Month: September 2018

Suffering heat stroke on an un-air-conditioned Tulsa, Oklahoma, transit bus, Sweet Paula Ogans-Recess’ cell phone may very well have saved her life. Losing consciousness as her complexion flushed, she dialed 911. First responders traced her call, found her, and administered aid.

“I would have died… If it wasn’t for the phone, I wouldn’t be here,” said Ogans-Recess.

It’s why she never leaves home without her phone—a phone Ogans-Recess has because she participates in the Lifeline program, a Reagan-era subsidy initiative.

But now, her participation in the program might be at risk, as she is one of more than 7 million low-income households threatened to be disconnected from their phone service under a government proposal to curtail the federal subsidy program.

Federal Communications Commission Chairman Ajit Pai, appointed to the post by President Donald Trump, wants to remove a majority of wireless providers that participate in the Lifeline program in an attempt to eliminate “waste, fraud, and abuse.”

If such a move were made, the “chaos would be magnificent,” said David Dorwart, the chairman of the National Lifeline Association (NaLA), a trade organization that represents Lifeline businesses.

Roughly 10.7 million Americans receive text, voice, and data under the program, and 70 percent would have to look for a new service provider under the proposal, according to NaLA, if an affordable option is even available. The program cost about $1.3 billion dollars in 2017, and the funding comes from the Universal Service Fund, which is collected from phone subscribers by service providers.

“They get their doctor calls, and they reach out to schools, and that won’t be available to them at the cost it is today,” said Dorwart of Lifeline users. “It’s not only an accessibility issue, it’s an affordability issue.”

Resellers eliminated

The proposal, introduced by the commission in November of 2017, would limit the Lifeline program to providers that own their networks. This would effectively eliminate “resellers,” or providers who instead lease space on a network. Such providers service more than 70 percent of Lifeline participants.

The program has been criticized in the past for fraud. It has been the subject of several reports from the Government Accountability Office, which highlighted “significant risks” for abuse.

In a report from May 2017, the GAO found a system in place that was “susceptible to risk of fraud, waste, and abuse,” because providers have financial incentives to enroll as many participants in the program as possible without diligently verifying whether they were even eligible for the program.

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GAO was unable to verify the eligibility of 1.2 million individuals participating in the program, about 36 percent of the subscribers it reviewed. The agency also found a single address associated with 10,000 separate subscribers who had been receiving benefits from the same provider, whom the FCC had fined and expelled from the program.

However, supporters point toward reforms taken by the Obama-era commission that eventually led to a $50 million national verification system that went live this year.

But without resellers in the market, there will be little need for the verifier.

Opponents of Pai’s proposal, which the FCC could vote on as early as September 26, say his reforms seem to undermine those efforts, which have led to program costs decreasing 30 percent.

Resellers, like TracFone and I-Wireless, are able to offer cheaper wireless coverage by leasing the networks and infrastructure of facilities-based providers like Verizon, AT&T, and Sprint. Resellers profit from marketing more affordable wireless alternatives, and larger providers profit from leasing their excess capacity to resellers.

Over 90 percent of Lifeline participants use their subsidy for wireless service.

The FCC did not include a transition plan for providers that would lose customers or for users who would lose coverage as a result of the proposal. Instead, the agency asked the public to comment on what a transition should look like and how it would be implemented.

Diverse group of opponents

Everyone from low-income advocates to the conservative Citizens Against Government Waste, to large Internet service providers like Verizon and Sprint, agree that Pai’s decision might do more harm than good—and that network-owning providers aren’t interested in picking up the slack.

Sprint is one of the largest providers in the country participating in the Lifeline program and will likely be the only low-cost wireless option available for many if the FCC enacts its rule. Sprint’s Lifeline brand, Assurance Wireless, offers free minutes, texts, 1GB of data monthly, and a free Android smartphone for qualifying households.

Outside of Lifeline, a Sprint phone plan typically costs at least $65 a month for one line.

But activists fear that Sprint’s participation in the Lifeline program may be threatened by the company’s planned merger with T-Mobile, a carrier that only provides Lifeline services in a limited number of states and has actively sought to distance itself from the program.

When asked, a Sprint representative said that the company did not “anticipate any impact to our current Lifeline subscribers as a result of the merger” and that the new company created by the merger was committed to serving its Lifeline customers.

Pai, appointed as chairman of the FCC in early 2017, has long been critical of the Lifeline program. Appointed by President Barack Obama to join the commission under former Chairman Tom Wheeler, Pai voted against the program’s modernization in 2016. He did not mention a desire to eliminate resellers in his dissent.

But in November 2017, after his proposal was released, Pai said the commission will take a “hard look at wireless resellers—the group of Lifeline providers that have been the subject of the vast majority of Commission investigations for waste, fraud, and abuse.” The chairman has the votes needed to proceed; Republican commissioners that make up the majority have voiced support for the proposal.

Verizon said in a comment on the FCC’s proposal that “restricting Lifeline support to facilities-based carriers is unlikely to materially improve the business case for broadband deployment in high-cost areas.”

“The proposed exclusion of resellers from the Lifeline program would be highly disruptive to existing Lifeline beneficiaries and is at odds with the Commission’s goal of supporting affordable voice [service] and high-speed broadband for low-income consumers,” Verizon added.

CTIA, the trade organization representing large wireless telecommunications companies, including AT&T, told the FCC that it was concerned about the proposed reforms. They would “negatively impact millions of low-income consumers who rely on wireless supported lifeline services,” CTIA said in its comment.

“It’s a direct attack on the poor,” said Jessica González, deputy director of Free Press, a consumer advocacy group that supports equal access to communications services. Before attending law school, González participated in the Lifeline program after she was let go as a teacher in the suburbs of Los Angeles.

González pointed out that the least-connected groups across the country are often minority and low-income groups. “There may not be discriminatory intent, but there certainly will be a discriminatory impact from the proposal… It’s the cruelest thing I’ve ever seen out of the FCC.”