House Democrats Introduce Bill to Subsidize Broadband Internet Service for Poor

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By Paul Barbagallo

Top Democrats on the House Energy and Commerce Committee on April 23 introduced legislation that would restructure the federal Lifeline program to subsidize the cost of broadband internet access services for low-income Americans.

The Broadband Adoption Act of 2013 (not yet numbered) comes two days before a scheduled committee hearing titled “The Lifeline Fund: Money Well Spent?” at which the subject of broadband subsidies will undoubtedly be raised.

“We must ensure lower-income Americans have a greater opportunity to participate in the digital economy, whether it be for workforce training, education, finding a job, or creating the next big idea,” Rep. Doris Matsui (D-Calif.), one of the bill's champions, said in a press statement April 23.

26 Years Without Revamp

Created in 1985 and codified in the Telecommunications Act of 1996, the Universal Service Fund's Lifeline and Link-Up programs provide discounts on monthly telephone service and installation to low-income residents, but have never been modernized in their 26-year existence.

As part of an ongoing rulemaking proceeding at the FCC, the agency is exploring whether to classify broadband--and bundled packages of broadband and telephone service--as as eligible service for the Lifeline and Link-Up programs. In 2012, the FCC voted to begin a pilot program that will actually shift subsidy funds from phone service to broadband service.

The FCC is also in the throes of a comprehensive Universal Service Fund reform effort, focused on updating the overall subsidy system to support broadband.

Under the bill, the FCC would be required to create a new broadband-centric Lifeline Assistance program, relying on a database to determine eligibility and prevent duplication. Eligible households must meet federal low-income guidelines or qualify for one of several social service programs such as the National School Lunch Program, Medicaid, or Head Start, according to a fact sheet on the bill.


   

Lifeline has been successful in helping lower-income families maintain basic telephone service but has been beset by fraud and abuse.  

 

 


Although Lifeline has been successful in helping lower-income families maintain basic telephone service, the program has been beset by fraud and abuse.

In recent cases, phone companies and wireless carriers have sought and received reimbursement for service to the same residence.

The size of the fund increased from $667 million in 2000 to $1.3 billion in 2010, leading FCC officials to increase the fees that consumers pay to support the program. According to a November report from the Government Accountability Office, the increases are due in part to the addition of prepaid wireless service from America Movil SAB TracFone, a marketer of subsidized SafeLink phones.

To address these issues, the FCC has approved a number of changes to the program, including limiting the $10 monthly subsidy to one phone line per home, requiring proof of income eligibility from new subscribers, and creating a national database to prevent duplicative subsidies.

These and other changes helped the FCC cut $214 million in spending in 2012, according to the FCC said. The goal of the FCC is to save $2 billion by the end of 2014.

FCC Chairman Endorses Bill

In a statement, FCC Chairman Julius Genachowski hailed the legislation, which is also being sponsored by Reps. Henry Waxman (D-Calif.) and Anna Eshoo (D-Calif.), the respective ranking members of the full committee and its Communications and Technology Subcommittee.

“Our work will complement the legislation introduced today, ensuring that low income Americans are connected while protecting this critical program from waste, fraud, or abuse,” Genachowski said.