FCC Aims To Expand Internet Subsidies for Low-Income Users
Is a subsidized program the best way to bridge the digital divide? A $1.7-billion federal program might hold the answer. The Federal Communications Commission (FCC) aims to overhaul its Lifeline program, which subsidizes phone service for low-income consumers, to help expand access to high-speed Internet.
The plan, unveiled Thursday by FCC head Tom Wheeler (pictured), was revealed in a commission document seeking comment on modernizing and reforming Lifeline for broadband. About 12 million households used the program last year -- up from 7 million in 2008 -- which began 30 years ago to ensure that all Americans had access to basic telecommunications services.
"Since 1985, Lifeline has helped make phone service affordable for low-income Americans," according to Wheeler's proposal. "But to continue to serve its statutory purpose, Lifeline must evolve to meet today’s most pressing communications needs, including access to broadband."
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Lifeline is funded by a small fee on consumers' monthly phone bills. Recipients get a $9.25 monthly subsidy on one phone line per household -- either a land line or wireless -- that is paid to their carriers. Wheeler wants to expand Lifeline’s options to include broadband service.
Households would still be limited to one subsidy, so consumers would have to decide to apply the amount, which would likely remain at $9.25 a month, to either voice or broadband service. Wheeler said he is not planning to increase the fees paid by consumers to fund the program.
While more than 95 percent of homes with annual incomes of $150,000 or more have broadband access, only 48 percent of those households making less than $25,000 have service at home, according to the FCC.
Also, almost half of low-income Americans have had to cancel or suspend smartphone service due to financial hardship. Since low-income consumers disproportionately use smartphones for Internet access, those figures put them at a disadvantage at a time when broadband access is essential for access to education and information, for managing and receiving health care, and for daily tasks such as checking bank balances, according to the FCC.
FCC commissioners will meet to discuss Wheeler's proposal on June 18. If it’s approved, the agency would seek public comment on establishing minimum standards for broadband and phone service to ensure both Lifeline subscribers and ratepayers are getting the best possible value from the service.
We reached out to Teresa Mastrangelo, chief analyst for Broadbandtrends, who told us that there’s already a program, Connect to Compete, that’s primarily serviced by cable operators, including Comcast, Time Warner Cable, Charter and others. It offers broadband service for about $10 a month and -- with help from partners -- arranges for low-income families to have access to low cost computers.
"This program has already been quite successful in helping to close the digital divide in many markets," Mastrangelo said. "It seems to me that the FCC should be working to have more operators participate in this program rather than take multiple years to make a change to the Lifeline program."
Wheeler also proposed a change in how the program is operated. Phone companies currently determine if a household is eligible for a Lifeline subsidy. Wheeler wants to take the eligibility determination away from the companies and give it to an independent third-party administrator.