Federal Communications Commissioner Michael O’Reilly penned a recent article in which he provocatively teased readers by saying, “I expect some changes to Lifeline in the not-too-distant future.”
O’Reilly admits that the Lifeline Assistance program grew so rapidly that it “created problematic incentives that opened the door to waste, fraud and abuse that have never been sufficiently resolved.” But instead of tossing the proverbial baby out with the bath water, the Commissioner suggests a series of steps that will assure the viability and integrity of the program well into the future.
Of greatest interest to us was this paragraph:
“I would prefer to ensure that there are adequate controls and deterrents in place before considering a revamp of the program to include broadband. In fact, the Commission is still grappling with the consequences of its previous expansion, so we need to be very cautious about further changes. Moreover, there is a legitimate debate whether the Lifeline program should be abolished or significantly scaled back rather than expanding its mission. I would be open to having a thoughtful debate on the best way to address a perceived need in this communications area rather than bootstrapping the old program with new responsibilities.
This is very good news for consumers. First, O’Reilly confirms our long held belief that the high-speed broadband internet service is coming. We’ll admit that it hasn’t come as quickly as we had hoped for. In fact, we ran an article in mid-2014 predicting that Lifeline Internet (or Lifeline Broadband) would be announced before the end of the year. Our prediction may have been inaccurate in when, but we believe it will eventually be borne out.
Second, we have no fear in regard to O’Reilly’s question as to whether Lifeline should be abolished or significantly cut back. There’s an old saying in Washington, DC that says, Once an entitlement is given, it’s impossible to be taken away.” In other words, politicians live in fear of angering voters. Lifeline has become vital to so many voters that it will be virtually impossible to round up enough votes to eliminate or even scale back the program.
Third, yes, Commissioner O’Reilly, let’s have that discussion about the future of Lifeline. With that in mind, here are his ideas for reforming this valuable program (and our comments following them in parentheses)
“Set a budget for Lifeline.” (Absolutely right, Commissioner. If there’s been one overriding problem with the Lifeline Assistance program, it’s that it hasn’t been handled like a business. O’Reilly argues that Lifeline isn’t an entitlement program and he is correct that it is different than Medicare and Social Security. Nevertheless, we agree that budget controls must be put in place, every dollar treated like the valuable asset that it is, and fraud must be eliminated.)
“No increase in the reimbursement rate for broadband.” (O’Reilly says some proponents of expanding the program to include broadband argue that rates should be increased, but he is against that expansion. We disagree. Lifeline cell phone companies manage to make a profit on a reimbursement rate of $9.25 per month per customer. But broadband is considerably more expensive to deliver to customers and will require more than $9.25 a month to provide any service worth using. You may ask, but how can Comcast’s Internet Essentials offer high-speed, unlimited cable internet for only $9.95 a month? They are able to do so because it’s being subsidized by the standard internet access plans it offers other customers; and the FCC “suggested” they offer Internet Essentials as a condition of approval for their acquisition of NBC. If we want to have widespread options for broadband under the Lifeline program, the reimbursement rate should be raised.)
“Limit services eligible for support.” (Some proponents say customers should be allowed to apply the discount to any service — wired, wireless, broadband, whatever. We wholeheartedly agree with O’Reilly when he says, “Only the Commission can determine which services are supported, and there are limits on what may be funded directly or as a condition of receiving support.” Fraud, waste and abuse are difficult enough issues now and indiscriminately opening the program up at this point can only exacerbate the issue.)
“Prohibit double dipping.” (Here we disagree with O’Reilly. He thinks a household should be allowed to get one discount — the consumer’s choice of Lifeline voice service or broadband service or one discount on bundled services. C’mon, Commissioner, here in the 21st Century we call it providing the needy with basic services, not double dipping.)
“Better target funding to those who really need it.” (O’Reilly believes research that says most Lifeline customers would have subscribed to phone service even without a subsidy. He asks for further comment on the issue. May we suggest that you read some of the heartbreaking comments left by readers of FreeGovernentCellPhones.net. If they don’t convince you of the necessity of the Lifeline program, nothing will.)
“Tighten eligibility requirements.” (O’Reilly thinks the FCC should investigate the income levels at which people are eligible. He thinks 135% of federal poverty guidelines may be too high and make that it should be lowered to help assure that participants are truly needy. Although we abhor the thought of eliminating those who truly need Lifeline Assistance, we agree that eligibility standards should be tightened to eliminate fraud, waste and abuse.)
“Require a minimum contribution.” (O’Reilly points out that many programs require participants to contribute at least 10% of the unaided price and that charging a minimum fee — such as $1 per month — would help reduce fraud, waste and abuse. On one hand, we understand his point and don’t completely disagree with it. On the other hand, we must stand against O’Reilly on this one. We’re not against it because we believe a customer cannot find a dollar or two a month, but because just the process of making the payment will be a barrier for many Lifeline cell phone users. Over the course of running FreeGovernmentCellPhones.net, we have learned that Lifeline users are often not very technically proficient and could have trouble processing a monthly payment electronically. To make matters worse, the Lifeline cell phone companies’, shall we say, streamlined support services would likely be of limited assistance with payment issues that could arise. On top of that, a large number of Lifeline customers do not even have credit cards with which to make monthly payments. And we didn’t even get into the additional expenses for the cell phone companies which would of course be passed along to customers either in even poorer service, lower quality phones or fewer minutes and text.)
“Carrier participation should be voluntary.” (The Federal Communications Commission currently requires all telephone companies to participate in the Lifeline Assistance program. Most of them have no real interest in the program, bury it on their websites, and offer discounts but not free government cell phones. This is a silly waste of resources considering the dozens of companies set up specifically to participate in the Lifeline program. We agree with O’Reilly — let those who want to participate do so without forcing it upon those who don’t.)
“Automatic safeguards against abuse.” (O’Reilly suggests some commonsense ideas such as automatically halting payments — pending further review — if a Lifeline Assistance provider sees a sudden, unexplained increase in its customer base. Great idea, Commissioner O’Reilly. We believe that will help stop waste, fraud and abuse.)
“Require document retention.” We find it hard to believe that providers have not been required to keep documentation of a subscriber’s eligibility to provide greater oversight. This one makes so much sense that we’re actually shocked to discover it isn’t already and hasn’t always been the case. This is 2015 — Hillary Clinton may be allowed to erase the past, but Lifeline free government cell phone providers shouldn’t.
In conclusion, we agree with many of Commissioner O’Reilly’s proposals. He’s not a fan of the program and he seems to be against the proposed Lifeline Broadband concept, but that doesn’t mean he hasn’t given the free government cell phone program a lot of thought. He may want fraud, waste and abuse eliminated for different reasons than we do, but we both agree that they must be eliminated by whatever means necessary.
Many of his ideas are excellent and should be instituted without delay.