The recently announced plan by the Federal Communications Commission (FCC) to expand the Lifeline program to include broadband for qualifying low-income households is being hailed by nearly everyone as a much needed step to bridge the digital divide. And while there is no doubting the good intentions of the FCC, no one seems to be asking the key question: Will it work?
In all of my years devoted to consumer issues, I have seen few federal proposals receive so little scrutiny when so much is needed. One thing I’ve learned the hard way is that wanting to do the right thing and having a workable way to do it are not always the same thing. It would be a tragedy to see the Lifeline program — which recently has been improved significantly to address concerns about how it provides services — suffer a serious setback by failing to deliver on the promise of broadband.
Under the proposed FCC plan, eligible households could opt on a monthly basis to receive $9.25 worth of either telephone Lifeline or broadband Lifeline services. In theory, that is all about fostering more consumer choice, but the issue is how to go about doing it. The FCC has raised the possibility that a voucher system would be created to facilitate consumer choice, but there has been little detail provided so far as to what that would look like.
It’s claimed by some that the card and/or PIN system could be created and not cost the FCC more than the administrative expenses of the Lifeline program today. I find this very hard to believe. Currently, the wireless Lifeline program only reimburses a couple dozen carriers each month. In the potential voucher system, payments would need to be made each month to millions of low-income consumers.
Beyond the concern of greater cost to the government is reduced convenience for the consumer. Our worry here is that forcing participants to somehow submit payment every month in order to remain involved in one of the overhauled Lifeline program could quickly result in a sharp reduction in the level of consumer participation. Frankly, I’ve not heard anyone answer my repeated questions about how this new system would work.
The potential for headaches, delays, and anger with an ATM or online PIN-based system for Lifeline are considerable, but it would be even worse if consumers had to actually show up at carrier’s storefront each month to go through the process of using a voucher card. (Yes, this idea is being advanced by some at the FCC and elsewhere.) This reflects a disturbing lack of understanding about the reality of life for many low-income Americans. What about the elderly, disabled, and others who are not able to leave their homes? What about people in rural areas who may be an hour or more away from a storefront? What about those who are without cars and would have to pay for public transportation?
You don’t have to dive very deep into the Lifeline demographic data to see that there are most likely millions of eligible consumers who either would be unable to physically present themselves every month at a storefront or would end up paying so much in cab or bus fees getting to such a location that their monthly $9.25 Lifeline benefit would largely or even entirely be eaten up. This is where a study should come in.
One final point worth pondering: Keep in mind that we are talking about a modest $9.25 monthly benefit. I have heard the optimistic claims of those who say that adding broadband to Lifeline will result in many eligible low-income households crossing the digital divide. What I have not seen is any data that shows that a less-than-$10 voucher is going to make a $90-a-month broadband service affordable enough that those who are eligible will choose to opt in. As an organization working with low-income populations, Consumer Action has real doubts that a household would buy broadband at $80 if they couldn’t afford it at $90. We urge the FCC to survey low-income consumers to determine whether easing the monthly cost of broadband by less than $10 would have any impact at all on their decisions.
In our view, it would be a grave mistake to force low-income consumers who legitimately need access to telephone Lifeline for educational, health and job reasons to sacrifice that service in order to get broadband. Consumer choice is a wonderful thing, but not if it means choosing between two vital services. Telephone Lifeline should be preserved in full and the system used to reimburse participating companies should be kept in place. The FCC has spent years coming up with effective reforms to make wireless Lifeline an efficient program. It makes no sense to ditch that considerable progress in favor of an entirely new and unproven system to handle the addition of broadband to Lifeline.
If the FCC wants to offer low-income consumers access to broadband, which they should, a totally separate subsidy program should be set up to do it. One answer to the question of how this could be funded would be to apply the Lifeline surcharge to broadband charges for other consumers. Doing so would be consistent with how telephone Lifeline is currently funded.
Ken McEldowney is executive director of the nonprofit Consumer Action, which is based in Washington, D.C., and San Francisco.
Read the original posting here.