Putting the Lifeline Program on Hold

FCC_New_LogoEarlier this month the FCC under new Chairman Ajit Pai reversed earlier FCC approval for nine Lifeline providers who had been granted the ability to provide either wireline or wireless Lifeline broadband service. The Lifeline program grants a subsidy of $9.25 per month for low-income customers.

These were the first nine companies that had filed for the new Lifeline Broadband Provider designation to provide the subsidy for broadband connections. The Lifeline program for 32 years has provided this same subsidy to telephone service, but last year the program was extended also to data services – with the caveat that a given household is only eligible for one monthly subsidy.

The nine providers are Spot On, Boomerang Wireless, KonaTel, FreedomPop, AR Designs, Kajeet, Liberty, Northland Cable, and Wabash Independent Networks. Four of the providers had obtained their new Lifeline status on December 1 with the others being granted in January. Boomerang Wireless had already started to serve lifeline-eligible customers and the FCC ordered them to notify their customers and to cancel all lifeline subsidies within 60 days of the new order.

The stated reason for the reversals was that the FCC wanted to “promote program integrity by providing the Bureau with additional time to consider measures that might be necessary to prevent further waste, fraud, and abuse in the Lifeline program.” None of these companies has been accused of fraud but rather were the first nine companies to be granted the status of Lifeline Broadband Provider with the ability to sell a subsidized data product.

The fraud issue is an interesting one because the FCC had already overhauled the Lifeline processes to protect against fraud. For years carriers were allowed to self-certify that customers met at least one of several qualifications that made them eligible for Lifeline. But the FCC eliminated self-certification by publishing a national list of eligible customers – the list provided by and updated by other federal agencies overseeing eligible programs.

The FCC had also done compliance audits over the last several years looking for Lifeline fraud and didn’t find much of it. The new FCC order cited a $30 million settlement from Total Call Mobile that had been found to be seeking reimbursement for duplicate and ineligible customers. But the vast majority of the lifeline providers were found to have few or no issues.

Customers may have other options because the 800 carriers that already provide a Lifeline voice subsidy are now also allowed to provide a data subsidy. But nobody knows how many of these existing providers plan to offer subsidized data, and in fact over 80 Lifeline-eligible carriers recently asked to be excused from the program. This includes most of the biggest carriers in the country including AT&T, Verizon, CenturyLink, Charter, Cox, Frontier, Fairpoint, Windstream and Cincinnati Bell. There were also a lot of wireless carriers asking to be excused from the program.

It’s possible that politics has something to do with this order. The FCC under past Chairman Wheeler had reset the Lifeline program’s annual budget to $2.25 billion a year, indexed to inflation. There are Republicans in Congress who have called for the program to be capped instead at $1.75 billion annually. Stopping these new providers is one way to stop the program from growing. One would think that the withdrawal of the biggest carriers from the program will also greatly shrink the fund.

The most interesting thing about this order to me is that it seems to conflict with statements made by new Chairman Pai. On his first day as Chairman he addressed FCC employees and told them that one of his top goals was to bring broadband to all Americans. But this reversal of Lifeline status came just three days later and seems contrary to that goal.

It’s certainly possible that after more internal review that these companies might still be granted Lifeline status. But this also might instead be an indicator that the new Chairman wants to curb the Lifeline program, or maybe even eliminate it. I guess we are going to have to wait a while to see what this all means, including the Chairman’s statements about expanding broadband to all.

How to Collect Broadband Lifeline

USF-logoThe Wireline Bureau of the FCC released clarification rules last week in Docket DA 16-1118 that describe how companies can participate in the broadband Lifeline program. This is the program where the Universal Service Fund will compensate ISPs $9.25 per month for broadband customers that qualify for the Lifeline program.

The program requires landline speeds of 10/1 Mbps with a data cap of no less than 150 GB per month. Mobile speeds can be slower and there is also a much lower data cap starting at 500 MB and increasing to 2 GB by the end of 2018. The FCC has established a registry listing eligible participants called the National Eligibility Verifier. Only households in that registry can receive the Lifeline subsidy and only one subsidy is allowed per household.

The new clarification in the docket describes the process for ISPs to participate in the Lifeline Fund. The FCC will require ISPs to register as a Lifeline Broadband Provider (LBP). The FCC is developing an application process for ISPs that want to gain this designation.

The original order said that the FCC had up to six months to act on LBP applications, but there is now the ability to request a streamlined process where the FCC will approve requests within 60 days. Basically an ISP must complete the application, and if they don’t hear back from the FCC then they automatically have the designation on the 60th day after submission of the request. If the FCC asks questions or asks for changes to the submitted information then the request will be approved 60 days after the request filing has been amended and corrected.

In order to qualify for the streamlined and expedited review process an applicant must 1) serve at least 1,000 non-Lifeline voice customers and/or 1,000 Lifeline-eligible broadband Internet access service (BIAS) customers. This would be measured as a snapshot as of the time of making the application; and, 2) has offered broadband service to the public for at least two years, without interruption. So the expedited process is for established ISPs and not new ones.

Any ISP that doesn’t meet the streamlined review process will still have their application reviewed within six months.

Carriers that are already certified as Eligible Telecommunications Carriers (ETCs) or as Lifeline-only ETCs do not need to seek the LBP status unless they are seeking to ask for Lifeline subsidies in new geographic areas where they were not previously certified.

In a petition to seek LBP status a carrier must:

  • Certify that they will meet all of the service requirements of the Lifeline program.
  • They must demonstrate the ability to remain functional during emergency situations and that they have taken precautions such as having back-up power to remain functional.
  • Demonstrate that they will satisfy all applicable consumer protection service quality standards.
  • Demonstrate that they are financially and technically capable of meeting all of the FCC rules needed to provide Lifeline. The FCC will look to see that the company can be viable without receiving the subsidies.
  • Provide the terms and conditions that the ISP will offer to Lifeline subscribers.

The FCC is clearly trying to help as many ISPs as possible to participate in the Lifeline program. If your company is interested in taking part in this program feel free to contact CCG Consulting and we can help you through the application process.