Lifeline is a federal program that provides targeted
subsidies to low-income consumers to support their access to communications
services. In the last few years, the program has become a subject of considerable
public debate. For instance, today's Washington Post contains the article "'Obama phones’ subsidy program draws new
scrutiny on the Hill." With Lifeline now coming to the
attention of many people for the first time, a sober perspective on the program
and ongoing universal service reform proposals is needed.
Lifeline support is targeted directly to low-income
individuals. This distinguishes Lifeline from other Universal Service Fund (USF)
programs that annually transfer, in a fairly indiscriminate fashion, billions
of dollars in indirect subsidies to voice carriers. Concerted reforms are
needed to ensure that waste and fraud – such as the receipt of duplicate
subsidies by the same person – are, to the extent possible, eliminated from the
Lifeline program. At the same time, however, a reformed and modernized Lifeline
program, with subsidies carefully targeted to low-income persons that meet
income-based eligibility-based criteria, ought to allow more rigorous reform of
the USF high-cost subsidy program. Indeed, over time, as competition continues
to increase consumer choice and technological developments offer opportunities
for ever more means of affordable communications, the USF subsidies that
presently are distributed to support "high-cost" providers ought to
be diminished substantially.
Lifeline is administered under the umbrella of the
FCC-administered Universal Service Fund (USF). The history of USF traces back
to the Communications Act of 1934 and what is now Lifeline began in 1985. Universal
service policy historically has been justified, in no small measure, by an argument
about the positive benefits to overall consumer welfare of so-called
"network effects." The idea is that bringing more people onto the
network – including those who would be unable to afford voice services without
subsidies – benefits all users of communications services. The value of the
network to users increases proportionally to the overall number of connected
users who can communicate with one another. So while the benefits of Lifeline
accrue directly to low-income consumers, other consumers of voice services
receive a degree of indirect benefit by being able to communicate with those
low-income consumers.
There is nothing wrong at all with implementation of reforms
to the program that seek to protect against fraud or abuse. Indeed, they are welcome.
But a constructive approach to Lifeline policy should avoid easy dismissal of Lifeline
as yet another welfare give-away program. In my view, this is incorrect, and it
is short sighted.
For many low-income persons, the program's support is indeed
a real "lifeline" – a vital link to today's ever more connected and
networked world, a world in which a communications link is often an important
gateway to the availability of educational and employment opportunities.
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