2016 Called. It Wants to Know How Lifeline is Doing

Friday, July 9, 2021

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Round-Up for the Week of June 5-9, 2021

Kevin Taglang
Taglang

In 2016, the Federal Communications Commission adopted a comprehensive reform and modernization of its Lifeline program. For the first time, the FCC included broadband as a supported service in the program, allowing support for stand-alone mobile (think cell phone) or fixed broadband Internet access service (think home broadband service delivered over a wire), as well as bundles including fixed or mobile voice and broadband. But the 2016 decision also set out to zero-out support for voice-only services.

With such major changes to the program, the FCC’s 2016 Lifeline decision included two mechanisms to review the impact of the reforms. As we noted back in March, the FCC directed its Wireline Competition Bureau, by June 30, 2021, to review the Lifeline program and submit a report to the full FCC recommending whether action should be taken to adjust course. To help inform that report, the FCC also mandated that the Universal Service Administrative Company (USAC), which administers the FCC’s universal service programs (including Lifeline), obtain an independent program evaluation of the Lifeline program’s design, function, and administration by December 31, 2020 so that the evaluation’s findings could be incorporated, as appropriate, into the State of the Lifeline Marketplace Report. Both of these reports became available last week.

Independent Program Evaluation by Grant Thornton

USAC contracted Grant Thornton Public Sector LLC (Grant Thornton) to conduct an independent program evaluation to determine the extent to which the Lifeline program is efficiently and effectively achieving its performance goals. The FCC and USAC identified four specific goals for the program evaluation:

  1. Determine the Lifeline program’s effectiveness at providing affordable voice and broadband services for low-income Americans;
  2. Determine whether the administrative burden placed on consumers impacts program participation;
  3. Determine the cost-effectiveness of the Lifeline program, including the contribution burden on consumers and businesses; and
  4. Determine the effectiveness of Lifeline program operations and administration.

Apparently, Grant Thornton completed this evaluation back in early February 2021. Here are the key findings:

  • There is a notable absence of a Lifeline Program strategic plan which details the means by which USAC can implement FCC’s policies to achieve the program’s intended outcomes and measure results based on FCC-developed performance measures.
  • Despite current USAC information outreach methods, low-income consumers are generally unaware of the Lifeline program or USAC, which may be limiting consumer program participation.
  • The Lifeline program has been successful in providing a free/low-cost option for voice and broadband service for consumers.
  • The penetration rate for broadband has been increasing for the low-income consumer group; however, program participation rates have been decreasing over the same time period. There is no evidence to support whether or not the Lifeline program has improved access to voice and broadband services for low-income consumers.
  • This evaluation could not determine whether the Lifeline program has been effective in addressing challenges in the low-income community such as the “Homework Gap” among school-aged children, the digital divide, or socio-economic mobility in low-income families due to lacking data to link program participation with these dimensions.
  • The phase-down and ultimate phaseout of voice services by December 1, 2021 may negatively impact 797,454 (9.95 percent) consumers who use voice-only services for fundamental needs.
  • USAC’s Companies Near Me tool may not provide participants an accurate listing of service providers serving their community due to data completeness issues resulting from the tool relying on self-reported information from carriers.
  • USAC has successfully improved the application process and reduced the administrative burden on consumers by automating the eligibility determination process through implementation of the National Lifeline Eligibility Verifier (National Verifier), the application process created to check a person’s eligibility to participate in the program
  • The evaluation found no substantial evidence to determine whether the National Verifier has been successful in enhancing consumer choice. Grant Thornton noted that the evaluation was finalized less than a month after the final hard launch for the National Verifier system, but the firm had found no evidence of increased competition among providers to serve Lifeline consumers.
  • The eligibility check application programming interface (API) has been an effective means for carriers to help consumers enroll in the Lifeline program and has addressed carrier requests for USAC to provide more automated tools to enhance the enrollment process.
  • The Lifeline online application process has improved with implementation of the National Verifier. However, Grant Thorton noted several areas for improvement in the online application process and user interface.
  • The Lifeline program’s design, including implementation of the National Verifier and expansion of automated data connections have created cost efficiencies and protect program resources against fraud, waste, and abuse. However, USAC’s administrative costs relative to program enrollment and the number of eligible low-income households have been steadily increasing since 2011 and should be monitored to determine whether program changes achieve the FCC’s goal of reducing costs on carriers and consumers.
  • Grant Thorton was unable to determine whether the Lifeline program’s design minimizes costs for carriers due to the lack of published carrier cost data.

