Sound Principles for Lifeline Reform

Over the last few years, the Federal Communications Commission has taken action to reform each of its universal service distribution programs to refocus them on broadband. The only program outstanding is the Low-Income or "Lifeline" program. Over time, Lifeline began to pay for prepaid wireless service, and the "discount" often covers the entire monthly bill. That shift has more than doubled the size of the program. It also created problematic incentives that opened the door to waste, fraud and abuse that have never been sufficiently resolved. This is unacceptable. Since the FCC appears ready to press forward notwithstanding the need for fundamental review, it seems appropriate to outline certain principles for any Lifeline reform effort in order to garner my consideration:

1. Set a budget for Lifeline
2. No increase in the reimbursement rate for broadband
3. Limit services eligible for support
4. Prohibit double dipping -- The one per household rule provides an important check on spending and must be retained as the program shifts to broadband.
5. Better target funding to those who really need it -- Recent research has suggested that 7 out of 8 Lifeline subscribers (and 19 out 20 wireless Lifeline subscribers) would have subscribed to a phone service even without a subsidy.
6. Tighten eligibility requirements -- Instead of setting the income eligibility threshold at 135 percent of the federal poverty guidelines, it could be set lower, which would focus funding on fewer subscribers that are most in need.
7. Require a minimum contribution -- In other universal service programs, beneficiaries have been required to pay in at least 10 percent (which is still too low). We should expect the same in the Lifeline program.
8. Carrier participation should be voluntary
9. Automatic safeguards against abuse -- We could automatically halt payments to a provider for new subscribers, pending further review, if the provider suddenly increases its number of subscribers by an improbable amount defined in advance
10. Require document retention