Feds take steps to bring broadband to low-income households

The FCC will seek comments on how to expand its $1.7 billion fund for subsidizing phone service for low-income families. The agency wants the fund to cover broadband service as well.

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon
4 min read

FCC Chairman Tom Wheeler: "Broadband has gone from being a luxury to a necessity."
FCC Chairman Tom Wheeler: "Broadband has gone from being a luxury to a necessity." Mark Wilson/Getty Images

Federal regulators are moving forward with plans to expand a three-decade-old phone subsidy program for low-income households so that it can also help families cover the cost of broadband Internet service.

The Federal Communications Commission voted 3-2 Thursday to advance a proposal that would give qualifying households the choice of spending the $9.25 monthly Lifeline subsidy on either phone or broadband service.

FCC Chairman Tom Wheeler has been pushing for the expansion of the federal program, begun in 1985 under the Reagan administration, because he says high-speed Internet service has become a necessity for functioning in today's society. And to reduce the so-called digital divide, Wheeler said, it's time for the Lifeline program to be rebooted for the Internet age.

"Broadband has gone from being a luxury to a necessity," Wheeler said at a press conference following the FCC's vote. "But the fact of the matter is that the majority of Americans earning less than $25,000 a year don't have broadband at home."

The proposal is meant to help these consumers get access to broadband and expand their opportunities for finding jobs, accessing education and receiving improved health care services. While commissioners on both sides of the political aisle agree that broadband is the future and access to it is important for all Americans, they disagree about how the FCC should be promoting that access.

As a result, the vote to expand the Lifeline program has emerged as one of the most contentious and politically divisive issues the FCC has addressed since the agency passed its controversial Net neutrality rules in February. Even though the program was started under a Republican administration and expanded in 2005 under President George W. Bush's administration, Republicans in Congress and on the FCC have been critical of it.

In this political climate, it came as little surprise that the three Democrats on the FCC voted in favor of the proposal to expand the program, while the two Republicans, Ajit Pai and Michael O'Rielly, voted against it.

Still, Wheeler said he was befuddled by how the program had become so partisan. He said it was time for the agency to move forward to ensure that low-income consumers had access to 21st century technologies. He also said the new proposal will help fix many of the issues that have plagued the program over the past few decades.

"Today begins a proceeding to spend ratepayers' money more wisely and to get to the heart of the historic issues that have haunted this program's efficiency," he said.

The Lifeline program is funded by a "universal service fee" that is attached to consumer phone bills. The fund today has grown to $1.7 billion, serving roughly 12 million Americans.

At a Senate hearing earlier this month, Republican lawmakers expressed concern over the potential cost of expanding the program and said that issues around waste, fraud and abuse need to be settled before moving forward.

The FCC implemented a number of reforms in 2012 to address some of these concerns. Since that time, spending on the program has been reduced by at least $1 billion. Critics say the reforms didn't go far enough.

FCC Commissioner Pai said in a statement that the agency still has a long way to go in fixing the issues, as spending on Lifeline is still almost double what it was in 2008. He also cited a March report from the nonpartisan Government Accountability Office that called the Lifeline program an "inefficient and costly mechanism to increase telephone subscribership among low-income households."

And Pai said spending is only expected to increase as the program expands. He echoed the sentiments of Republicans in the Senate and said that before Lifeline should be expanded, the FCC has to bring fiscal responsibility to the program.

"Despite some positive aspects to parts of this item, the Commission's main proposal would take us in the wrong direction," Pai said. "It would expand a broken program. It would waste even more money. And it would raise taxes on the American people."

Wheeler argued that the FCC's proposal is taking steps to continue "cleaning up the invitation to waste, fraud and abuse that has haunted the program." And he emphasized that the problems the program experiences today are a legacy of poor decisions that were made under a Republican administration when the program was expanded to serve wireless consumers a decade ago.

"Those who dissent today are voting against cleaning up the waste and abuse created when the program was originally designed and expanded," Wheeler said. "For the past three years, this agency has been trying to overcome inherited managerial problems that have perpetuated the problems called out today."

The FCC's vote on Thursday is not the final word on expanding the Lifeline program. It's only the first major step forward. Now that the proposal has been adopted, the FCC will ask for comment on how the program should be expanded to include broadband and how the agency can continue to crack down on waste, fraud and abuse.