FCC has determined that competition for voice (telephone) services has increased dramatically and that prices for voice services are in decline. Moreover, the FCC found that the vast majority of households in the United States today have access to telephone service. In 1985, after the divestiture of AT&T, the Federal Communications Commission (FCC) established a low-income telephone assistance program known as the federal “Lifeline” program. Congress codified the FCC’s program with the passage of the Telecommunications Act of 1996, grounding it in principles of “universal service” – the concept that telephone service should be affordable and available to all. Since 1996, the telecommunications industry has undergone dramatic and rapid change. In 1996, the telephone remained the dominant form of communication for American consumers. However, in 2016, the FCC has determined that competition for voice (telephone) services has increased dramatically and that prices for voice services are in decline. Moreover, the FCC found that the vast majority of households in the United States today have access to telephone service.
Since 1996, the FCC found that broadband has become an essential service in the everyday lives of all Americans. The FCC found that 84 percent of Americans access the Internet. When American have access to the Internet at home, 95 percent use it. Finally, two-thirds of American households subscribe to broadband service. The FCC reasoned that if broadband lifeline is created where access is made more affordable to low-income consumers, more consumers will purchase broadband services, which will provide incentives for more broadband deployment to areas and populations that lack access to the service.
Given these transformative developments, the FCC issued its Lifeline Modernization Order April 27, 2016. The order redirects Lifeline funds, historically dedicated to subsidizing voice telephone services for low-income consumers, to be used to subsidize broadband services for low-income consumers. The order implements this shift of focus over a five and a half year transition period, during which the FCC will gradually decrease federal support for standalone voice services. Specifically, the new FCC rules phase in a requirement that to be eligible for Lifeline support, a voice service must be bundled with broadband service, thereby phasing out support for voice service as a standalone subsidized service.
The Lifeline Modernization Order establishes a new “National Verifier” system for determining eligibility for the Lifeline program. By Dec. 31, 2019, all 50 states will be required to use the National Verifier to make subscriber eligibility determinations for the federal Lifeline program. The FCC envisions the National Verifier’s electronic subscriber certification process will produce “near real-time results.” Subscribers will be able to interact directly with the National Verifier.
The Lifeline Modernization Order also streamlines the Lifeline subscriber eligibility determination process. It does so by reducing the number of federal programs in which participation automatically qualifies a household for Lifeline assistance. Specifically, participation in the Low Income Heating and Energy Assistance Program (LIHEAP), National School Free Lunch Program (NSLP) and Temporary Assistance for Needy Families (TANF) no longer automatically qualify a subscriber for the Lifeline program. However, receipt of veterans pension or survivors pension now qualify a subscriber for the Lifeline program. In addition, the order amended the definition of “income” to align with the IRS definition of “gross income” simplifying what a consumer must show in order to be eligible based on the FCC’s independent income eligibility test. This change, the FCC reasoned, makes it easier for electronic verification of eligibility by verifying representations of income level through a single source. Finally, the order prohibits state specific eligibility criteria for federal Lifeline support. The Lifeline Modernization Order also adds a streamlined federal process for certifying Lifeline Broadband Providers (LBPs).
Minnesota has a state analog to the federal Lifeline program called the Telephone Assistance Program (TAP). The Minnesota law and FCC’s rules are closely intertwined with the federal Lifeline program. The Minnesota Public Utilities Commission has opened a proceeding seeking comments on what changes, if any, should be made to the Minnesota TAP program in light of the FCC’s Lifeline Modernization Order. The Minnesota Governor’s Broadband Task Force is also studying whether the Minnesota TAP program needs to be reformed in light of the FCC’s Lifeline Modernization Order. In the short term, there may be limited and modest changes the FCC can make to the state TAP program, but any fundamental, longer term changes will need to be considered by the Minnesota legislature. Tony Mendoza