TR Daily FCC’s Proposals for Limiting Lifeline Support Meet Opposition
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Friday, February 23, 2018

FCC’s Proposals for Limiting Lifeline Support Meet Opposition

Opposition to FCC proposals for limiting Lifeline support to facilities-based providers have flowed into the agency from a wide range of parties, including advocates for Lifeline beneficiaries, city governments, competitive carriers, and facilities-based providers. A similarly wide range of stakeholders have registered opposition to the FCC’s proposal for a “hard” budget cap on the Lifeline program.

Parties were responding to a notice of proposed rulemaking (NPRM) and notice of inquiry (NOI) that the Commission adopted last fall in WC dockets 17-287, 11-42 and 09-197. The NPRM proposed limiting Lifeline support generally to facilities-based providers; “restoring the traditional role of the states in approving participation of Lifeline-eligible providers”; establishing a “self-enforcing” budget cap for the program; and establishing a maximum discount level for Lifeline-supported services. The NOI sought input on how to more efficiently target program support to those most in need of help in obtaining broadband access. (TR Daily, Nov. 16, 2017).

The Multicultural Media, Telecom and Internet Council (MMTC) and 12 other “Lifeline supporter” groups said, “The Commission’s proposed course of action of imposing a facilities-based-carrier-only requirement without providing incentives for these carriers to participate would eviscerate the program.”

MMTC and its fellow commenters added, “The Commission has inaccurately characterized the Lifeline program as one riddled with waste, fraud, and abuse. Due to the reforms that the Commission adopted in the 2016 Lifeline Order, and that eligible telecommunications carriers (‘ETC’) have implemented, the Lifeline program already has resolved the significant issues cited in the NPRM. The program functions today as a critical tool in providing access to 21st century telecommunications networks for low-income minorities and other vulnerable segments of society, such as seniors. The Commission must ensure that all low-income Americans are able to access critical broadband services. Therefore, Lifeline Supporters oppose many of the proposals in the NPRM, and we urge the Commission to ensure that low-income minorities and other vulnerable populations have access to broadband to participate meaningfully in society.”

Specifically, they opposed the proposal to end support for services offered by non-facilities-based providers, saying that its argument that the proposal will encourage deployment lacks any data supporting the “conclusion that the deployment of additional facilities is the key to solving the affordability problem facing low-income Americans. In fact, the highest concentrations of Lifeline recipients are found in urban areas, where there is no lack of facilities-based options.”

MMTC and its fellow commenters added that “the Commission’s justification neglects to account for the fact that the vast majority — over seventy percent (70%) — of Lifeline subscribers currently are served by resellers. By eliminating resellers from the Lifeline program without providing incentives for facilities-based carriers to participate in Lifeline, the Commission will effectively reduce access to broadband by leaving a significant void in the program where resellers once provided valuable telecommunications and broadband services to low-income minorities and other vulnerable segments of society.”

They also opposed the proposed “self-enforcing” budget cap for the Lifeline program as “punitive” and difficult to administer. “In particular, it is difficult to justify a budget cap for the Lifeline program when participation in the program has never materially exceeded fifty percent (50%) of the eligible low-income population. Further, a hard, annual cap on universal service disbursements in the Lifeline program is difficult to structure because support is distributed on a monthly basis, in contrast to the other universal service programs whose funding mechanisms more naturally lend themselves to an annual cap,” they said.

Joining MMTC in its comments were the African American Mayors Association, Asian Americans Advancing Justice, Consumer Policy Solutions, the Hispanic Technology and Telecommunications Partnership, the National Black Caucus of State Legislators, the National Coalition on Black Civic Participation, the National Congress of Black Women, the National Organization of Black County Officials, the National Organization of Black Elected Legislative (NOBEL) Women, the National Puerto Rican Chamber of Commerce, the National Urban League, and U.S. Black Chambers, Inc.

The National Hispanic Media Coalition opposed the proposed facilities-based requirement, the proposed budget cap, the proposed minimum subscriber payment, the proposed lifetime benefit limitation, and “cutting off service for residents in Puerto Rico and in the U.S. Virgin Islands still reeling from the aftermath of the devastating 2017 hurricane season.”

