FCC Seen Likely To Alter Lifeline Mobile Voice Plans; Senate Democrats Weigh In

A mobile industry representative agreed but didn't know if the commission would change minimum service standards proposed in a draft order, delay their implementation, or do both. The draft also proposed a phaseout of Lifeline subsidies for stand-alone mobile service. A group of Senate Democrats urged the FCC Monday to be careful about phasing out that funding support, and to strike a balance on minimum service standards. Various incumbent telcos and others weighed in at the FCC late last week before lobbying restrictions took effect ahead of a planned FCC Lifeline vote Thursday, said filings posted Friday and Monday in docket 11-42. The FCC had no comment.

The proposed minimum standards would make service uneconomical for providers without co-pays that many low-income consumers couldn't afford, many wireless interests have told the FCC. Under the draft, mobile providers would have to offer unlimited talk by Dec. 1 and phase in broadband offerings starting at 500 MB of data usage monthly, increasing to 2 GB by the end of 2018. Wireless resellers say they would have to pay more in wholesale costs for the average consumer than what they receive in Lifeline subsidies -- without even counting their other costs. "If the government wants to get rid of the free service model, this is the way to do it," said the mobile industry representative. The FCC also proposed to phase out the $9.25 monthly per-subscriber Lifeline USF subsidy for stand-alone mobile voice by December 2019.

Leanza said consumer groups support the thrust of the FCC's proposals to modernize Lifeline USF and understand its desire to push Lifeline providers toward bundled broadband and voice service offerings. "They're moving in the right direction," she said. "You want to push the industry forward." But the groups are also concerned that low-income consumers not lose access to free voice service if the proposals go too far, too fast.

Public interest and civil rights advocates, including Leanza, met with Gigi Sohn, counselor to FCC Chairman Tom Wheeler, and other FCC staffers recently. "From the beginning our organizations have been very supportive of high-quality services for Lifeline consumers and, at the same time, very supportive of maintaining affordable services for all Lifeline recipients too," they said in a National Consumer Law Center filing. "That may include no-cost services within the marketplace of products for Lifeline consumers, especially those who are unbanked. Similarly, consumers should be able to choose to use voice-only mobile services if that best meets their needs." They urged the FCC "to make careful and detailed projections" of the potential program impact of proposals, and they said consumers needed time to make the transition to broadband as "a severe change for the existing voice customers could be problematic."

Leanza said the FCC seems to be looking at "moderating" the proposals for unlimited talk and the minimum service implementation timelines. "It may be a combination of both," she said. The mobile industry representative said, "They might push back the deadlines, but I don't know if they're going to change" the substance. Even a shift from unlimited talk to a 500-minute monthly voice minimum could be problematic for the economics of free service if combined with the proposed ramp up in mobile data requirements, the industry rep said. Neither Leanza nor the industry rep could offer a good sense about what the FCC would do about the proposed phaseout in Lifeline support for stand-alone mobile voice service.

A letter from 17 Democratic senators said the FCC should carefully review any proposed decrease in mobile “voice-only” Lifeline support to consider affordability, including for consumers receiving free service. “Diminishing support for voice-only offerings may have unintended consequences for vulnerable communities who still rely on such services,” said the letter, which was noted in a release from Cory Booker of New Jersey. “We understand that the proposed order includes a requirement that the FCC conduct a thorough review of the Lifeline market during the transition period and trust this further data will be analyzed prior to any final changes to mobile voice support. We welcome news of that review process.”

The senators also noted the possible minimum service standards and other provider eligibility mandates. “We trust that the Commission will strike a balance on these questions, striving not only to promote customer choice among new and existing Lifeline providers, but also to ensure the availability and reliability of such services, including the availability of no-cost-to-consumer options,” said the letter, which was signed by a number of senior Democrats, including Dick Durbin of Illinois and Charles Schumer of New York.

Verizon urged the FCC not to impose Lifeline broadband duties on ILEC recipients of frozen high-cost USF support, in part because that support is interim and due to be eliminated after the commission does a reverse auction of Connect America Fund Phase II support. "Second, in contrast to CAF II support, frozen support is not dedicated to the deployment of facilities meeting the wireline broadband Lifeline service standards described" by an FCC Fact Sheet, Verizon said in a filing on a meeting with FCC staffers. If the commission does impose such a Lifeline broadband obligation on ILECs receiving frozen support, "it should make clear that the obligation is limited to a subset of the carrier's service area." A Verizon official was also part of an ILEC delegation that met with FCC officials to discuss Lifeline issues, a filing said.