Thread: FCC Expands Low-Income Phone Subsidy to Include Internet Service

FCC Expands Low-Income Phone Subsidy to Include Internet Service

Commission voted 3-2 along party lines to approve Democrats’ plan


Federal Communications Commission Chairman Tom Wheeler was one of the Democrats on the panel who supported expanding the $9.25-a-month subsidy to include Internet service. PHOTO: ASSOCIATED PRESS


By JOHN D. MCKINNON
Updated March 31, 2016 5:26 p.m. ET
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WASHINGTON—Federal regulators approved a contentious plan Thursday to expand a $9.25-a-month phone subsidy for low-income people to include Internet service, after a skirmish over the provision delayed action by several hours.

The final vote by the Federal Communications Commission was 3-2, along party lines, approving a plan advanced by the panel’s Democrats.

The expansion of the Lifeline subsidy, which has been in the works for several years, is intended to help lower-income people who have trouble affording broadband service on their own. Many experts worry that a digital divide is emerging between lower-income and higher-income households, at a time when Internet service has become important for everything from school work to job searches to veterans benefits.

Commissioners Mignon Clyburn and Jessica Rosenworcel cited examples of students who lurk on sidewalks outside coffee shops or schools to take advantage of Wi-Fi hot spots to complete schoolwork assignments.

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Ms. Rosenworcel said FCC data suggest that as many as one in three households don’t subscribe to broadband service, in part because it isn’t affordable.

Five million households out of 29 million with school-aged children nationwide fall into the “homework gap,” she said.

The expansion of the existing federal phone subsidy to include Internet service could encourage providers to bundle voice and broadband services, potentially giving more households an opportunity to have both.

The FCC has struggled to decide many of the details of the complex plan, such as spending and minimum service levels. Thursday’s last-minute wrangling was just the latest proof of the difficulties the proposal faced.

In negotiations in recent days, Republicans commissioners pushed for tighter budget caps in the Democrats’ plan, among other changes. The Republicans – along with some telecommunications companies – have worried that higher costs for the subsidy could ultimately fall on all consumers, because the program is funded by a Universal Service Fund tax on phone bills.

As originally outlined a few weeks ago, the FCC plan was expected to boost the program’s annual budget to about $2.25 billion from the current level of more than $1.5 billion. Officials say they don’t expect to spend that much initially, but they hope to use a range of changes to attract more customers and carriers.

About 12 million households have benefited from the voice-subsidy program in recent years. The new plan eventually could add about 5 million more, officials say.

Republicans worry that with anticipated growth, the new spending cap could easily be exceeded.

A deal Republican commissioners reached with Ms. Clyburn overnight for a tighter cap fell apart during the day on Thursday, when she said she had second thoughts.

In statements on Thursday, Ms. Clyburn said she had been seeking “consensus” in the compromise and was hoping for a 5-0 vote on the program’s expansion. A party-line decision could be more easily overturned later by Republicans, either in Congress or at the FCC in the event of a GOP victory in the November elections.

But Ms. Clyburn said she ultimately concluded the budget mechanism Republicans wanted “could not fully achieve my vision of a 21st century Lifeline program.”

Republican commissioners were critical of the majority’s rejection of the last-minute bipartisan deal to modify the chairman’s proposal. “This agency and this proceeding represented the worst of government,” GOP Commissioner Ajit Pai said.

For his part, Chairman Tom Wheeler said the majority’s plan represents a major step forward in bringing fiscal responsibility to the program, which has suffered from substantial waste and abuse. The program has been tightened in recent years, and Mr. Wheeler said his plan would go further to reduce abuses.

The FCC also approved a proposal that could lead to new privacy standards for Internet providers. The standards could make it more difficult for Internet providers to use consumer data for commercial purposes such as advertising. Providers worry the standards could subject them to tougher regulation than other Internet companies such as Facebook Inc. or Alphabet Inc.’s Google unit.

http://www.wsj.com/articles/fcc-expa...ice-1459457202

. . . The vote expands the Reagan Era program, which was designed to provide subsidized phone service to low-income households, to broadband Internet service.

Starting in December, broadband providers offering discounted Internet service to eligible Lifeline customers will receive a $9.25 subsidy per Lifeline subscriber. . .

http://www.cnet.com/news/regulators-...d-to-the-poor/