III. The Next Four Years: A Blueprint for Recovery & Growth

Ajit Pai resigned from the FCC in January 2021, leaving behind a legacy of neglect and hostility toward the Lifeline program. Looking ahead, new leadership at the FCC and in the White House offers an opportunity to turn the page. The war on Lifeline must end. The FCC and the Biden administration should recommit the federal government to the program and signal a renewed sense of purpose. Accordingly, we recommend the following steps.

New leadership at the FCC should immediately close all of the open proceedings from the Trump-era FCC that threaten Lifeline, including the 2017 and 2019 items. Congress could close the proceedings legislatively—as it tried to do in a bill that passed the House in 2020, but stalled in the Senate¹—or the FCC could close them on its own. As long as they remain open, uncertainty will linger. Further, this action ensures that the proposals are officially gone—no future FCC can act on them without restarting the rulemaking process from the beginning. This move will allow the FCC to start a new chapter on Lifeline, both symbolically and procedurally.

The new $3.2 billion Emergency Broadband Benefit that Trump signed into law in December 2020 must be quickly implemented to ensure that relief gets to the millions of people suffering through the pandemic without access to the internet. The new program resembles a significant expansion of the Lifeline program: a $50 monthly subsidy (compared to Lifeline’s $9.25), a clear, dedicated focus on broadband service (compared to the uncertainty plaguing Lifeline’s commitment to broadband), and new eligibility categories (the newly unemployed, students who qualify for the National School Lunch Program, and recipients of Pell Grants). The success of this program could provide a model for how to expand Lifeline once the emergency benefit expires.

The sluggish implementation of the National Verifier system is a longstanding problem that needs to be addressed. Nearly five years after its creation, the system still isn’t active in all 50 states. There is added urgency to get the National Verifier up and running now that the FCC intends to use the system to process applications for the new Emergency Broadband Benefit. This new program has the potential to reach millions of people who have struggled to afford internet service, but only if the enrollment system works. There are serious concerns that the National Verifier is not up to this task, so the Biden administration and the FCC must make it a top priority to bring the system up to its full capabilities.

The FCC must reverse the 2017 Restoring Internet Freedom Order, a misleadingly-titled action that abdicated the agency’s legal authority over internet service providers. A federal court has questioned whether this leaves the FCC with authority to include internet providers in the Lifeline program. The FCC should restore its legal authority under Title II of the Communications Act, thereby giving certainty to the agency’s efforts to make Lifeline a broadband-inclusive program.

Reversing Lifeline’s steadily declining participation rates should be an overarching objective for the FCC. The agency should endeavor for participation rates more like those of Medicaid and SNAP, both of which are primary gateways for how people enroll in Lifeline. Stronger interagency collaborations, state partnerships, and a robust National Verifier system would help achieve this goal. We also need a national public awareness campaign for Lifeline. Too many eligible people don’t know the program exists. In the immediate short term, the FCC and the Biden administration should focus on a coordinated public awareness effort that links Lifeline with the new Emergency Broadband Benefit. The programs are complementary and could merge at some point in the future.

The telecommunications sector is highly consolidated and anticompetitive—an oligopoly that creates risks for the Lifeline program. As their market power has grown, the largest wireless companies have steadily lost interest in serving low-income customers. Sprint, once the most prominent company to participate in Lifeline, has been acquired by T-Mobile, raising fears that the newly merged company will abandon legacy Sprint customers enrolled in Lifeline. Moreover, Verizon has applied to acquire TracFone, one of the nation’s biggest Lifeline providers, in a merger that could lead to further erosion of provider participation. The FCC must aggressively review the Verizon/TracFone merger and enforce its T-Mobile/Sprint settlement to ensure that providers continue to participate in Lifeline and make low-income consumers a priority.

In 2016, the FCC established minimum service levels that Lifeline providers must meet in order to participate in the program. The new standards, which are to be phased in steadily over five-and-a-half years, were designed to ensure that Lifeline subscribers are not relegated to substandard service. However, it has become apparent that providers may not be able to meet these new, robust standards while keeping their costs within $9.25 per month. Accordingly, wireless providers, public interest advocates, and civil rights groups asked the FCC to pause the phase-in of these standards and study their effect on the Lifeline market.² The FCC should closely review this study, which is due later this year, and make any necessary changes. Among other things, increasing the subsidy amount may help providers improve their services to meet the more robust minimum standards.

The FCC and Congress could reconsider the aforementioned one-subsidy-per-household rule. As currently instituted, this restrictive rule often forces families to share a single plan that may have been designed for a single person’s needs. The FCC should review this rule and, at a minimum, mitigate the aforementioned sharing problems by (1) expanding Lifeline-supported broadband service that an entire household can share, (2) increasing the subsidy amount to cover more robust plans, and (3) ensuring that all Lifeline plans offer sufficiently robust service to accommodate multiple users.

The FCC has long warned that the USF’s contribution system is unsustainable. In 2010, the FCC said expanding the contribution was necessary to sustain the Lifeline program.³ In 2012, the commission worried about “a shrinking pool of contributors” shouldering a growing financial burden and argued for “an improved system that will adapt to market changes and stabilize the contribution base.”⁴ A decade later, the system still hasn’t changed. Landline and wireless phone providers still pay into the system, the contribution factor adjusts quarterly based on what the USF programs require, and the USF fee risks becoming increasingly regressive.⁵ Broadening the base of companies that pay into the system to include other telecommunications companies—such as broadband providers—is one potential reform. It is time for the FCC to address this long-standing issue.