FCC Moves to Reform Phone Subsidies Program for Low-Income Americans

The Federal Communications Commission on Thursday proposed reforms to modernize a $1.3 billion program that provides discounts to make basic telephone service affordable for millions of low-income Americans. 

The agencys Notice of Proposed Rulemaking is the first step in a regulatory process to reform a program that has more than doubled in size over the last decade.  

The Universal Service Funds Lifelink/Link Up program provides reductions of approximately $10 per month on wired and wireless telephone service and discounts of up to $30 for connection charges. 

The FCC Thursday said the program does not reflect changes in technology, markets and regulations.

Among other objectives, federal regulators are aiming to strengthen protections against fraud, waste and abuse. The FCC wants to verify that only eligible households receive discounts, prevent phone companies from receiving support when they have not provided service to a customer in months and ensure that multiple carriers are not obtaining subsidies to serve the same house.

The FCC also has proposed placing a cap on the size of the program in order to reduce the burden on consumers and businesses who contribute to the Universal Service Fund. Over the last 10 years, the Lifelink/Link Up program alone has ballooned in size from $577 million to more than $1.3 billion, according to FCC Commissioner Meredith Attwell Baker.

I support our efforts to address the need for real cost containment, and to recognize that in difficult economic times escalating contribution burdens on consumers can create their own affordability challenges undermining our efforts,” she said in a statement.

The FCC also has proposed introducing pilot programs to test strategies for supporting broadband service as well as allowing discounts to be used for bundled voice and high-speed Internet services.

Less than half of low-income Americans have subscribed to broadband, and one-third of Americans who have not purchased broadband, say they have not done so due to the expense of obtaining such service,” FCC Commissioner Mignon Clyburn said in a statement. We also know that for those consumers who are struggling to pay for their basic needs, there is very little discretionary income left to afford broadband service.”

The agencys proposals are part of a broader effort to reform the Universal Service Fund, which provides billions of dollars in communications subsidies to low-income Americans, schools and libraries, rural health care providers and areas that are expensive to serve.  

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