FCC's Pai Offers 'Fiscally Responsible' Lifeline Alternative

Would cap subsidy at $1.75 billion, reduce payments when ceiling was near
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As the FCC prepares to vote on chairman Tom Wheeler's proposal to reform the Lifeline advanced telecom subsidy, principally by migrating it to broadband, senior Republican commissioner Ajit Pai has gone public with what he bills as a fiscally responsible compromise proposal.

The Lifeline program is the Universal Service Fund subsidy for advanced telecommunications service to low-income Americans. The subsidy to eligible carriers is $9.25 per month. The FCC is planning to vote Friday on a plan to migrate that away from stand-alone voice to broadband or bundled voice and broadband and to increase the subsidy.

For starters, Pai says the fund should be capped at $1.75 billion—the chairman's proposal would increase it to $2.25 billion.

Pai is all for modernizing the program but says that "failing to clean up the waste, fraud, and abuse in the program puts the entire enterprise in jeopardy."

The chairman's proposal does target waste, fraud and abuse, including getting eligible telecoms out of the business of verifying participants. Pai clearly wants more.

Pai says the $1.75 billion should be enough to offer Lifeline supported Internet "to every single Lifeline-qualifying household that isn’t online today, as well as to maintain landline voice service as proposed by Chairman Wheeler."

Pai also wants to automatically reduce payment to carriers when the estimated costs of the program exceed that budget.

Wheeler has a mechanism to raise red flags when the money is running short but not an automatic reduction in payments.

Pai also wants to eliminate the enhanced subsidy of $25 per sub for counties with more than 50 people per square mile. He says that while the subsidy was intended to help build out facilities in Indian country, it has encouraged abuse of the program in big cities including Tulsa, Reno and the Oklahoma City suburbs.

Finally, Pai says the minimum standard for fixed broadband should be 25 Mbps downstream—the chairman's proposal is 10 Mbps—for fixed and 4G LTE or wireless.  "As Chairman Wheeler has put it, these speeds are 'table stakes' for digital consumers in the 21st century. I believe low-income families and students deserve a seat at the table," he said in announcing his proposal.

Wheeler’s proposal said it was basing the 10 Mbps on what “a substantial majority of consumers receive” and data at 3G speeds.

Pai has been spotlighting what he says was the FCC and Obama administration’s failure to get advanced telecom to the nation in a reasonable and timely fashion. That is the conclusion the FCC has been drawing in recent reports, and Pai want to make sure the Administration does not try to take credit for broadband buildouts and adoption at the same time it is saying to the commercial sector that the buildout has not been reasonable and timely, in part based on that “aspirational” high-speed definition of 25 Mbps.

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