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FCC Restricts Options Under the Low-Income Consumer Lifeline Program, to Democratic Outcry

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WASHINGTON, November 16, 2017 — In a move harshly condemned by Democrats and consumer advocates, the Federal Communications Commission on Thursday voted along party lines to significantly restrict the Universal Service Fund’s Lifeline program, which provides subsidies to enable lower-income consumers to purchase basic telecommunications services.

The vote took place during a contentious open meeting at the commission’s headquarters on Thursday. The Republican majority also voted to end restrictions on media consolidation that have been in force for decades.

Under the new Lifeline rules — which take effect immediately — poor consumers will no longer be able to purchase phone or broadband internet services from telecommunications resellers like TracFone, Simply Wireless, and numerous other service providers.

Such providers are called resellers because they do not own their own networks, and instead resell capacity bought wholesale from network operators like AT&T, Verizon, and Sprint.

Under the new Lifeline rules, only facilities-based carriers need apply

Only so-called “facilities-based carriers” — telecommunications companies that own and operate their own networks — will be allowed to participate in the Lifeline program by offering subsidized plans. The plans are subsidized by the Universal Service Fund, which is funded from small charges on consumers’ landline phone, wireless, and broadband Internet service bills.

The new restrictions will most heavily impact tribal lands, many of which largely depend on resellers for all of their telecommunications services. In addition to the service provider restrictions, the commission eliminated an extra $25 subsidy once available to anyone living on tribal lands. Under the new rules, only tribal consumers living in rural areas will be eligible for the extra $25 subsidy.

Republicans on the FCC said the change was necessary to prevent waste, fraud, and abuse. The Lifeline program has been criticized by conservatives since the program — which began under then-President Ronald Reagan — expanded to allow Lifeline subsidies to be used to purchase wireless phone service.

The Lifeline expansion began as a pilot program under then-FCC Chairman Kevin Martin, the FCC chairman during the George W. Bush administration from 2005 to 2009.

But when providers began advertising the subsidized service to lower-income consumers a few years later, Republicans began to mock the program by calling the subsidized wireless plans “Obamaphones.” Such criticism was amplified by a racially-tinged viral video featuring an African-American woman shouting to “keep Obama in president” because “he gave us a phone.”

Under the new rules, however, far fewer consumers will be eligible for wireless Lifeline services because not all “facilities-based” wireless carriers offer subsidized plans.

Democrats Mignon Clyburn and Jessica Rosenworcel assail the new restrictions

Democratic Commissioner Mignon Clyburn assailed the new restrictions in a statement before the vote, telling the assembled crowd that despite assurances from the GOP majority, the plan would not help bridge the digital divide.

“It is a bridge to nowhere,” she said. “It proposes to shirk one of the four pillars of our universal service promise – affordability – but I can only hope that this commission and its majority sees the error of its ways before it does further harm to those Americans trapped in economic distress.”

Clyburn added that under the new rules more than 70 percent of Lifeline-eligible consumers will be told they cannot continue to use their current plans even though they may not have a Lifeline-eligible carrier to turn to.

Clyburn’s Democratic colleague, Commissioner Jessica Rosenworcel, said that the changes to the program were not “real reform,” but were in reality “cruelty.”

“It is at odds with our statutory duty,” she said. “It will do little more than consign too many communities to the wrong side of the digital divide.”

Rosenworcel also noted that despite Republican assertions that the new rules were needed to prevent fraud, the FCC was in the process of implementing new controls to do just that, and her GOP colleagues were “discard[ing] its possibilities before we even begin,”

FCC Chairman Pai says that his changes would make Lifeline more effective

In a statement, Pai said he was adamant that the reforms were necessary and would accomplish needed goals.

“The reforms that we implement and propose today seek to accomplish two important objectives: (1) curtail the waste, fraud, and abuse that continue to plague the Lifeline program and (2) make Lifeline more effective at bridging the digital divide on behalf of low-income Americans,” he said.

His Republican colleagues also maintained that the changes were necessary. Commissioner Mike O’Rielly said that the reforms were “necessary fixes” and that the FCC had a responsibility to protect taxpayer money, despite the fact that Lifeline isn’t funded by tax dollars.

O’Rielly added that Lifeline was meant to be a discount service program — not a free one — and that there should be some way of requiring a minimum contribution from even the most destitute consumers.

