FCC’s Proposed Lifeline Restructuring Only Exacerbates the Digital Divide
By Fiona Redmond | Aug 06, 2018
At a House hearing regarding expanding broadband internet access across the country on July 25, Federal Communications Commission Chairman Ajit Pai said that closing the “digital divide” was a “top priority” during his tenure as chairman.
If that’s the case, then he certainly has a surprising approach to doing so.
In November 2017, the Republican-dominated FCC leadership voted to consider a proposal to restructure the Lifeline program—sometimes called “Obamaphone” by conservative critics—which provides subsidies for broadband and phone access to low-income Americans. The program provides a $9.25 per month discount to individuals or families who are either at or below 135 percent of the federal poverty guidelines—$16,389 per year for an individual, $33,885 per year for a family of four—or who qualify for other government assistance programs, like SNAP or Medicaid.
The obvious effect of the proposal is to limit access to phone and broadband service to low-income Americans, which of course would widen the digital gap that Pai claims to want to close. According to a 2017 Pew Research Center poll, almost 30 percent of adults with an income below $30,000 per year don’t have smartphones, and roughly half don’t have home broadband services or a computer of some kind. Among adults making $30,000 to $99,000 a year, 81 percent have a smartphone, 87 percent, a computer of some kind, and 80 percent, broadband internet. Nearly 100 percent of adults with an income over $100,000 have access to all three.
As of 2015, 12.5 million people subscribed to the Lifeline program, with 400,000 subscribers living on tribal lands. Two tribal organizations, the Crow Creek Sioux Tribe and the Oceti Sakowin Tribal Utility Authority, along with several smaller wireless carriers, have sued the FCC over this proposal, which seeks specifically to cut an enhanced $25 subsidy for tribal residents in “urban” areas, and makes the enhanced subsidy unavailable to subscribers who buy from wireless resellers, effective immediately. Tribal groups even submitted a petition to the FCC to hold off on enacting the proposal until the court case is decided, but the FCC denied the petition.
The restructuring would also affect survivors of domestic abuse and those living in abusive households, a report by Mother Jones found. Domestic violence affects women’s ability to be financially self-sufficient, and abusers often cut women off from various support systems, making subsidized cell phones a literal lifeline to those who would otherwise be separated from society, the report finds.
Residents of Puerto Rico, who are still recovering from the devastation to cell phone and internet infrastructure from Hurricane Maria, are also in the crossfire of this restructuring: 17 percent of Puerto Ricans use Lifeline, and the proposed cuts could be a “death sentence” for subscribers, Luis Belén, CEO of the National Health IT Collaborative for the Underserved told Newsweek. The restructuring would also affect veterans, who make up 12 percent of the program and the many more active duty military members and their families who would qualify for the Lifeline program.
The proposed restructuring would slash the benefits provided through Lifeline by limiting subsidies. Recipients would only be eligible for discounts through “facilities-based providers,” such as Comcast, which have their own physical network infrastructure to provide wireless service to consumers. This is opposed to “wireless resellers,” such as Virgin Mobile or Straight Talk, which are smaller companies that buy network access from these larger facilities networks and resell this access to consumers.
These “mobile virtual network operators” (MVNOs) usually offer cheaper, prepaid phone options that don’t require good credit to purchase. Such a move would effectively cut off 70 percent of Lifeline users that rely on wireless resellers for coverage, and instead push subscribers to larger providers such as AT&T and Verizon.
The plan also proposes an annual cap on Lifeline disbursements, changing the original Lifeline structure in which the amount spent on disbursements was more flexible. Prior to this proposal, if disbursements exceeded 90 percent of the overall Lifeline yearly budget, a report would have to be filed to explain how funding was used, but ultimately, the increased spending was allowed.
If the proposal is enacted, the new budget would have a self-enforcing mechanism that would put a cap on disbursement spending automatically if it overtook its allotted portion of the overall budget, limiting the flexibility of disbursement spending. This type of cap could potentially bar those who qualify for Lifeline from ever getting subsidies, depending on where the cap is set.
The restructuring proposal could take effect in October, pending approval by the Office of Management and Budget.
The proposal is supposedly aimed at cutting down fraud and abuse, despite claims from over 200 advocacy groups—including the ACLU, the NAACP, and Common Cause— in an open letter to Pai that Lifeline has aided in reducing the digital divide in rural and poor communities. That isn’t stopping the FCC from going ahead with a restructuring proposal that targets millions of marginalized people.
A program that takes away vital connections to today’s online world from veterans, American Indians, low-income Americans, and others seems hardly a solution for closing the digital divide— if anything, it works to exacerbate it.