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FCC proposes Lifeline update to include affordable broadband, help close digital divide

Matt Hamblen | March 9, 2016
Plan calls for new entity to verify eligibility through databases to reduce fraud

Lifeline has been criticized in the past for fraud and waste. The Verifier approach is designed to make sure only low-income people actually receive Lifeline funds. In 2012, the FCC set up a Lifeline subscriber database to prevent multiple Lifeline subscriptions in a household, which has reduced spending from $2.1 billion in 2012 to $1.5 billion in 2016, according to FCC officials.

By setting up the Verifier and battling fraud, the FCC is hoping to ensure that the money goes to broadband use for more low-income Americans, not waste, an official said.

The Verifier approach will use state and national databases of people who have registered under various programs such as Medicaid and Supplemental Nutrition Assistance Program (SNAP) to determine eligibility, although applicants will also be able to supply other income information to help determine if they are eligible.

One benefit of the Verifier approach is that individual carriers and cable companies would not have the burden of administering the eligibility process and protecting against fraud. FCC officials believe this approach will greatly increase the number of carriers -- as well as first-time participating cable companies -- offering Lifeline support.

The FCC's latest data from 2014 shows that there were 30 major Lifeline supporting companies that year. They included the top provider -- America Movil, based in Mexico -- with $436 million in support in 2014, with SoftBank Corp. (the majority owner of Sprint) in second with $272 million and AT&T in third with $164 million. Verizon was seventh with $47 million.

The Verifier would be administered by the Universal Service Administrative Company (USAC). In turn, USAC is likely to select another entity to be the Verifier, and might not do that job itself, FCC officials said. USAC operates under the direction of the FCC.

FCC officials said that while the $9.25 monthly Lifeline subsidy might not sound like a large enough sum to help reduce the digital divide, they noted that the updated plan would make the program run more smoothly and could attract more providers. This could lead to competition on rates for low-income households. The idea would be to establish a competitive Lifeline broadband marketplace for affordable service, a senior FCC official said.


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