I. Introduction & Background

For nearly four decades, the Federal Communications Commission (FCC) has administered the Lifeline program to help low-income consumers afford the high cost of telecommunications services, including landline phone, wireless phone, and, most recently, broadband. The program has helped millions of people connect to vital tools such as 911 emergency support and the internet. Unfortunately, for the past four years, this successful program was dogged by neglectful leadership and repeated attacks from the FCC under Chairman Ajit Pai. As the COVID-19 pandemic and a persistent digital divide exacerbate income, racial, and geographic inequities, this program has been stifled at a crucial time.

In this paper, we review the myriad attacks that Lifeline has endured during the Trump administration—and build a blueprint for a better path forward. We conclude by forecasting looming threats to the program and identifying opportunities for Lifeline’s recovery and growth. As new leadership takes over, the federal government can repair the damage of the past four years and get Lifeline back on track.

What is Lifeline?

The Lifeline program was established in 1985 by the FCC and the Reagan administration to provide support for low-income households to purchase telecommunications service. Lifeline currently provides a $9.25 monthly subsidy to qualifying households and a $25 enhancement for Tribal participants. An individual is eligible for Lifeline if their income is at or below 135 percent of the Federal Poverty Guidelines or if they are participants in other federal assistance programs including the Supplemental Nutrition Assistance Program (SNAP), Medicaid, Veterans Pension, Federal Public Housing Assistance, Food Distribution Program on Indian Reservations, and Bureau of Indian Affairs General Assistance. The FCC restricts households to one Lifeline subsidy.

Initially, only landline phone service qualified for the Lifeline subsidy. In the aftermath of Hurricane Katrina in 2006, the FCC under the George W. Bush administration expanded the program to include wireless phone service. In 2016, the FCC added standalone broadband service. Each of these modernizations ensured that the program kept up with the evolving nature of telecommunications services, as federal law requires.

The Current Subsidy is Insufficient

According to the Open Technology Institute’s (OTI) latest Cost of Connectivity study, the average monthly cost for internet service in the United States is $68.38—which shoots up to $83.41 once promotional rates expire.¹ The situation is worse in Tribal communities, where we found significantly higher costs: $127.51 in Navajo Nation, once promotional rates expire. That’s a steep $44.10 above the monthly average in the rest of the United States.² Clearly, Lifeline’s $9.25 monthly subsidy—and the $25 enhancement in Tribal areas—is insufficient to cover the total price of internet service.

Our pricing research indicates that the United States is experiencing a broadband affordability crisis that Lifeline is not adequately addressing. Moreover, this affordability crisis is poised to worsen amid widespread job and income losses during the pandemic and a consolidated broadband market that fosters price increases. Against this backdrop, the Lifeline subsidy is falling short.

Participation Rates are Declining

Lifeline has experienced a steady decline in participation in recent years, which marks a worrying trend as participation was not very high before the decline began. According to the Universal Service Administrative Company (USAC)—the independent organization that operates the Lifeline program under the FCC’s direction—only 33 percent of eligible households participated in Lifeline in 2016.³ That number fell to 28 percent in 2017, 25 percent in 2018, and 25 percent in 2020.⁴ The advocacy group Free Press estimates that the participation rate is even lower than what is reported by USAC: 18 percent at the end of 2019.⁵

Overall, Lifeline had 17 million monthly subscribers in 2012, but just 7.7 million by July 2020. These numbers lag well behind similar federal programs.⁶ For example, 19 million households receive SNAP food assistance benefits.⁷ Medicaid (which does not break down its enrollment by household) reported 68.8 million enrollees in July 2020.⁸ Moreover, the majority of Lifeline subscribers enroll in the program via SNAP or Medicaid, yet Lifeline’s participation remains significantly lower than either program.⁹ The explanation for this decline is likely multifaceted, but the Trump administration did little to reverse the trend—if anything, former President Trump’s appointees worked to accelerate it.