Last Week in Tech Law & Policy Vol. 28: Should the FCC Reconsider Lifeline Voice Phase-Out, Minimum Standards from Broadband Expansion Order?

[Editor’s note: each week during the academic year, TLPC student attorneys write blog posts on cutting edge issues as a prompt for class discussion. We’re back for Fall 2016! We also welcome your feedback via Twitter and e-mail.]

(by Caroline Jones, Colorado Law 2L)

On March 31st, 2016, the Federal Communications Commission (FCC) approved, over the dissents of Republican Commissioners O’Rielly and Pai, new rules governing the Lifeline program designed to “help low income customers afford access to the 21st Century’s vital communications network: the Internet.” The Commission’s Lifeline program was adopted in 1985 under the Ronald Reagan administration, and initially provided discounted landline telephone service for qualifying low-income households before eventually expanding to wireless service in 2005. The new rules expand the program to include broadband internet service, set minimum broadband service standards, and outline the eventual phase-out of standalone voice service in favor of voice and data bundles.

The current program is funded through the Universal Service Fund (USF) and paid for by contributions from telecommunications providers based on end-user revenues. The current subsidy provides $9.25 per month to participating carriers, who then pass on the savings to their customers.

Though the Commission has adopted safeguards such as the National Lifeline Accountability Database (NLAD) to prevent waste, fraud, and abuse in the program, the Commission has faced criticism for millions of dollars in improper Lifeline payments to a company accused of enrolling ineligible and duplicate customers. The program has faced threats to its funding from Republicans concerned with mismanagement of the program, including a narrowly-defeated House bill that would have prevented USF funds from being used for wireless phones and broadband service.

The Commission’s latest decision to expand the Lifeline program to broadband is also not without controversy. In late June, opponents  filed petitions for reconsideration with the Commission voicing concerns about several aspects of the new rules. The National Association of State Utility Consumer Advocates (NASUCA), argued that the phase-out of standalone voice service would “force Lifeline customers into more expensive bundles” and that the new rules do not provide adequate assurance that those unable to afford these bundles will maintain access to basic voice service. While the current voice-only service comes at no cost to recipients, the new bundles may require additional contributions to receive service. NASUCA contends that for some, “the difference in cost between a stand-alone voice service and a bundle may be the difference between having voice service and not having voice service.”

The Commission responded that bundling requirements ensure that the program delivers the latest available technology to its participants. It reasoned that encouraging voice-only services indefinitely is inconsistent with its duty to ensure universal service for evolving telecommunications services.

Other opponents criticize the new minimum service requirements that broadband providers must meet in order to receive program subsidies. These requirements include speeds of 10 Mbps (megabits per second) for downloads, and 1 Mbps for uploads. The Commission reasoned that these minimum service standards ensure that recipients receive the most robust services available, and that are essential for participation in today’s society. However, the Information Technology and Information Foundation (ITIF) has argued that minimum standards may hurt rural customers, as high-speed networks in less populated areas are uneconomical, and therefore may leave those potential recipients behind. Opponents suggest eliminating the minimum service standards in order to increase provider participation, leading to increased consumer choice that would drive competition and improve offerings over time.

How should the FCC respond to concerns regarding standalone voice phase-out and minimum standards? Is the Commission justified in requiring voice and data bundles to ensure participants have internet access? Or will the more expensive bundles force eligible individuals out of the program for lack of affordability? Will minimum speed requirements improve service for Lifeline recipients, or decrease consumer choice and providers’ incentives to improve offerings over time? Do concerns regarding the FCC’s management of the Lifeline program justify a scale-back of the program, or is further expansion warranted?