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The Federal Communications Commission today voted to approve a comprehensive overhaul of Lifeline service, which helps tens of millions of low-income Americans afford basic phone service. The FCC also voted to improve data collection and a database to make it easier to verify a consumer’s eligibility and ensure one home doesn’t receive multiple reimbursements for service.

The changes are part of bigger efforts to reform the $9 billion universal service fund which subsidizes phone and Internet service to rural areas. The Universal Service High-Cost program, a part of the larger USF fund, is designed to ensure that consumers in rural and high-cost areas have access to telecommunications services at rates that are affordable and reasonably comparable to those in urban areas.

The Low Income program provides discounts on the installation of telephone and monthly telephone service to low-income consumers. This program has been divided into two programs; Link Up America, which provides a discount on the cost of commencing phone service, and the Lifeline program, with discounts on monthly phone service.

The High-Cost program is meant to ensure that consumers in rural, insular, and high-cost areas have access to telecommunications services at rates that can be afforded and reasonably comparable to those in urban areas. For this, the program provides subsidies to carriers.

The FCC estimates that its reforms will save the government $2 billion over the next three years. Key elements of the reforms include:

  • Setting a savings target of $200 million for 2012, and putting the Commission in a position to adopt an appropriate budget for the program in early 2013 after review of a six-month report and one-year report on the effects of the Order.
  • Creation of a National Lifeline Accountability Database to prevent multiple carriers from receiving support for the same subscriber. The database will build on FCC efforts in 2011 that eliminated nearly 270,000 duplicate subscriptions in 12 states following review of over 3.6 million subscriber records, saving $33 million.
  • Creation of eligibility databases from governmental data sources, enabling fully automated verification of consumers’ initial and ongoing Lifeline eligibility. This would reduce the potential for fraud while cutting red tape for consumers and providers. A database based on the three most common federal benefit programs through which consumers qualify for Lifeline will be created no later than the end of 2013.
  • Establishing a one-per-household rule applicable to all providers in the program, defining household as an “economic unit” so that separate low-income families living at the same address can get connected.
  • Establishing clear goals and metrics to measure program performance and effectiveness.
  • Phasing out support for services such as Toll Limitation – subsidies to carriers for blocking or restricting long-distance service—and ending Link Up – subsidies to carriers for initial connection charges. Link Up will continue in Tribal lands.
  • Reducing burdens on carriers by establishing a uniform, interim flat rate of reimbursement, allowing carriers to obtain a subscriber’s signature electronically, and streamlining enrollment through uniform, nationwide eligibility criteria.
  • Adopting an express goal for the program of ensuring availability of broadband for all low-income Americans.
  • Establish a Broadband Adoption Pilot Program using up to $25 million in savings from other reforms to test and determine how Lifeline can best be used to increase broadband adoption among Lifeline-eligible consumers. Starting this year, the program will solicit applications from broadband providers and will select a number of projects to fund. Lifeline will help reduce the monthly cost of broadband service, but applicants will be expected to help address other challenges to broadband adoption, including the cost of devices and digital literacy.
  • Proposes increasing digital literacy training at libraries and schools.

The reforms met a largely positive response from the wireless industry. CTIA President and CEO Steve Largent said the association was “pleased” that consumers would still be able to choose wireless service under the program and urged the FCC to move quickly on its proposed database.

Bob Quinn, AT&T’s chief privacy officer and head of federal regulatory affairs, was less chairitable.

“No one must pay an 18 percent tax on the electric bill to fund the low-income electric programs,” he said. “One has to wonder why communications consumers are treated differently in this regard.”

The FCC estimated that 9.2 million U.S. households, or about 26 million people, didn’t have access to wired broadband in 2010. Excluding those who can get broadband wirelessly, the number shrinks to 5 million households or 14 million people. That’s 4.5 percent of the population.

Related Dailywireless articles include; FCC Reforms $4.3B USF Fund, FCC Reforms Universal Service, Will USF Funds Subsidize AT&T Buildout? and White Space Legislation Goes Dark

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