyLink, AT&T and Conexions LLC were among telcos panning the cap. AT&T said a cap would be “premature,” and CenturyLink said the commission “should instead specifically address program abuses.” “The rapid increase in the size of the fund has been closely tied to the rise in Lifeline-only [eligible telecommunications carriers] over the last few years,” CenturyLink said. “The Commission should closely examine and understand the Lifeline programs of these new ETCs to best evaluate how to constrain the size of the low-income fund.”
Wireless carriers also opposed a cap. “Since the Lifeline program is focused on delivering benefits to end user consumers (rather than, for example, carriers participating in the high cost support mechanisms), the proposal to cap Lifeline support raises difficult questions about the impact on low income consumers,” CTIA said, saying FCC data shows fewer than 33 percent of eligible consumers currently receive benefits. Streamlining program administration costs, [and] bolstering protections against waste, fraud and abuse “would eliminate the need for a cap on overall support,” Leap said.
The FCC should not tamper with the ability of wireless carriers to offer service as competitive ETCs, TracFone Wireless said in its comments. TracFone said it provides Lifeline service under the SafeLink Wireless brand to 3 million households covering most of the 36 states where it has been designated as an ETC. “The level of services which warranted support in 1987, 1996, or even 2002 is not the level of services to which USF support, including low-income support, is appropriate for 2011 and beyond as the nation continues its rapid movement into the Information Age,” TracFone said. “TracFone respectfully urges the Commission to avoid reforms which deny Lifeline support to qualified households or which unduly complicate the enrollment process and unfairly impede enrollment by the persons who are the program’s intended beneficiaries -- low-income consumers.”
The cost of the Lifeline program is increasing, but only because it serves a growing number of families -- 8.6 million in 2009, versus 6.5 million in 2002, TracFone said. While “waste, fraud, and abuse” are problems that should be addressed, “the vast majority of enrolled Lifeline customers of TracFone and of most ETCs are lawfully enrolled, and are fully entitled to Lifeline benefits."
CTIA said the FCC should establish a national database, to be administered by the government or a third party, to “verify consumer eligibility, perform periodic verification, and check for duplicate recipients to improve accountability” in USF programs serving those with low incomes. If the FCC decides that an interim fix is needed, it should adopt the joint industry proposal, which has the support of the wireless industry, the group said. But any steps the commission takes should recognize the growing importance of wireless to Lifeline recipients, CTIA said. “The market for communications services has changed dramatically since the last comprehensive effort to reform the low-income program, and the needs of low-income consumers have changed along with it,” the group said. “The programs, too, must change."
Sprint Nextel endorsed a national database, but argued that ETCs are to blame only part of the time when abuse or fraud occurs. “Rather than directing all recovery efforts at the ETC, ETCs should be responsible only for recovery of Lifeline subsidies that were distributed in error as a result of the ETC’s own action or inaction,” Sprint said. “ETCs should not be responsible for recovery of funds distributed as the result of error or fraud outside their knowledge and control.” Sprint said the low-income programs should be viewed as “directly analogous” to the E-rate program, in which the end-user, not the carrier, is the typical target of enforcement efforts. Making ETCs responsible would impose a “significant administrative cost on ETCs,” the carrier said. Leap Wireless/Cricket said the low-income programs are important and should be modernized. “As a provider of digital wireless voice and broadband services with a focus on low-income and value-seeking consumers that often are ignored by other carriers, Cricket understands that many consumers simply cannot afford these services at market-based rates, even from a value-oriented carrier,” the company said.
The proposed USF-funded pilot program that would be used to identify the most efficient means of increasing broadband penetration for low-income users should be technology neutral, said ViaSat and its subsidiary WildBlue. Eligibility shouldn’t be limited to participants of other past or ongoing government programs, which may have “precluded eligibility of certain broadband providers based on reasons unrelated to the success of the proposed pilot program,” and the FCC should ensure satellite providers can participate, said ViaSat. The program should accommodate variations in services and technologies as each service represents different “trade-offs,” the companies said. Satellite equipment represents a major part of total costs and the pilot program should experiment with different approaches to help fund customer equipment, it said.