Lifeline is what the name says, it is an assistance program that creates a line to the outside world necessary to live. Today, that takes the form of broadband, when it began in the 1980’s it was the landline phone.
What is Lifeline?
Since its inception, Lifeline has been trying to help the part of our society that is left behind when innovative technologies emerge. One of the public policy concerns that comes with emerging technologies is the group of citizens that are left behind because they cannot either access or afford the new technology. This stifles innovation and creates greater disparities between subsets of our population. During the inception of Lifeline, the objective was to ensure all Americans have the opportunities and security that a phone line brings. This subsidy was given in the form of “universal service.” This goal was achieved by the late 1990’s. With that goal achieved, the FCC looked to the next connection—broadband. In 2016, the FCC began covering broadband services under the universal service fund of Lifeline, and, by 2021, Lifeline will provide assistance for only broadband services.
What is the framework?
The current framework provides that Universal Service Administrative Company (USAC) is responsible for data collection, maintenance, support, calculation, and disbursement for low-income programs. In turn, USAC administers the Universal Service Fund (USF.) Universal Service Fund is not only for Lifeline; it also funds Connect America, E-rate, and rural healthcare fund. Universal Service Fund is funded by fees paid by wireless and landline telephone subscribers based on their long distance and international usage. Technically speaking, USF is paid for via an assessment on the telecommunications revenues of certain service providers. Those providers are then allowed to “recover” their contribution from both the business and consumer customers. Check out your wireless bill, there’s likely a charge to “recover” the contribution. It is important to note, that Lifeline was not created to be profit-driven, it is supposed to be self-sufficient. How does it work on the consumer side? The primary rules that surround the Lifeline program are:
- The participants must be enrolled in certain government programs or show they are at or below 135% poverty line as established by Health and Human Services.
Note: In 2012 the FCC established annual certificates and a one-per-household limit.
- The participant applies online or in-store, with the required documents to prove they live at or below the poverty line or are enrolled in a government program.
- Once the participant has been approved, they can go to any eligible provider and receive broadband services.
How does it work on the service provider side? Once the participant has been approved, we turn to the service provider side.
- The service provider is required to check if the participant has been certified by the National Verifier (NV), a database created and funded by the FCC.
- From there, the service provider adds a discount to the participant’s bill.
- The service provider then sends a “bill” to USAC showing how many participants have received this benefit.
- USAC reimburses the service provider.
- The service provider is required to check the National Lifeline Accountability Database (NLAD) to ensure that all participants that previously qualified have been recertified. Participants are required to recertify yearly.
- At any point, the FCC is able to send an audit to the service provider, normally organized by state.
- Throughout the audit process if there is a participant that has been identified who failed to recertify or no longer met the requirements, the service provider must pay those funds back to the FCC.
- The service provider receives $9.25 per Lifeline service from USAC, on behalf of the consumer.
Sounds great, so what is the downside of the Lifeline program?
Lifeline was successful when it came to getting landline phones into American homes. However, like most rules, these are specialized to optimize for a certain outcome, this outcome being connecting the American people via landline phones. We have already begun to see issues at a larger scale with trying to implement rules for a technology it was not originally intended for, such as recertifications, the amount of assistance provided, and the application process.
Recertification
Recertification is essential to ensure USAC is not providing funds for participants that are no longer eligible for Lifeline services. USAC is a finite resource that needs to be closely regulated to ensure that they are reaching the most efficient outcome possible.
On the other hand, the current process is cumbersome and puts the burden on the service providers, even though the effect is felt by USAC. Service providers are required to ensure all participants who signed up for service with a Lifeline subsidy, are still eligible 365 days later. One of the issues that comes with the recertification is there is not an “open enrollment,” in other words, participants sign up on a rolling basis. This means the service providers are having to check NLAD on a continuous basis. If they miss a participant, they will owe that money back to USAC through the audit process.
This effectively makes money that could have been used to provide services through USAC stuck in limbo between the service provider error in checking NLAD — or lack thereof — and the FCC auditing the service provider.
