The infamous “Obamaphone” program that provides subsidized cell phone service to low-income households may soon be expanded to cover broadband.
The Federal Communications Commission announced Thursday it will begin putting together a proposal to update and expand the “Lifeline” program, most notably by giving participants the option of applying the $9.25 monthly subsidy toward broadband service.
FCC Chairman Tom Wheeler described the effort as a “reboot” of the program, which was created in 1985 and last updated in 2012. It is designed to meet the evolving communications needs of citizens. (RELATED: FCC Votes in Favor of Net Neutrality)
“While over 95 percent of households with incomes of $150,000 or more have [broadband] access, only 48 percent of those making less than $25,000 have service at home,” Wheeler pointed out. This forces many low-income individuals to rely on smart phones for Internet access, and according to Wheeler, nearly half of them have had to cancel or suspend smartphone service due to financial hardship.
Wheeler’s announcement is only the first step toward a potential expansion of the program, and specific details will be hammered out over the next few months, CNN Money reports. Regardless of the form the new rules eventually take, though, approval of the final proposal is generally expected because three of the FCC’s five commissioners, including Wheeler, are Democrats.
The two Republican commissioners are nonetheless likely to resist the effort. In February, GOP Commissioner Michael O’Rielly wrote a post on the FCC’s blog outlining the principles he would like to see applied to any expansion of the Obamaphone program. (RELATED: This is What a Republican FCC Commissioner Had to Say About Wheeler’s Net Neutrality Plan)
“I would prefer to ensure that there are adequate controls and deterrents in place before considering a revamp of the program to include broadband,” O’Rielly wrote. “There is a legitimate debate whether the Lifeline program should be abolished or significantly scaled back rather than expanding its mission.”
Conceding that the FCC is likely to go forward with the broadband expansion regardless of his objections, O’Rielly argues the order should at least include certain reforms and limitations, such as imposing a strict budget on the program, prohibiting participants from collecting subsidies for both voice and broadband services, and creating safeguards against abuse.
Last year, about 12 million households received roughly $1.7 billion in subsidies from the Lifeline program, more than double the $809 million the program paid out in 2005, according to The Los Angeles Times. (RELATED: Legal Battle With FCC Not Worth $3 Billion, Advisers Tell DISH)
On the other hand, the $1.7 billion cost in 2014 represents a significant reduction from 2012, when Obamaphone spending hit an all-time high of $2.2 billion. Wheeler attributes the 24 percent decline in costs to reforms the FCC adopted in 2012, and which took full effect in 2013.
The full commission will vote on Wheeler’s preliminary proposal at its next meeting on June 18, and its presumed approval will signal the start of a public comment period during which the FCC will seek input on the exact form that the rules should take.
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