The newest member of the FCC, Republican Commissioner Brendan Carr agreed. “I am glad that we’re now taking action to increase accountability while at the same time considering ways to target Lifeline support to consumers and communities that need it most,” he said.

Markey calls Lifeline the ‘Medicaid of the telecommunications universe’

Sen. Ed Markey, D-Mass., a member of the Senate Commerce Committee that has oversight over the FCC, also assailed the commission’s decision to restrict Lifeline services.

“The FCC also voted to advance a proposal that threatens to cut the very lifeline that helps tens of thousands of Bay Staters access critical telephone and internet services,” Markey said.

“The Lifeline program is the Medicaid of the telecommunications universe, and any attempt to cap funding, limit benefits, or reduce the number of providers for this critical program could exacerbate the digital divide and deprive disadvantaged communities the opportunity to access key educational, employment, and emergency services.”

 

Andrew Feinberg was the White House Correspondent and Managing Editor for Breakfast Media. He rejoined BroadbandBreakfast.com in late 2016 after working as a staff writer at The Hill and as a freelance writer. He worked at BroadbandBreakfast.com from its founding in 2008 to 2010, first as a Reporter and then as Deputy Editor. He also covered the White House for Russia's Sputnik News from the beginning of the Trump Administration until he was let go for refusing to use White House press briefings to promote conspiracy theories, and later documented the experience in a story which set off a chain of events leading to Sputnik being forced to register under the Foreign Agents Registration Act. Andrew's work has appeared in such publications as The Hill, Politico, Communications Daily, Washington Internet Daily, Washington Business Journal, The Sentinel Newspapers, FastCompany.TV, Mashable, and Silicon Angle.

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Digital Inclusion

Broadband is Affordable for Middle Class, NCTA Claims

According to analysis, the middle class spends on average $69 per month on internet service.

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Photo of Rick Cimerman, vice president of external and state affairs at NCTA

WASHINGTON, November 22, 2022 – Even as policymakers push initiatives to make broadband less expensive, primarily for low-income Americans, broadband is already generally affordable for the middle class, argued Rick Cimerman, vice president of external and state affairs at industry group NCTA, the internet and television association. 

Availability of broadband is not enough, many politicians and experts argue, if other barriers – e.g., price – prevent widespread adoption. Much focus has been directed toward boosting adoption among low-income Americans through subsidies like the Affordable Connectivity Program, but legally, middle-class adoption must also be considered. In its notice of funding opportunity for the $42.5-billion Broadband Equity, Access, and Deployment program, the National Telecommunications and Information Administration required each state to submit a “middle-class affordability plan.”

During a webinar held earlier this month, Cimerman, who works for an organization that represents cable operators, defined the middle class as those who earn $45,300–$76,200, basing these boundaries on U.S. Bureau of Labor statistics for 2020. And based on the text of an Federal Communications Commission action from 2016, he set the threshold of affordability for broadband service at two percent of monthly household income.

According to his analysis, the middle class, thus defined, spends on average $69 per month on internet service. $69 is about 1.8 percent of monthly income for those at the bottom of Cimerman’s middle class and about 1.1 percent of monthly income for those at the top. Both figures fall within the 2-percent standard, and Cimerman stated that lower earners tended to spend slightly less on internet than the $69-per-month average.

Citing US Telecom’s analysis of the FCC’s Urban Rate Survey, Cimerman presented data that show internet prices dropped substantially from 2015 to 2021 – decreasing about 23 percent, 26 percent, and 39 percent for “entry-level,” “most popular” and “highest-speed” residential plans, respectively. And despite recent price hikes on products such as gas, food, and vehicles, Cimerman said, broadband prices had shrunk 0.1 percent year-over-year as of September 2022.

Widespread adoption is important from a financial as well as an equity perspective, experts say. Speaking at the AnchorNets 2022 conference, Matt Kalmus, managing director and partner at Boston Consulting Group, argued that providers rely on high subscription rates to generate badly needed network revenues.

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Broadband's Impact

Federal Communications Commission Mandates Broadband ‘Nutrition’ Labels

The FCC also mandated that internet service provider labels be machine-readable.

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Federal Communications Commission Chairwoman Jessica Rosenworcel

WASHINGTON, November 18, 2022 – The Federal Communications Commission on Thursday afternoon ordered internet providers to display broadband “nutrition” labels at points of sale that include internet plans’ performance metrics, monthly rates, and other information that may inform consumers’ purchasing decisions.

