Real Lifeline reform on tap

The FCC is poised to reform a Reagan-era program designed to keep low-income Americans connected to core communications services.  In Reagan’s time, this meant voice; now it means broadband.

This reform has particular importance for cities. As a bipartisan group of 44 mayors observed in a letter supporting reform, “Getting more low-income households online will help modernize delivery of public services—facilitating more responsive and effective governance while lowering overheads for local governments. E-government delivery also saves the public the expense of visiting government offices in person …. Taking advantage of e-government frees public beneficiaries from losing wages if they are paid hourly, and it allows easier and more ubiquitous access to opportunities and resources.”

The mayors correctly anticipate how a local government can both improve itself and the lives of its residents when all are online. Still, this is also an appropriate moment to look back to consider critical lessons on the nature of successful reforms.

It’s been clear, at least since the 2010 National Broadband Plan that the FCC should reform Lifeline, as the program is called, to include broadband. Unfortunately, the subsequent 2012 FCC effort failed to do so. Rather, the 2012 effort focused largely on steps to reduce waste, fraud, and abuse. While those steps had merit, they did not go to the root of the problem: relying on carriers to certify the eligibility of the program recipients, which creates incentives for fraud and abuse. Moreover the reforms neither enabled the transition to broadband nor created a competitive dynamic to improve value for Lifeline customers. The reforms were limited, in part in an effort to obtain Republican support, and in part because the then FCC chairman focused his personal efforts on a new non-profit to encourage broadband adoption. There is nothing wrong with a non-profit effort. Its impact, however, pales in comparison to the impact of real Lifeline reform.

Fortunately, Commissioner Mignon Clyburn understood the initial efforts were not enough. She articulated principles for a real reform package at an American Enterprise Institute event in November 2014, principles current Chairman Tom Wheeler and the staff adopted in moving the process forward.  At their core, the reforms do three things: allow the subsidy to purchase broadband, transfer the obligation to certify to an independent third party, and lower barriers to carriers offering programs for Lifeline-eligible customers. All are necessary, but the last is often overlooked.

Currently, the major carriers find the administrative costs too burdensome, yet the best way to improve the program’s effectiveness is for carriers to compete for that market segment. Fortunately, national providers are starting to compete for that market. Reducing the carriers’ costs to participate in Lifeline should add fuel to the competition that can ensure recipients will receive a lot more bang for the program’s bucks.

These reforms are far reaching, combining the desire for greater efficiency and improved value for recipients. I can’t predict whether the Republicans at the commission will endorse them but it is notable that the reforms have garnered support from a broad spectrum of stakeholders, as indicated by a letter signed by six major carriers and a dozen diverse community groups. Bipartisanship is good but, as the 2012 effort suggests, such support should be the consequence of solid policy analytics, not the principal objective.

It is unfortunate the FCC did not adopt the 2016 reforms in 2012.  The benefits the mayors described could be today’s reality instead of a remaining aspiration. Nonetheless, the reforms demonstrate that the federal government still has within it to course correct and in so doing, lay a foundation for a better future for all.