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The FCC wants to modernize US with Lifeline’s low income broadband discounts

rural-broadbandThis week the FCC is working on overhauling its Lifeline service, which is a program that currently provides discounts to low income households so they can have access to cheap phone service. One of the FCC’s main goals in the new order is fraud reduction and better accountability, but there is also a push to modernize the program with the inclusion of making broadband available for those in the low income bracket.

Lifeline is part of the low income focused portion of the Universal Service Fund (USF), a fund created in response to the goals in the 1996 Telecommunications Act concerning abundant access to quality telecommunications services at low rates for all. According to the FCC, since the Lifeline programs beginning the percentage of low-income households with phone service has increased by 12%.

However, the government noticed a little misuse of its funds, so the FCC has set forth with the hopes of eliminating waste, fraud and abuse. The goal to save for 2012 is $200 million, with a three-year goal of $2 billion. The main weapon being used to cut down multiple carriers taking support for the same subscriber, is a National Lifeline Accountability Database. The database will verify consumers’ eligibility, and will supposedly streamline the process for both consumer and provider. The FCC has already seen some success with a similar effort in 2011 where $33 million was saved by cutting out 270,000 duplicate subscriptions in 12 states.

So where is all that “saved” money going? The FCC has decided to use $25 million in savings freed up by the proposed reforms to establish a broadband adoption pilot program. Starting this year the Commission will be meeting with broadband providers in order to decided which projects to fund, and how best to increase broadband adoption among the target group.

The pilot programs idea met with mixed reception. Commissioner Robert McDowell, while agreeing with the aggressive savings plan, did not see the broadband adoption program as practical, saying, “I don’t believe it is fiscally prudent for us to launch pilot programs that are likely to increase the Lifeline program’s costs. We certainly shouldn’t be laying the foundation for inflating the program before shoring up its finances.”

However, Comissioner Clyburn points to the money already spent on broadband-capable networks, and the need to get everyone connected to those networks, saying, “when a segment of our fellow citizens cannot access those networks because they cannot afford to, we are all experiencing a loss.” The program must then evolve to meet the needs of the consumers now and for the future.

Finally, Chairman Genechowski headlines the modernization theme. According to the FCC, one-third of Americans don’t have broadband at home, and most non-adopters are in the low income bracket. According to the Akamai State of the Internet report, the US has a lower adoption rate than Canada, Germany, Spain, France, the UK, Ireland, Poland, Hungary, Romania, South Korea and other countries.

Genechowski says that broadband “has gone from being a luxury to a necessity in the 21st century.” An example is the phone subsidy’s goal to help consumers with job hunts, however, many job postings are migrating to the Internet. This calls for an evolution of the subsidy to keep up with expectations in the job world. Part of the money for the pilot program will go towards subsidy, and the rest will go towards digital literacy training in order to help low income households understand the need to adopt.