The agency released the requirement less than 24 hours before it released the first draft of its updated broadband map.

The FCC mandated that labels be machine-readable, which is designed to facilitate third-party data-gathering and analysis. The commission also requires that the labels to be made available in customers’ online portals with the provide the and “accessible” to non-English speakers.

In addition to the broadband speeds promised by the providers, the new labels must also display typical latency, time-of-purchase fees, discount information, data limits, and provider-contact information.

“Broadband is an essential service, for everyone, everywhere. Because of this, consumers need to know what they are paying for, and how it compares with other service offerings,”  FCC Chairwoman Jessica Rosenworcel said in a statement. 

“For over 25 years, consumers have enjoyed the convenience of nutrition labels on food products.  We’re now requiring internet service providers to display broadband labels for both wireless and wired services.  Consumers deserve to get accurate information about price, speed, data allowances, and other terms of service up front.”

Industry players robustly debated the proper parameters for broadband labels in a flurry of filings with the FCC. Free Press, an advocacy group, argued for machine-readable labels and accommodations for non-English speakers, measures which were largely opposed by trade groups. Free Press also advocated a requirement that labels to be included on monthly internet bills, without which the FCC “risks merely replicating the status quo wherein consumers must navigate fine print, poorly designed websites, and byzantine hyperlinks,” group wrote.

“The failure to require the label’s display on a customer’s monthly bill is a disappointing concession to monopolist ISPs like AT&T and Comcast and a big loss for consumers,” Joshua Stager, policy director of Free Press, said Friday.

The Wireless Internet Service Providers Association clashed with Free Press in its FCC filing and supported the point-of-sale requirement.

“WISPA welcomes today’s release of the FCC’s new broadband label,” said Vice President of Policy Louis Peraertz. “It will help consumers better understand their internet access purchases, enabling them to quickly see ‘under the hood,’ and allow for an effective apples-to-apples comparison tool when shopping for services in the marketplace.”

Image of the FCC’s sample broadband nutrition label

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Broadband's Impact

Midterm Control of Congress Remains Uncertain, But States Got Answers to Broadband Votes

Alabama, Colorado, New Mexico, New York, Kansas and Pennsylvania had broadband-related measures on the ballot.

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Photo of an Ohio voter on November 8, 2022, by Marshall Gorby of the Dayton Daily News

As voters went to the polls on Tuesday, November 8, 2022, broadband-focused initiatives and candidates could be found up and down the ballot all across the country.

Alabama

Alabama voters cast their ballots to decide on a state Constitutional amendment known as the Broadband Internet Infrastructure Funding Amendment. The measure sought to amend the state’s constitution “to allow local governments to use funding provided for broadband internet infrastructure under the American Rescue Plan Act (ARPA) and award such funds to public or private entities.”

That measure passed, garnering a “Yes” vote from nearly 80 percent of Alabama voters. With 73 percent of the vote counted late last night, 922,145 “Yes” votes had been tallied with 251,441 “No” votes.

Also in Alabama, Democratic U.S. Rep. Terri Sewell won her re-election bid to represent Alabama’s 7th congressional district. Sewell, whose district covers a large swath of the Alabama Black Belt, “spent much of her past two years in office bringing American Rescue Plan Act funds to rural Alabama, dedicated to healthcare, broadband access and infrastructure building,” as noted by The Montgomery Advertiser.

Colorado

The Centennial State is not listed as one of 17 states in the nation with preemption laws that erect barriers to municipal broadband because nearly every community that had a vote has passed it to nullify it. But more communities had to go through that unnecessary process yesterday due to the law known as SB-152 that bans local governments in the state from establishing municipal broadband service absent a referendum.

As of spring 2022, 118 Colorado municipalities, 40 counties and several school districts have opted out of SB-152.

Now Colorado can add to that list.

In Pueblo County, nearly 48,000 ballots were cast with 34,457 or 72 percent, voting yes to opt out of SB 152 while 13,087 (28 percent) cast a “No” vote.

In the City of Pueblo, the county seat, Mayor Nick Gradisar told The Pueblo Chieftain that his city was not looking to build a municipal broadband network but rather to pursue a public-private partnership to bring ubiquitous high-speed Internet service to the city in a way that does not “just allow (broadband companies) to cherry pick the ones that can pay the most.”

Meanwhile, in the City of Lone Tree, one of about a dozen communities located in Douglas County, voters there overwhelmingly approved opting out of SB-152 with over 83 percent of voters casting a “Yes” ballot.