State of the Lifeline Marketplace Report

On July 2, the FCC’s Wireline Competition Bureau released its report on the state of the Lifeline marketplace, in part informed by the Grant Thorton research. The aim was to identify areas for FCC consideration regarding the continued transition of the Lifeline program from a program that primarily supports voice services to one with a greater focus on supporting broadband Internet access service. 

From the Wireline Competition Bureau we learn:

  • For low-income consumers, high-speed data adoption rates are much lower than they are for households that are not low-income. In 2019, 86.4% of Americans had high-speed data but only 64.2% of households with an annual income of $20,000 or less had high-speed data service.
  • As of June 20, 2021, approximately 6.9 million subscribers were enrolled in the Lifeline program.
  • Approximately 94% of all Lifeline subscribers subscribe to a mobile service.
  • Lifeline subscribers are now more likely to participate in plans that have a broadband component; the largest service category is the bundled voice and broadband category, where both services meet the Lifeline minimum service standards. More than 52% of Lifeline subscribers received this type of offering in May 2021.
  • It appears that 93% of the Lifeline subscriber population uses less than 4 GB of data per month, with 76% of all reported Lifeline subscribers using less than 1 GB per month.
  • The majority of Tribal Lifeline consumers subscribe to either bundled broadband or bundled voice broadband service. About 8% of Tribal Lifeline consumers subscribe to voice-only service and a smaller percentage still subscribe to broadband-only or bundled voice service.
  • In 2019, 77.9% of the Native American population had high speed internet compared to 86.4% of the overall U.S. population.
  • Tribal lands experience lower rates of both fixed and mobile broadband deployment as compared to non-Tribal areas of the United States, particularly in rural areas.
  • Deployment on rural Tribal lands continues to lag behind urban Tribal lands, with only approximately 65% of all Tribal lands in rural areas having deployment of both services, as compared to 95% of Tribal lands in urban areas.
  • The disparity between broadband adoption by low-income rural Americans and higher-income rural Americans is significant.
  • U.S. population with high-speed internet access in rural areas is 82.3% and in urban areas is 87.4%.
  • While the majority of Lifeline subscribers have shifted to broadband-focused Lifeline plans, a persistent minority of Lifeline subscribers opt for voice-only Lifeline plans. Approximately 8% of Lifeline subscribers still subscribe to either a voice-only plan or a bundled plan that only qualifies for reimbursement because it has met the voice minimum service standard. Apparently, those subscribers still value the voice service to which they subscribe as those plans are only eligible for the lower voice reimbursement amount that is currently set at $5.25.
  • 73% of Lifeline subscribers use less than 250 minutes of voice service per month. A further 12% of Lifeline subscribers use between 250 and 500 minutes, and a further 9% of subscribers use between 500 and 1,000 minutes per month. Approximately 6% of reported Lifeline subscribers use more than 1,000 minutes per month. This data reflects all voice service offerings, including voice service offered as part of a bundled service, so it may reflect the current state of free-to-the-user bundled Lifeline plans, which may cap such free service at 250 minutes.

The Wireline Competition Bureau identified a number of issues for the full FCC to consider:

