These past few months have been especially proud ones for me at the Federal Communications Commission for one very simple reason: I have had the privilege of being part of a team that put the principles of smart government to work. Yesterday, the Commission released a bipartisan Order comprehensively reforming the Lifeline program, the culmination of months of effort to clean-up and modernize this vital program.
Lifeline is a program that helps low-income Americans afford phone service by providing them with a monthly discount on their phone bills, averaging $9.25, paid for by our universal service fund. The program has been around since 1985, and over that time, the percentage of low-income families with phones has increased from 80% to nearly 92%. But the program’s problems have also increased, especially after the Commission in 2008 made it easier for pre-paid wireless providers to participate.
The pre-paid services proved very popular, in part because the companies priced their plans so the Lifeline subsidy covered the whole bill, allowing them to advertise “free” phones. Unfortunately, Lifeline’s rules were built for the kitchen phone, not the cell phone. As a result, some consumers got multiple subsidized phones – something that didn’t happen in the hard-wired wall phone days. Some companies were enrolling consumers who weren’t eligible. Some companies were collecting a $30 bounty every time they signed someone up..
The Commission started the process of reforming the Lifeline program with the release of the National Broadband Plan in early 2010. Shortly thereafter, we asked the Federal-State Joint Board on Universal Service to examine the Lifeline program and offer recommendations for reform, which it did. Last year, the FCC proposed rules that built on the Joint Board’s recommendations. But we didn’t wait for a comprehensive reform to take concrete steps. Last June, we issued an Order to start cleaning up one of the most glaring problems: duplicate subscriptions. Working with industry, the Lifeline program administrator scrubbed some 3.6 million subscriber records in 12 states, and by the end of the year, eliminated 270,000 duplicate subscriptions, saving $33 million. This process will expand to additional states in the months ahead.
Continuing this important work, last Tuesday the Commission adopted an Order approving comprehensive reform, with unanimous support for the overwhelming majority of the item, and today we are releasing that Order. The reforms adopted by the Commission include building a database that will end duplicate subscriptions forever. A second database will determine eligibility on-line, which will ensure only those who are truly eligible can enroll in the program. We killed the wasteful Link Up subsidy. And there’s more; all told, reforms will save up to $2 billion over three years. We’re going to use some of that savings -- $25 million – to look at how Lifeline can better help low-income families in an era when high-speed Internet has become essential.
I’m proud that the FCC acted so comprehensively – and so boldly, with input from so many diverse interests -- to fix this program. We’ve preserved a vital part of the safety net: affordable access to a phone to find a job, track down a child, or call 9-1-1. We’ve kept program costs in line. And we’ve looked ahead, beginning to orient the program to the broadband future. In my book, that’s what smart government is all about.