According to the city’s website, the ballot question was put to voters to enable the county to extend broadband infrastructure into Lone Tree. The website goes on to explain what opting out of SB-152 would mean for city residents and businesses:

  • Along with providing support for the County’s efforts, voter approval opens a range of opportunities to improve broadband access or services. Approval would allow the conversation to begin, while not binding the City to any specific actions or timelines.

New Mexico

Similar to the Constitutional question voters decided in Alabama, a ballot question in New Mexico asked voters to modify the New Mexico Constitution to ensure the easy flow of broadband funding. A 1900s era portion of the state’s constitution restricts “lending, pledging credit, or donating to any person, association, or public or private corporation.”

The proposal, which was approved by the New Mexico state legislature last February, passed with a 65 to 35 percent split in favor of adding an exception to the state’s anti-donation clause that will allow the state legislature to appropriate state funds through a majority vote in each chamber for infrastructure that provides essential services such as water, sewer, electricity, and broadband.

Bipartisan Support for Expanding Broadband Access

Yes, one day after the election and it was still unclear which party will control Congress, even as political analysts pontificate on what happened to the “Red Wave.” But, this much is clear: for successful candidates in both parties, at the federal and state-level, expanding access to broadband has become a bipartisan issue.

In New York, Republican State Sen. Dan Stec won his bid re-election, building on his first victory in 2020 when he campaigned for better broadband and mobile phone service. In North Carolina, Renée Price, a Democratic state representative, was elected by a wide margin. During the campaign, Price said her priorities are funding a range of initiatives and that she was particularly focused on increasing access to broadband.

Meanwhile, Republican Congressman Rick Allen was re-elected to represent Georgia’s 12th Congressional District. Allen said he would “continue to fight for the priorities of the 12th District like securing funding for Fort Gordon and the Savannah River Site, expanding rural broadband, and supporting our farmers and rural America.”

In Kansas, where Republican Congressman Mark Alford was elected to represent Missouri’s staunchly conservative 4th Congressional District, Alford told The Kansas City Star that as he campaigned “’on just about every back road of the district, all 24 counties,’ he heard that the No. 1 issue in the district is lack of rural broadband access.”

Over in Pennsylvania, where Democratic candidate Josh Shapiro won the race to be that battleground state’s next Governor, Shapiro’s campaign told Spotlight PA “he will prioritize expanding quality and affordable access to broadband in rural regions of the state by supporting the newly created Pennsylvania Broadband Development Authority, and establishing comprehensive subsidies for low-income households with high [I]nternet prices.”

And finally, in Texas, where Republican Gov. Greg Abbott fended off a challenge from Beto O’Rourke, in the less sexy race for State Comptroller, Republican incumbent Glenn Hegar won his re-election bid in which he touted his record championing the expansion of broadband in the Lone Star State.

Eye On State Legislatures

States are now beefing up or establishing state broadband offices to award billions of dollars for the deployment of new or expanded broadband infrastructure thanks to an historic infusion of federal funds from the American Rescue Plan Act (ARPA) and the Infrastructure Investment and Jobs Act (IIJA). With those bills already passed and the midterm elections behind us, most of the action on the broadband front will rest in the hands of state lawmakers.

The National Conference of State Legislatures notes that “with roughly 9 out of 10 adults in America using the Internet, many consider it to be a necessity of modern life,” which is why there are numerous pieces of broadband-related legislation that was enacted or is pending in the 2022 legislative session.

  • In the 2022 legislative session, 43 states, the District of Columbia and Puerto Rico have pending and enacted legislation addressing broadband in issue areas such as educational institutions and schools, dig once, funding, governance authorities and commissions, infrastructure, municipal-run broadband networks, rural and underserved communities, smart communities and taxes. Twenty-six jurisdictions enacted legislation or adopted resolutions: Alabama, Alaska, Arizona, California, Colorado, Hawaii, Idaho, Illinois, Kentucky, Louisiana, Maine, Minnesota, Mississippi, Missouri, Nebraska, New Hampshire, New Mexico, New York, Oklahoma, Oregon, South Dakota, Tennessee, Utah, Virginia, Washington and West Virginia.

Authored by Sean Gonsalves, this article originally appeared on the web site of the Institute for Local Self Reliance’s Community Broadband Broadband Networks Project on November 9, 2022, and is reprinted with permission.

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