FCC Broadband Subsidies Restrictions Could Further Digital Divide

The FCC may soon finalize a proposed ban that would affect 70 percent of low income people using consumer broadband subsidies to access the Internet.

Since last year, Federal Communications Commission (FCC) Chairman Ajit Pai has been proposing changes to the Lifeline Program that limits use of the federal broadband subsidies. Pai, however, says his goal is to close digital divide.

The chairman was in Little Rock, Arkansas, recently, according to KATV.com, to discuss expanding high-speed broadband in rural areas:

To me, there's no greater issue than closing the digital divide, the gap between those who have access to the Internet and next generation technologies and those who don't," said Pai.

Pai has expressed his proposals to curtail the Lifeline broadband subsidies will actually result in broadband expansion. But not everyone thinks his proposals will actually achieve that result, and critics say he is simply going to limit poor people's digital access and hurt them.

Changes to Federal Broadband Subsidies Proposed

The Lifeline Program for Low-Income Consumers was established in 1985 as a way for those qualifying to purchase telephone service and in 2016 was expanded to include broadband access, according to the FCC.

Pai had been opposed to Lifeline's expansion to include broadband, according to the Washington Post. Since being named commissioner last year, Pai has propose changes for how broadband subsidies are used.

About 900 service providers had been participating when the FCC revoked several companies from participating last year. FCC has cited abuse and fraud for its decision.

Now, the FCC is considering a plan that would only allow broadband subsidies to be used to purchase service from "facilities-based broadband providers," according to ArsTechnica.

More than 70 percent of wireless users that buy their plans with the subsidy purchase from resellers who buy their capacity from the largest network operators. But even those telecomm companies aren't supporting the latest proposal to reduce Lifeline Program's participation.

The proposed exclusion of resellers from the Lifeline program would be highly disruptive to existing Lifeline beneficiaries and is at odds with the Commission's goal of supporting affordable voice telephony and high-speed broadband for low-income households," Verizon explained in a prepared statement.

Sprint told the FCC that resellers have "an important and legitimate role in providing competitive broadband and voice service to low-income consumers," and that banning them as an option would have a significant impact on participation in the Lifeline program.

Applying a Short-Term Loss to Bet on a Long-Term Gain?

Pai indicated he proposed the resellers ban would encourage network operators to build networks that improve broadband access:

We believe this proposal would do more than the current reimbursement structure to encourage access to quality, affordable broadband service for low-income Americans."

Lifeline has a budget of $2.25 billion and about 12 million subscribers. According to the FCC website, the program's purpose is "to ensure that all Americans have the opportunities and security that phone service brings, including being able to connect to jobs, family and emergency services."

Those against the policy to ban resellers from Lifeline, and effectively complicate use of the broadband subsidies for 70 percent of those receiving them -- including not only consumer advocates, but regulatory officials, broadband industry lobby groups, members of Congress and others -- say the proposal changes the purpose of the program.

Critics point to other programs designed to do that, such as the Connect America Fund.

The comment period on the proposal to ban resellerswas extended, but closed for replies on March 23, 2018. A final FCC decision could come at any time.

Access open meetings and agendas on the FCC website.

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