FCC Chairman Ajit Pai’s Dangerous Proposal to Destroy the Lifeline Program

In November 2017, FCC Chairman Ajit Pai introduced a sweeping proposal that, if enacted, would all but destroy the Lifeline program. Pai’s proposal takes a “death by a thousand cuts” approach with a series of punitive and draconian reforms, including a ban on wireless resellers from participating in the program, a harsh budget cap that would limit how long households and individuals could subscribe to the program, and the elimination of support for standalone broadband service.

The proposal to eliminate standalone broadband service ignores the immense power the program, after its 2016 modernization, has to bridge the digital divide.

Seventy-four percent of Lifeline subscribers have access to broadband on their smartphone or computer. However, due to restrictive data caps and the difference in usability between smartphones and computers, it is critical to provide low-income households with the option of standalone broadband access in their homes as well. Each household only gets one Lifeline-supported, broadband-connected device, and they may prefer a standalone broadband option to a bundled service.

Broadband access on a smartphone provides users mobility, but it is difficult to complete job applications, work assignments, and homework on such a small device.

Nearly half of those who have sought jobs using a smartphone reported problems accessing and reading job-related content that did not display properly or was not mobile-optimized. Of those who used their smartphone for a job search, 38 percent reported having problems entering a large amount of text on their smartphone and 37 percent reported having problems submitting required files or supporting documents.

Forty-five percent of U.S. teenagers living in households making $30,000 or less annually said they either often or sometimes have to do homework on a smartphone device. Students without broadband internet access at home are then pressed to do their homework where they can find free Wi-Fi, such as McDonald’s restaurants, Starbucks locations, in their classrooms during other classes, and libraries. Approximately one-fifth of U.S. teenagers in households making less than $30,000 a year reported needing to use a public Wi-Fi connection often or sometimes due to a lack of broadband internet access at home.

The FCC’s proposal to eliminate wireless resellers from Lifeline would cause immense damage to the program’s ability to provide communications services to low-income households.

Seventy percent of Lifeline recipients receive their service from wireless resellers, according to the 2017 Lifeline Monitoring Report. Removing these wireless resellers would leave millions of Americans without a Lifeline provider. History has shown that while facilities-based providers have not seen the business case for offering Lifeline service, wireless resellers have filled that void to provide service to millions of low-income Americans. This move from the FCC threatens to not only leave consumers without the service they have been relying on, but is also likely to throw the market into chaos.

The FCC’s proposed reseller ban is so unpopular that almost everyone who commented on the item expressed opposition to it. That includes public interest advocates, but also Sprint, Verizon, Mobile Future, CTIA––the Wireless Association, conservative scholars such as Randolph May at the Free State Foundation and Daniel Lyons at the American Enterprise Institute, the Information Technology and Innovation Foundation, the NAACP, and low-income health care providers such as AHIP, EmblemHealth, and UPMC, to name a “few.”

The Item proposes to limit the size of the program with a “self-enforcing budget.” The FCC proposes an annual cap for Lifeline disbursements that would mark the most severe and draconian fiscal measure in Lifeline’s history. And it’s completely unnecessary.

Between 2012 and 2016, Lifeline expenditures have gone down from $2.1 billion to $1.5 billion. The expenditures have hovered at around $1.5 billion between 2015-2016. Lifeline has never had a budget cap and, with expenditures having dropped and eventually remained stagnant, there is no need for a cap now.

Additionally, only 28 percent of eligible households actually participated in Lifeline in 2017, according to the most recent statistics. That participation rate marks a drop from 2016, when (a still modest) 33 percent of eligible households participated in the Lifeline program. The FCC should be working as hard as it can to increase the number of qualifying households that participate in this crucial program. A strict budget cut, as proposed by the FCC, would undermine Lifeline’s ability to serve current recipients as well as its capability to expand to serve new low-income consumers as well.

OTI recently hosted an event discussing the importance of the Lifeline program and the damage the FCC’s recent proposals could have on the digital divide and the program’s effectiveness.