Price
Since 1996, the subsidy given to Lifeline participants has not exceeded more than $10.00, not including tribal lands. The subsidy sits at $9.25 today. One of the reasons Lifeline was successful with landline services is the amount of help they provided to the consumer. On average Lifeline provided in the beginning had 32.41% – 64.9% of the final bill cover for participants. Today, people have 16.89% of the bill covered. Thus, making the amount of assistance provided substantially lower. (Statistics have been created by the author, though the numbers used to create these came from the Universal Service Monitoring Report)
This is a clear effect from the flawed system we are currently working with, rules for not only a different era, but a different technology entirely. The people in need of this assistance are feeling the effects of it, not the service provider, not the FCC. As previously mentioned, Lifeline was created under the assumption that it would be self-sufficient. Yet, we see it is dependent on the service provider during the recertification process, and Lifeline only covers about 17% of the bill for people in need of assistance to receive the latest services to connect them to the world. This issue becomes even more pronounced when we factor in the necessity of broadband service in the 21st century, the only technology that will be covered by Lifeline by 2021.
Application process
A participant is allowed to apply online or in the store. The first issue we encounter is the lack of language accessibility. That is to say, the application can be completed in English or Spanish, yet we have more than 350 languages spoken in the US between 2009 – 2013. This is a simple barrier to entry that can be fixed.
Further, an application can be filled out in the store. This is one of a few assistance programs that a participant can go into a 3rd party or private company to fill out a form for the government. A form that that 3rd party cannot approve itself. This is yet again another aspect of the Lifeline program that puts the burden on private corporations when Lifeline was created to be self-supportive. When in reality, it is supported by private corporations, at the very least administratively. What can we do to fix Lifeline when it moves into the age of broadband?
So, what can be done to fix these rules and regulations before Lifeline fully transforms into a broadband assistance program?
Recertification
This could benefit from an overhaul of rules. Instead of looking to the service providers to self-regulate, the certification, rectification, and verification could come from one entity: the National Verifier. This database provides the network needed to check if a person is eligible for the Lifeline program. It would be little work to implement for the system to automatically check a given participant’s information against the database every 350 days, to ensure everyone is recertified before the 1-year mark.
In turn, if the FCC is taking on the recertification process, it would be in the best interest of the FCC to stop giving funds to service providers and, instead, give it to the consumer. This would take out the administrative burden—on both sides—of auditing. Instead, they could load a credit card every three months with the subsidy funds. For example, if USAC is providing $25 a month, they would put $75 every three months on the credit card. This credit card number would be easily attached to the NV profile for the participant given that, each applicant already has a special NV ID number attached to their “profile.” If the FCC did something of this sort, like a SNAP program, it would reduce the administrative burden of auditing, take away the possibility of money sitting in limbo or in the pockets of service providers when it shouldn’t be, and would streamline assistance to the people who need it.
Price
One of the reasons we saw such success with the Lifeline program when it came to landline services was the amount of assistance the government was providing. With that, to obtain the same level of success, and the benefits that come from that success, it is necessary for us to provide the same level of support.
When Lifeline was created, the consumer received service for the price of $7.82- $26.66, with a subsidy ranging between $2.87-15.86. That averages to about $6.50 subsidy per customer. With an inflation rate that results in $1 in 1996 to be $1.67 in 2020, the average subsidy is $10.33 in today’s dollars. In short, when Lifeline started, the government-subsidized anywhere between 32.41% – 64.9% of the bill.
Today, the average rate for voice is $54.76, with a $9.25 subsidy. A 16.89% subsidy by the government, at least 15% lower than the onset of lifeline and at most, 48% reduction in help. Yet, broadband has been added to this framework. Voice and broadband run the average American $120 a month. Which brings the final number to 7.6% in aid from the government, granted consumers can have assistance for voice or broadband but not both.
My proposal is to have Lifeline subsidy go by the Consumer Price Index (CPI.) Every year the FCC will subsidy 40% of the average broadband bill from the year previous. This would amount to about $25-30 a month, based on the 2018 CPI rates. The 40% comes from an average of the percent of subsidy at the inception of Lifeline.
Application
The application should be left to the FCC, that is, taking away the ability to apply in-store. The private corporations cannot approve these applications, in turn it makes no sense for them to take the paperwork. Instead, the FCC should run an overlay app on the online platform to implement a more accessible platform with more languages. Companies like Google allow for these types of systems. In practice, when the application would ask what language, the PDF would overlay an application in the applicant’s native tongue, they would answer in their native tongue. Once they submitted, the application would turn in an original copy in the person’s native tongue and an English version that has been interpreted by the overlay system.
Takeaways
All in all, these problems already have answers, and the technologies exist to achieve said answers. It only takes a little rework of the rules before Lifeline is a program for broadband. The FCC has a little more than a year to ensure we are spending money to assist the most vulnerable portions of our nation. To keep rules from another era of Lifeline is to be lazy with money that is supposed to go to our citizens.