For well over a decade, I have been critical of the FCC's
Universal Service Fund high-cost subsidy program for the indiscriminate way in
which the program's subsidies have been distributed to telephone carriers. For
too long, the USF high-cost subsidy program has been administered in an
economically inefficient manner which not only is wasteful of societal
resources, but which also has had the effect of deterring the introduction of
new lower-cost – unsubsidized -- communications technologies and services.
And, as the high-cost subsidies grew year after year, they
were the major contributor to the rapid increase in the size of the USF tax,
which now stands at over
17% for all interstate and international calls. This 17% tax obviously
discourages use of telecom services.
While the measures did not go far enough in curtailing the
excesses and inefficiencies of the high-cost subsidy program, the FCC did finally
adopt reforms in an order
released last November. For at least taking some important steps in the right
direction down the reform path, I commended the Commission's action.
For as long as I have urged meaningful reform of the
high-cost subsidy program, I have supported the FCC's Lifeline program that
subsidizes the cost of telephone service for qualified low-income persons. In
today's world, there are social and economic imperatives favoring the notion
that those who cannot afford a minimum level of telephone service should receive
subsidized support.
And there is another separate, compelling reason I have supported
Lifeline service. It always has been my view that the existence of a
well-functioning, competently-administered Lifeline service, with its subsidies
targeted to the poor, is a persuasive argument against continuation of the more
indiscriminate, less economically efficient, more competition-distorting
high-cost fund subsidies. In other words, the Lifeline subsidies go to support
access to telephone service for poor people, whether they are living in New
York City or Aspen, while the high-cost fund, in effect, subsidizes telephone
service for an awful lot of rich folks who choose to live in Aspen and Jackson
Hole.
That said, it is important, of course, that the Lifeline
program be administered in a manner that is not wasteful and which does not
invite fraud or abuse. The FCC's Lifeline
Reform Order, released February 6, 2012, is intended to address such concerns.
I generally support the Commission's efforts to modernize the program so that
it can fulfill its worthwhile objective in an economically efficient manner.
In my view, however, it would be a mistake for the
Commission to adopt such an overly rigid stance regarding administration of the
Lifeline program that its objective – supporting access to telecom services for
poor people – is unnecessarily, if not deliberately, undercut. Thus, the
Commission should not condition Lifeline eligibility on implementation of state
databases that are variable in their reliability and in their information
resources. Such conditioning on state eligibility databases, or requiring documentation
that is often referred to as "full certification," may well result in
denial of support to otherwise qualified low-income persons. Instead, the Commission
should proceed with plans to establish a reliable national database that, when
ultimately operable, can be accessed efficiently by carriers. This national
database would permit all certified carriers to determine eligibility based on a
low-income person's participation in recognized programs, such as the Medicaid
or food stamp programs.
Other limitations suggested by the Commission also may have
the effect of unnecessarily limiting access to Lifeline support in a way
inconsistent with the program's objectives. For example, there appears to be no
sound reason for excluding text messages from the definition of usage eligible
for support. Or to require that Lifeline recipients must activate their own
phones before receiving benefits as opposed to having the carriers activate the
phones at the time of purchase. Limitations such as these don't seem to comport
with the program's objective to support access for low-income persons.
I have spent well over a decade arguing in favor of adoption
of desperately needed free market-oriented regulatory reforms that comport with
the realities of our fast-changing, technologically-dynamic communications and
Internet markets. We still have a long way to go to achieve such fundamental
reforms, including meaningful reform of Universal Service programs.
At bottom, a well-functioning Lifeline program – a
"safety net" in today's parlance – is not only consistent with pursuing
further market-oriented regulatory reforms. It is, in my view, a prerequisite
for advocating such reforms effectively, and in a principled manner.
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