FCC Aims to Subsidize Internet Service for the Poor

The agency wants to expand its Lifeline subsidy, which is derisively referred to as the "Obamaphone" program.

WASHINGTON, DC - MARCH 12: FCC Commissioner Mignon Clyburn testifies before the Senate Committee on Commerce, Science and Transportation during an FCC oversight hearing on March 12, 2013 in Washington, DC. FCC members warned that a planned 2014 incentive auction of broadcast TV spectrum for mobile broadband use could encounter setbacks.    (National Journal)

The Federal Communications Commission plans to soon begin working on a proposal to subsidize Internet service for low-income consumers by expanding its Lifeline program, which is mocked by conservatives as the "Obamaphone" program.

All three Democrats on the five-member commission have publicly said they want to use federal money to help ensure that all Americans can afford to get online. Lifeline—which despite the Obamaphone nickname was created during the Reagan administration—currently subsidizes only phone service.

"The Lifeline program, established in the mid '80s, has been stuck in the mid '80s," Democratic FCC Commissioner Mignon Clyburn told National Journal during an interview Wednesday on C-SPAN's The Communicators. Clyburn said she is hoping the agency will unveil a proposal by this summer to expand the program to cover Internet access.

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Lifeline subsidizes about $10 of phone service per month for qualifying consumers. Under Clyburn's plan, that amount wouldn't necessarily increase, but consumers could choose to have it cover the data on their smartphone or their home broadband connection.

FCC Chairman Tom Wheeler indicated at a public meeting last December he agrees that Lifeline should cover Internet costs, and Jessica Rosenworcel, the other Democratic commissioner, is particularly focused on ensuring that children from poor families have Internet access at home so they can do their online homework.

But subsidizing broadband access for the poor has the potential to explode into another partisan controversy. The money for Lifeline comes from government fees on consumers' monthly phone bills, and conservatives have decried the program as a wasteful government handout.

Last Congress, 67 House Republicans co-sponsored a bill that would have curbed the program to only cover landline phones, and 44 House Republicans signed a letter calling for the program to be scrapped altogether. "Obamaphone welfare symbolizes how the culture of government dependency is weakening America," Rep. Marsha Blackburn of Tennessee said at the time.

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Even supporters of the $1.7 billion program admit that it has been plagued by fraud and abuse. The FCC and the Justice Department have tried to crack down in recent years on companies scamming the program.

During the C-SPAN interview, Clyburn argued that the FCC should overhaul the program so that the phone and Internet providers aren't the ones responsible for determining if customers are eligible for the subsidies. That system encourages the companies to lie to receive more subsidies, she argued.

"This program is literally what it says," she said. "It is a lifeline, an opportunity for those who have significant financial challenges to be able to keep in touch with their doctors, with their educators, with their communities, with their loved ones. And it is vital that we reform that to meet the current needs of our most vulnerable citizens."

She said she believes it's possible to cover broadband service without increasing the overall size of the program—which would avoid increasing the fees on consumers' phone bills.

There is some hope that overhauling Lifeline could be a bipartisan issue. Michael O'Rielly, one of the two Republican FCC commissioners, outlined his own plan last month for updating the program to include broadband. He would also impose a variety of restraints and oversight mechanisms to keep down costs.

But in the wake of the bitterly partisan fight over net neutrality, there might not be much goodwill left between the FCC's Democrats and Republicans.