Proponents call it necessary for bridging a societal gap. Opponents call it wasteful and beyond the point of reform. Call it what you like, the long-running controversial “Obamaphone” debate has once again been ignited. FCC Chairman Tom Wheeler has announced a proposal to extend the Lifeline phone subsidy program, better known as the “Obamaphone,” to now cover the internet.
The program finds its roots during the Reagan era and was created by President Reagan to serve the purpose of providing discounts for basic phone services. Fast forwarding to 2007, in addition to landline services, the FCC began allowing the subsidies for cell phones and prepaid wireless providers under President George W. Bush. During this time, the number of program participants skyrocketed from 7 million in 2008 to 17 million in 2012. The number dropped to 12 million last year when the FCC attempted to make reforms against misuse and duplication of program participants.
Currently, Lifeline is funded by a universal service fee that is placed on consumers’ phone bills. The subsidy program pays phone carriers to lower phone costs to $9.25 a month for the benefit of low-income households. Extending Lifeline is the latest development of the FCC’s attempt to regulate and reform broadband and is a good indicator of the new regulatory burdens included in the FCC’s ongoing efforts to regulate the internet. But this new proposal exposes the obvious: “expanding Lifeline means new broadband taxes and higher taxes overall on telecom services.” As it stands, Lifeline is the only USF program that doesn’t have a budget or a cap of any kind.
Democratic FCC Commissioner Mignon Clyburn is a strong supporter of expanding the entitlement program, claiming it simply recognizes how society communicates today. Clyburn and other supporters insist the expansion is a critical need of our country and we must meet it. Clyburn differentiates in how the internet program should be set up though. Instead of replicating Lifeline in the sense of having phone providers determine who qualifies for the subsidies, eligibility for the Lifeline expansion would be automatic if a person qualifies for food stamps or free school lunches.
Still there is huge pushback from some Republicans and opponents remain unconvinced that extending Lifeline to the internet will be effective. The program has a well-known reputation for its immense fraud and abuse. David Vitter (R-La.), well aware of this reputation stated, “[t]he free government cell phone program is beyond reform and should be ended.” Despite the FCC’s many attempts to the reform the program, criticism remains high and support for expansion will most likely remain low. Senate Commerce Committee Chairman John Thune (R-S.D.) remarked, “[a]n expansion of the program is probably not something there’s going to be a lot of support for.”
Once again though, the burden falls on the taxpayer. Because Lifeline operates with no budget or cap, fees automatically will increase each year in order to keep up with the tax on broadband and the higher tax on telecom services. Chairman of the House Energy & Commerce telecom subcommittee Greg Walden (R-Ore.) commented, “[t]his is still taxpayer, ratepayer money, and I think it’s important for us to do some oversight in that area, to look at how it’s being spent, who’s getting it, what are the controls.”
Wheeler is set to circulate this plan for a vote during the agency’s upcoming meeting on June 18th amidst the controversy of the FCC’s new internet regulation rules.