FCC looks to subsidize low-income Americans' Internet access

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The Federal Communications Commission is proposing to expand its Lifeline program to help subsidize Internet service for low-income Americans. 

The plan floated Thursday by FCC Chairman Tom Wheeler faces resistance from Republicans who point to lingering waste and inefficiencies in the $1.7 billion program, which helps low-income individuals pay for phone service. 

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Wheeler and the two other Democrats on the commission have made the update a priority, saying the program, first started in the 1980s, needs to adapt to current technology. While nearly all high-income individuals have access to broadband, studies have shown less than half of households making $25,000 or less have access. 

The commission is set to vote on the proposal next month. A final order would have to be crafted and approved before any changes take hold. 

The plan seeks to establish minimum service requirements on companies to make sure speeds and Internet data keep up with modern demand. The commission did not outline those baselines and will instead seek comment on them.

The Lifeline program was created in the 1980s to help low-income households receive landline telephone service. It was later updated to help foot the bill for mobile service as well. The program currently offers a $9.25 reimbursement for those services, paid for by fees on carriers that are usually later tacked on to customers’ phone bills.  

The proposal Thursday does not seek to increase that $9.25 reimbursement and would keep in place the limit of one subsidy per household, meaning eligible customers could either spend it on broadband or phone service. 

FCC officials could not say how many of the 12 million current participants would choose to use their subsidy differently. They also said it is too early to predict how many new participants the inclusion of broadband would attract.   

It remains unclear if customers will use those subsidies more for mobile or fixed broadband. One senior FCC official noted, however, that studies have shown smartphone use is popular with low-income individuals. 

Wheeler's proposal will also seek comment on a number of other reforms to the program. For example, Wheeler wants to remove the burden on telecommunications carriers to judge whether customers are eligible for the program. 

The commission will ask if establishing a "neutral third party administrator" would be better than having telecom companies handling sensitive customer information they would not otherwise have. The commission will also ask if the overall program should be capped with a budget. 

In the meantime, the proposal would require providers to maintain customers' eligibility information to help with oversight. The proposal would also require companies to retain records for 10 years. 

The program received harsh criticism during President Obama’s first term due to fraud and abuse that stemmed from the expansion to mobile phones. That criticism led to a number of reforms in 2012. 

A Government Accountability Office report released last month found those reforms helped shave about half a billion dollars from the program due in part to cutting off benefits for people who were not eligible. 

But the report also recommended the commission conduct a more thorough evaluation. It noted the program “may be a rather inefficient and costly mechanism to increase telephone subscribers.”

After the GAO report, Republican FCC Commissioner Michael O’Rielly said it helped prove Lifeline is “inefficient, costly, and in serious need of review.” Senate Commerce, Science and Transportation Committee Chairman John ThuneJohn ThuneFCC chief pushes phone companies to offer free robocall blocking How the new aviation law will affect your travel GOP chairman seeks answers about Tesla’s autopilot feature MORE (R-S.D.) said an expansion should be put on hold until the FCC could conduct a full program evaluation. 

House Energy and Commerce Chairman Fred Upton (R-Mich.) and Rep. Greg Walden (R-Ore.) said they have long called for reforms to the broader Universal Service Fund. But they said the update announced Thursday "misses the mark."

"Simply expanding the program without ensuring its effectiveness or longevity is the wrong approach if we're going to do right by those who pay for the program, and those who depend on it," they said. 

— Updated at 2:55 p.m.