The NHMC urged the FCC to “abandon these proposals that run contrary to the Commission’s goals of bridging the digital divide. The Commission should instead redirect its efforts to implementing the 2016 Lifeline Modernization Order and ensuring that poor, marginalized, and vulnerable populations are able to connect and stay connected to vital communication services in the 21st century.”

In a joint filing, the cities of Boston, Los Angeles, and Portland, Ore., and the Texas Coalition of Cities for Utility Issues said that the NPRM and NOI “are inconsistent with Congressional mandated universal service directives and must be substantially revised if not outright abandoned.” They said that the Lifeline program should remain focused on affordability, and that the proposed changes “would harm millions of Americans and fail to incent meaningful infrastructure investment, while undercutting state and local government efforts to expand connectivity.”

In addition, the cities said that the proposal to cap lifetime benefits under the program “is inconsistent with the program’s purpose, and the Commission’s Congressionally-mandated goal, of bridging the digital divide and promoting universal service for all Americans.”

In a separate filing, the city of New York opposed the proposed facilities-based requirement and the proposed lifetime benefit limitation, as well as proposals to “eliminate an equipment requirement to deprive low-income Americans access to Wi-Fi enabled devices, prioritize benefits to the detriment of urban low-income communities, and recommend an undefined and insufficiently detailed risk-based approach for audits.”

Incompas opposed most of the NPRM’s proposals.

The competitive carrier trade association said that the “proposal to eliminate Lifeline support for non-facilities-based providers stands in direct contrast to the competitive principles of the Telecommunications Act and conveniently ignores recent history. While incumbent providers have contributed to ensuring the availability of Lifeline service, the fact is that the program began to reach increased numbers of eligible consumers when competitive providers began to focus on providing Lifeline services. This happened because when they entered the Lifeline market, the competitive providers did what they do best: compete. They were leaders in innovation, created targeted service packages for different Lifeline-eligible groups, and engaged in price, features, and quality competition.”

Incompas urged the FCC to reject the proposal to restrict support to facilities-based providers, as well as the proposal to “require an out-of-pocket payment by low-income participants or enforce a maximum discount level, which could have a particularly disastrous impact on the Commission’s efforts to bridge the digital divide. It is also not necessary and may be counterproductive for the Commission to adopt a self-enforcing budget for the Lifeline program at this time — especially because the Commission’s prior reforms have significantly aided in decreasing the costs of the program and reigning in cases of waste, fraud, and abuse. Finally, the Commission should not condition providers’ receipt of Lifeline support on the development and deployment of next generation networks.”

The National Lifeline Association (NaLA) — an industry trade group that “supports eligible telecommunications carriers (ETCs), distributors, Lifeline supporters and participants and partners with regulators to improve the program through education, cooperation and advocacy” — opposed the proposal to bar Lifeline support to resellers, as well as the proposal for setting a maximum discount, minimum subscriber payment, or term limit for participation.

“As Commissioner [Mike] O’Rielly has recognized, no matter who is making the determination, there will be some consumers who can truly afford to pay nothing. But how are we supposed to make that determination and how often should we do it? How could it be implemented fairly and in a manner that does not invite waste, fraud and abuse? How could the benefits of such implementation exceed the costs of providing $111 in annual benefits? While Lifeline is a tool that can help many climb up out of poverty, some may face challenges and circumstances that will prevent them from succeeding. How do we fairly set a timeline and decide which exceptions or extensions should apply and in which cases? At bottom, we are left with this question: how can the cost savings of leaving some members of our society disconnected not be overwhelmed by the costs of having those people disconnected? The answer is obvious. Whether viewed in terms of public safety, health, education or economic competitiveness, we simply cannot afford to leave tens of millions of Americans on the wrong side of the digital divide,” NaLA said.

NaLA said that “a self-enforcing budget mechanism should operate on an annual basis only and have prospective impact only.” It urged the FCC to eliminate minimum service standards or to “at least allow consumers to choose voice or broadband units.” And it suggested that the FCC study “non-adopters and design an enrollment process to accommodate them.”

