FCC to offer Internet subsidies to poor

Nearly 40 million households will be eligible for small monthly Internet subsidies after the Federal Communications Commission approves final regulations at the end of the month. 

The FCC on Tuesday said it would vote this month to expand the federal Lifeline program, which currently only offers monthly subsidies for phone and basic cell service. The expansion will give people the option to instead use those $9.25 per month subsidies for Internet service. 

{mosads}Proposed rules were approved last year, and the final order was being circulated to all five commissioners on Tuesday.

“Internet access has become a pre-requisite for full participation in our economy and our society, but nearly one in five Americans is still not benefitting from the opportunities made possible by the most powerful and pervasive platform in history,” FCC Chairman Tom Wheeler and Commissioner Mignon Clyburn wrote in a blog post. 

All three Democratic commissioners have expressed support for the expansion, but Republicans point to lingering waste and inefficiencies that stem from the last expansion to cell service. 

The FCC will set an annual budget cap on the program of $2.25 billion per year, but does not expect to hit it right away. Current spending is about $1.5 billion. FCC Commissioner Michael O’Rielly had said he couldn’t support a proposal that lacked a cap, but it is unlikely to be enough to win his support, given the large increase. 

The rules will not increase the $9.25 reimbursement and would keep in place the limit of one subsidy per household, meaning eligible customers could either spend it on Internet, phone service or bundled service. But the aim is to transition the program away from voice and to Internet service. 

The subsidies will be open to fixed and mobile Internet. The minimum fixed Internet speed for now would be 10 Mbps for download speeds and 1 Mbps upload speeds. Mobile providers eligible for the program would have to offer at least 500 Megabits of data per month.

About 15 percent of U.S. adults do not use the Internet, according to a recent Pew survey. Those numbers are highest among the elderly, people with less than a high school education, people who live in rural areas and families making less than $30,000 per year. About one in five of those people said they do not use the Internet because of cost. 

The current program has an estimated 13 million household subscribers. That is only about a third of the estimated 39.7 million households that are eligible, according to the Universal Service Administrative Company. 

While advocates want more eligible people to join, FCC officials predicted it would take at least a couple years for the program to hit the new budget cap of $2.25 billion. 

The Lifeline program is one leg of the FCC’s Universal Service Fund, which aims to expand access in a number of different ways. It is paid for by fees imposed on telecom carriers, which eventually get tacked on to customers’ phone bills. 

Public advocates, Internet service providers and wireless carriers have all backed an expansion of the program as long as some other reforms are put in place. The new rules, for example, will create a third-party administrator to determine eligibility and hand out the subsidies. 

A single national verifier database will be created to allow providers to test whether individuals are eligible for the program, by gauging eligibility in other programs like Social Security, Medicaid and food subsidies. 

One of the key priorities for phone and Internet carriers was removing the burden on them to determine if and when a person is eligible for a subsidy. Some said that structure encouraged abuse and put companies in the uncomfortable position of having sensitive customer information, opening them up to extra security and privacy liability. 

The program received harsh criticism during President Obama’s first term due to fraud and abuse that stemmed from the expansion to mobile phones. That criticism led to a number of reforms in 2012. 

A 2015 Government Accountability Office report released last year found those reforms helped shave about half a billion dollars from the program due in part to cutting off benefits for people who were not eligible. But the report also recommended the commission conduct a more thorough evaluation. GAO noted the program “may be a rather inefficient and costly mechanism to increase telephone subscribers.”

This post has been updated