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Democrats Said Pushing for $1B or More in Broadband Subsidies

May 8, 2020, 9:01 AM

House Democrats are pushing to include more than $1 billion in the next economic relief package to help pay low-income Americans’ broadband bills, five telecom industry sources familiar with the effort say.

Democrats are said to be considering whether to distribute the aid through the Federal Communications Commission’s Lifeline program, which provides monthly discounts of $9.25 for about 7 million low-income subscribers, or through a new broadband subsidy program, according to the sources, who spoke on condition of anonymity to describe the effort.

The push is aimed at helping millions of low-income Americans and newly unemployed workers afford internet services to help them stay connected with family, look for jobs, and continue school remotely during the pandemic. It’s part of House Democrats’ broadband plan unveiled last week by Majority Whip James Clyburn (D-S.C.).

The Democrats haven’t settled on a dollar figure or a precise approach, the sources said. A spokesperson for House Energy and Commerce Chairman Frank Pallone Jr. (D-N.J.), who is said to be leading the effort, declined to comment. A Clyburn spokesperson also declined to comment.

Congressional action is likely the only way that Lifeline subsidies will see a boost this year.

The FCC could move on its own to expand discounts and eligibility in Lifeline, but the agency’s Republican majority may be concerned that boosting the aid would force the commission to increase a fee on interstate and international calls that funds the program, said John Heitmann, a partner at Kelley Drye & Warren LLP who advises carriers on Lifeline.

“If I’m managing the FCC, and I don’t, I’m looking and hoping that Congress is going to appropriate more money,” Heitmann said.

USTelecom, the trade group whose members include national carriers such as AT&T Inc. and regional phone companies, opposes fee increases to fund a Lifeline expansion and is instead calling for Congress to act.

“The commission could increase the amount of funding that goes into Lifeline right now, but if they were to do that, they would be increasing our monthly phone bill,” said Patrick Halley, USTelecom’s senior vice president of policy and advocacy. “It’s almost self-defeating.”

AT&T, Verizon Communications Inc. and other carriers assess the 19.6% fee on consumer phone bills to funnel money to the $8 billion Universal Service Fund, which pays for Lifeline and three other programs. The commission determines quarterly whether to raise the fee, depending on how much money it spends on the four programs.

Subscribers with incomes at or below 135% of the federal poverty line, or who qualify for Medicaid or food stamps, are eligible for Lifeline funds. Lifeline subscribers receive phone and broadband service mostly from budget phone carriers such as Mexican billionaire Carlos Slim’s TracFone Wireless Inc. and Sprint Corp.'s Assurance Wireless brand.

Senate Democratic Push

More than two dozen Democratic senators have called on congressional leaders to include at least $1 billion for Lifeline funding in the next coronavirus package.

The Lifeline program “needs at least $1 billion in additional funding to meet the needs of a growing number of households during this crisis,” Sen. Richard Blumenthal (D-Conn.), one of the senators making the push, said in a statement.

An additional $1 billion from Congress would more than double the size of the program, which cost $982 million last year.

House Democrats are still weighing whether to enhance Lifeline subsidies or to expand subsidies outside the existing program, the sources said.

TruConnect, a mobile provider that serves about 500,000 Lifeline customers, wants lawmakers to increase Lifeline subsidies so they can offer more data, and expand eligibility so more people can receive the benefit. The company argues that existing Lifeline providers, which must be approved by the FCC to participate in the program and follow rigorous anti-fraud rules, are best suited to serve low-income consumers.

“What is needed is the ability to provide eligible low-income Americans access to telemedicine and e-learning through mobile devices by providing reimbursements for the additional data required by these applications,” Judson Hill, an advisor to TruConnect, said in an email.

FCC Silence

Advocates for increased Lifeline subsidies say the Republican-controlled FCC shouldn’t wait for Congress to act.

More than 250 public interest groups in March asked the commission to grant an additional discount of $50 per Lifeline participant to help low-income households stay connected during the pandemic.

The FCC also should require that plans offer unlimited minutes and texting and increase minimum download speeds, the groups, including Public Knowledge, the AFL-CIO, and NAACP, said in a letter.

The FCC declined to comment on whether it would act on its own. FCC Chairman Ajit Pai is “open to suggestions and will continue to work with stakeholders and Congress on what more could be done,” the commission said in a statement.

To contact the reporter on this story: Jon Reid in Washington at jreid@bloomberglaw.com

To contact the editor responsible for this story: John Hughes at jhughes@bloomberglaw.com; Keith Perine at kperine@bloomberglaw.com

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