FCC's Pai Explains Lifeline Moves

Says story was sensationalized; 'mundane' truth is process needs more work

FCC chairman Ajit Pai posted his first official FCC blog item to correct what he said had been sensationalized and misleading reporting about the FCC's move to rescind nine Lifeline subsidy authorizations. He did not point fingers at any story in particular.

Based on some "of the coverage, one would think that we had ended Lifeline broadband subsidies altogether," he wrote. "So I want to set the record straight about the modest steps we have taken and why we have taken them….Hyperbolic headlines always attract more attention than mundane truths."

The chairman wanted to point out—and did—that the move only affected nine of the 900 companies participating in the Lifeline program, which is meant to provide essential communications services to low-income residents. "In other words, 99% of the companies participating in the program are not affected at all," he said.

He also wanted to clarify that only one of the nine had any customers yet.

Pai pointed out that those nine had not been rejected outright but were still "pending."

The decision to rescind them was among a number of Pai FCC moves affecting decisions under former chairman Tom Wheeler that came after the election, and Pai made clear that was also a factor.

"Many of these designations were approved in the last days of the last Administration (two days before Inauguration Day, over the objections of two of the four Commissioners, despite the fact that the FCC’s congressional oversight committees had requested that the Commission not take controversial actions during the transition between Administrations (consistent with the request from those same committees during the Republican-to-Democrat transition in 2008–09)," he said. "Thus, a majority of Commissioners never supported approval of these designations."

On Friday, Pai's acting bureau chief revoked the eligibility and accompanying streamlined treatment, citing a National Tribal Telecommunications Association petition to reverse the eligibility on some of the companies and because it would "promote program integrity by providing the Bureau with additional time to consider measures that might be necessary to prevent further waste, fraud, and abuse in the Lifeline program."

Pai complained that the FCC under his predecessor, Tom Wheeler, had failed to sufficiently root out such abuse.

Citing what it said were "shortcomings in the Bureau’s prior orders" and "procedural failings" including allegedly not informing tribal governments that they were seeking eligibility from the FCC, acting bureau chief Kris Monteith said the bureau "cannot conclude at this time that LBP designations are in the public interest for any of the entities…"

That drew a lot of pushback from Lifeline advocates, including from the Hill, the Communications Workers of America and the American Library Association.

But Pai made it clear in his blog that the process needed vetting before more companies were allowed to participate in the program.

"[E]very dollar that is spent on subsidizing somebody who doesn’t need the help by definition does not go to someone who does," he said. "That means that the Commission needs to make sure that there are strong safeguards against waste, fraud, and abuse before expanding the program to new providers."

"Chairman Ajit Pai has stepped in to call time out.  He has not rejected the designations but merely asked the bureau to withdraw them," Bruce Mehlman, co-chair of the Internet Innovation Alliance (IIA), blogged in defense of Pai's Lifeline time out. "For this, some now criticize him."

"This entire controversy, however, appears to be nothing more than theatre and overreaction," Mehlman wrote. "As his other actions – in particular, setting up a task force on ways to bring broadband to underserved communities – have shown, Pai is passionate about bringing high-speed broadband to every corner of the country. But as with other midnight regulations, it’s wise to take a pause and see whether they are really necessary or, as here, what the impact would be of letting them go forward."