News Ticker

FCC’s Wheeler proposes subsidies for Internet service

The federal government’s program that made telephone service affordable to low-income households, could soon be extended to broadband service.

Federal Communications Commission chairman Tom Wheeler is circulating Thursday a set of proposals to modify the 30-year Lifeline program, which provides phone subsidies to households.

Wheeler’s plan would extend those subsidies to Internet service at a time when broadband is becoming as essential as the telephone once was for everyday life.

Only 48 percent of households with an income of $25,000 or less, have access to the Internet, putting those households at a disadvantage for a number of education, government, and information services, the FCC said.

Under the proposal, households would be able to choose whether the subsidy ($9.25) be applied to voice or broadband.

As part his plan to modernize Lifeline, Wheeler is also asking for comment about whether the FCC should establish, for the first time, minimum standards for voice and broadband.

The program has been controversial in recent years, accused by some Washington policymakers of waste, fraud and abuse. Addressing those charges, the FCC made some changes two years ago. To strengthen those reforms, Wheeler is also asking about ways to tighten household eligibility, improve record keeping and increase program transparency.

Wheeler will likely have the support of the two Democratic commissioners when they vote on the proposals at the June 18 meeting. The Republican commissioners have criticized the way the FCC has handled Lifeline, echoing GOP lawmakers that the program needs a closer review before it is expanded to Internet service, as recommended in a recent Government Accountability Office report in March.

“As I told Congress earlier this year, it is time to overhaul Lifeline to make sure it is still performing the critical function for which it was formed,” Wheeler wrote in a blog post.

How the FCC will fund the proposals hasn’t been addressed, but it’s likely to collide with the ongoing debate over the FCC’s open Internet order. The Lifeline program currently provides $1.7 billion in subsidies to about 12 million households, funded through the fees telcos and wireless carriers contribute to the Universal Service Fund. Any expansion could come from Internet service providers, which will soon be classified as common carriers – just like telephone services.

“The FCC is dodging the obvious: expanding Lifeline means new broadband taxes and higher taxes overall on telecom services,” said Berin Szoka, president of TechFreedom. “The FCC made broadband taxes inevitable when it reclassified broadband as a telecom service — it’s just a question of the FCC’s Joint Board finding the least awkward time to make it official.”