Free State Foundation President Randolph May also opposed the proposed ban on Lifeline support for resellers and the proposed “hard” budget cap. “While I understand the impulse that motivates both of them, I oppose adoption of these proposals without a further convincing demonstration of need. At the same time, I support the pro-consumer, pro-empowerment proposal to allow providers to meet the minimum service standard through plans that provide subscribers with a particular number of ‘units’ that can be used either for voice minutes or broadband service,” he said. He noted the benefits accruing to non-beneficiaries from the Lifeline program due to network effects.

Regarding the proposed “facilities-based” restriction, Mr. May said that “while promoting increased facilities investment is, in general, a worthwhile objective, the primary purpose of the Lifeline program is to promote the affordability of communications services for low-income persons.”

“The reality is that, today, almost 70% of Lifeline subscribers are served by resellers. As the Commission has recognized, many of these are minorities who rely primarily or exclusively on wireless services, including wireless broadband services, for access to communications. There is no dispute that wireless resellers, like TracFone, have focused their marketing on reaching Lifeline-eligible low-income consumers, and, this, in turn, has increased awareness of the program. In any event, the reality today is that facilities-based providers currently are serving only a minority of Lifeline subscribers, so that discontinuing support for resellers would be very disruptive to the program,” Mr. May added.

He suggested that instead, the FCC “consider TracFone’s suggestion to implement ‘conduct based requirements’ to address waste, fraud and abuse concerns. Those carriers violating the conduct requirements should face stiff sanctions, including suspension from program eligibility for serious and deliberate violations.”

As for the proposed “hard” budget cap, Mr. May said, “As the Commission’s Notice recognizes, there are dozens of practical implementation problems that would have to be resolved in connection with adoption of a self-enforcing budget cap, for example, relating to the appropriate period or periods for assessing compliance, the forecasting models to be utilized, the methodology to be employed in reducing payments under a cap, the way to prioritize disbursements, and more. Moreover, the notion of a self-enforcing hard budget cap runs against the objective of a ‘safety net’ program to provide support for eligible low-income persons in need. Suppose, for example, there is a severe, unpredicted economic downturn with substantial job losses – let’s hope not, but just suppose — and, therefore, many more persons than projected in the budget become eligible to receive support. During the downturn’s duration, I don’t think it makes sense to ‘close the door’ when some budget cap is reached. The impact of such an action almost certainly would be capricious in its implementation.”

The U.S. Telecom Association said that while it “strongly supports policies that encourage investment in broadband-capable networks, the Commission should not utilize the Lifeline program to achieve a goal for which it is not designed. Instead, the Commission should focus its efforts on ensuring the successful implementation of the National Verifier, which will cure the clear majority of the issues raised in the Notice.”

USTelecom opposed the proposal to limit support to services delivered by facilities-based providers. Doing so “would not materially further the deployment of broadband infrastructure, because revenue from resellers already contributes to facilities-based carriers’ deployment of broadband facilities, but could harm customers that currently rely on resellers’ services,” it said.

USTelecom renewed its plea for the FCC to “eliminate the references to broadband Internet access service in Rule 54.101 [which enumerates the services supported by universal service mechanisms]. Doing so would at least resolve the inconsistency between this rule which defines broadband Internet access service, now an information service, as a universal service and section 254(c)(1), which defines universal service as an evolving level of telecommunications services.”

USTelecom also opposed the proposal for a self-enforcing budget cap. “While the Commission’s goal of keeping disbursements at a responsible level and preventing undue burdens on ratepayers is laudable, a self-enforcing budget mechanism could be disruptive to consumers and providers,” it said.

ITTA also urged the FCC “to refrain from limiting Lifeline support to broadband service provided over facilities-based broadband networks that also support voice service.” It urged the FCC “to seek further comment on the particulars of a proposed Lifeline program budget cap before implementing one. ITTA also suggests that it is not necessary to require customer enrollment agents to register [with] USAC, but if such a requirement is implemented, registration should not require the date of birth or any other personally identifiable information from the registering agent.” —Lynn Stanton, [email protected]

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