  • The current formula for calculating updates to minimum service standards for mobile broadband data capacity will continue to yield increasingly high results given broader market increases in mobile broadband data consumption and the greater prevalence of unlimited data plans. The FCC could consider several options to address this situation.
  • The minimum service standards for speed and data capacity have continued to increase gradually over the years. However, the structure of the rule may create a situation where a consumer could be forced into a higher-priced plan in order to receive Lifeline service. The Commission may wish to revisit this approach.
  • The Bureau recommends that the FCC consider continuing to support efforts directed toward improving broadband access in rural Tribal areas and consider exploring other ways of improving access in these areas.
  • As the FCC looks to take action to improve broadband access and adoption in rural areas, the Commission may also wish to consider ways to improve awareness of the Lifeline program for the eligible population in rural areas.
  • The removal of Lifeline support for voice-only services may push some Lifeline consumers into bundled plans that they are unable to afford.
  • Voice-only services, particularly for those populations that do not have an interest in receiving broadband services, are often Lifeline subscribers only connection to their communities and emergency services, which is more pronounced during national emergencies such as the COVID-19 pandemic.
  • The FCC may wish to consider some modification to the current phase-down in support for voice-only Lifeline services.
  • In orders implementing both the Emergency Broadband Benefit Program and the Emergency Connectivity Fund Program, the FCC recently stated its expectations that connected devices for bridging the digital divide and closing the homework gap should be accessible to and usable by individuals with disabilities. The FCC may wish to consider whether a similar expectation that Lifeline providers that provide mobile or fixed broadband services and devices similarly will provide devices that are accessible to and usable by individuals with disabilities.
  • Given that individuals with disabilities may need certain service plans and communications technologies to accommodate their disabilities, the FCC may wish to consider the need for Lifeline providers to make a variety of services available, such as bundled services, voice-only plans, and data-focused plans.
  • The FCC may wish to consider ways to craft Lifeline broadband support that accounts for data-intensive video communications like Video Relay Services (VRS). Such an approach may be best informed by the lessons learned from a completed Emergency Broadband Benefit Program.
  • As noted by Public Knowledge, many Lifeline subscribers lack the infrastructure to pay a copay. Nearly two-thirds of Lifeline subscribers do not have a checking or savings account, and 60% lack a credit or debit card.
  • The FCC may want to consider requesting additional information from Lifeline service providers when they file for reimbursement. When providers file claims for Lifeline reimbursement, they could be asked to provide basic information regarding the data, speed, and minutes of use associated with their current Lifeline plan(s) offered, and information on the number of subscribers enrolled in each plan. Collecting information on plan offerings and the number of subscribers enrolled in each offering may make it easier for the FCC to understand which aspects of minimum service standards are most costly for providers, as well as which services are most highly valued by consumers.
  • The FCC could consider initiating a proceeding seeking comment on the best methods for tracking Lifeline’s impact on broader affordability issues.
  • One of the most proposed suggestions for further changes in the Lifeline program was to raise the reimbursement amount for Lifeline services beyond $9.25, regardless of any changes in the minimum service standards. Commenters (including the Benton Institute) argued that the current level has not changed in nearly a decade and does not allow Lifeline eligible consumers to receive a level of service necessary to meet modern needs.
  • Several commenters also urged the Commission to consider removing “structural limitations” to provider participation in the program, such as the requirement to become an eligible telecommunications carrier (ETC), and do more to encourage competition within the Lifeline program.
  • Some commenters urged the FCC to explore new options for distributing support to Lifeline eligible consumers or permit support beyond one Lifeline service per household.
  • Several commenters urge the Commission to consider reclassifying broadband as a Title II service, as they contend it would put broadband Internet access service supported through the Lifeline program on a firmer statutory foundation.

Conclusion

In the 2016 Lifeline Order, the FCC clarified that ensuring the affordability of voice and broadband service is a goal of the Lifeline program. Both the Grant Thorton and Wireline Competition Bureau evaluations reveal that there are major considerations before the FCC if the program is going to achieve that goal moving forward. The clock is ticking towards December’s phase-out of support for voice-only services. The FCC should act now to consider these issues and ensure Lifeline’s effectiveness. 

Quick Bits

Beach Reads

ICYMI from Benton

Upcoming Events

July 13—July 2021 Open Federal Communications Commission Meeting (FCC)

July 14 & 15—Open RAN Solutions Showcase (FCC)

July 15—Emergency Connectivity Fund Tribal Training and Listening Session (FCC)

July 18—NARUC Summer Policy Summit (NARUC)

July 19—How Broadband Can Promote Telehealth Equity (Partnership for a Connected Illinois)

July 20—Broadband is the Electricity of the 21st Century: Let’s Light Up Every Community (Next Century Cities)

July 25—Fiber Connect 2021 (Fiber Broadband Association)

Aug 4—Broadband Infrastructure Program Webinar (NTIA)

Aug 5—August 2021 Open Meeting (FCC)

Aug 5—Broadband Infrastructure Program Webinar (NTIA)

The Benton Institute for Broadband & Society is a non-profit organization dedicated to ensuring that all people in the U.S. have access to competitive, High-Performance Broadband regardless of where they live or who they are. We believe communication policy – rooted in the values of access, equity, and diversity – has the power to deliver new opportunities and strengthen communities.


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Kevin Taglang

Kevin Taglang
Executive Editor, Communications-related Headlines
Benton Institute
for Broadband & Society
727 Chicago Avenue
Evanston, IL 60202
847-328-3040
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