FCC Chairman Julius Genachowski (News - Alert) chose the politically moderate venue of think thank Third Way, to give a sneak preview of an Order that will be submitted for consideration to the full Federal Communications Commission (FCC (News - Alert)) tomorrow, January 10.

Under the Chairman’s continuing efforts, as he stated in his remarks, to “to modernize our programs for the digital age, and to make them efficient and fiscally responsible.”  The new order is aimed directly at reforming and modernizing the Lifeline program.   And, while the elimination of fraud and waste were high on the Chairman’s list of short-term goals, much of his talk was about the need, reflected in the order draft to align Lifeline service delivery with giving those in rural and under-served areas universal access to broadband. 

The prologue for the need for changing the Lifeline regime

The Chairman, as is his want, provided an interesting prologue before stating what will be in the Order. He started with some context about his efforts, since taking the FCC helm in 2009, that he says have emphasized his priority of “the need for smart, responsible government.”   This includes the elimination of more than 200 outdated rules and a multitude of unnecessary data collections, and better regulatory enforcement which in 2011 alone led to a record $67 million in penalties and settlements for fraud and abuse. 

In the latter area, he set the table for why an Order was needed in the Lifeline program by stating:

“…we’ve received reports that some unscrupulous carriers are abusing the program – obtaining support for consumers who did not sign up for Lifeline by mailing them phones already set up for Lifeline service, or signing people up for Lifeline who aren’t eligible for the program. Defrauding a public program designed to help our most vulnerable citizens is flat-out wrong and simply unacceptable, and we have launched multiple investigations into these reported violations.

Where individuals or companies have unlawfully defrauded or abused our programs, we will penalize them, and we will make it clear that it does not pay to rip off the federal government. When someone rips off the government, they are ripping off the American people.”

He said the objective of the Order, which incorporates the work of state regulators, the Joint Board, the U.S. General Accounting Office (GAO) and the FCC’s staff and his fellow commissioners, was threefold:

• Stop fraud and abuse
• Close loopholes
• Implement adequate cost controls

He emphasized the the program has mushroomed in size in the last few years because of abuse, waste and inefficiency, and that during tough economic times when needs of those in need of affordable access to broadband are greatest, the program needed to recognize that its focus needed to be on broadband and not POTs and had to be trustworthy — transparent, efficient and accountable (based on metrics that were adhered to).

Genachowski said that fixing the Lifeline program was a key in his goal for the provision of universal broadband services by the end of the decade and the closing of the “digital gap.” The latter being critical to America’s financial future on a variety of fronts.

What will be in the Order?

The draft Order builds on work adopted in an order last June that clarified that an eligible consumer may only receive Lifeline-supported services from a single provider. A process, now underway in 12 states in cooperation with major Lifeline providers will be expanded going forward, but has already identified over 200,000 duplicate accounts representing a savings of millions of dollars. To address the duplication and other issues, a number of areas will be attacked in the new Order. These include:

• Putting goals and metrics in place to ensure the FCC and USAC (which administers the program) are accountable. To that end, there will be:
• Creation of a new National Lifeline Database since one does not exists and hence tracking duplication is extremely difficult if not impossible
• Establishment of a budget for the program to ensure unnecessary spending is cut but that there is enough money to help those in need
• National eligibility criteria will be created and enforced with recognition of unique circumstances such as those of Tribal communities
• Transparency: Which will be used and streamlined so carriers receive funds only for subscribers they actually serve.
• Several steps to “protect and empower consumers” including new educational efforts.
• Stiff penalties will be put in place and enforced.
• Transitioning Lifeline to support to universal broadband: To be done initially with a Broadband Adoption Pilot Program using savings from other reforms to test and determine how Lifeline can best be used to increase broadband adoption among Lifeline-eligible consumers.  The program would:
• Start by soliciting applications from broadband providers and would select a number of projects to fund, starting this year.
• Applicants would be expected to help address other challenges to broadband adoption, including the cost of devices and a lack of digital literacy.

All of this taken together is aimed at two goals: saving U.S. taxpayers an estimated $2 billion over the next few years from the elimination of fraud and abuse; and, aligning Lifeline with the push on multiple public,  public/private partnership and non-profit fronts to provide all citizens universal access to wired and wireless broadband services and devices and the “digital literacy” to be able to use them. 

Genachowski stated, “We know there are three primary barriers to broadband adoption: cost, digital literacy, and relevance – the fact that too many Americans don’t perceive broadband as having value for them.” While he admits there is no single solution to breaking down all of these barriers, the reform and modernization of the Lifeline program is viewed a major and critical part of the puzzle, as will be the sharing of data and best practices from all involved parties.

Reaction to the proposal has been muted with many waiting to see the words before commenting. However, The Leadership Conference on Civil and Human Rights, a coalition of more than 200 national organizations, put out a press release with quotes attributable to Wade Henderson, president and CEO, stating the FCC Chairman has outlined, “An important step toward narrowing the digital divide – but not yet the quantum leap necessary to include all Americans in the new economy.”  

In particular, he noted that while gratified the FCC appreciates the severity of the matter:

“The pilot programs the Chairman intends to launch later in the year won’t help the millions of Americans struggling right now to get a leg up in today’s economy…We strongly support the announcement of sensible steps to eliminate fraud…We should not confuse questions about the program’s size with the limited problem of fraud and abuse.  According to the FCC’s own data, the Lifeline program has about 10 million participants, and only reaches about 32 percent of eligible households. There are 100 million people who do not subscribe to broadband at home today, and according to the FCC’s research, a predominant reason for that is cost. The Lifeline program is the only program that can address this problem by systematically addressing the cost of modern telecommunications for low-income people.  Limiting a program that only reaches one-third of its eligible participants before the FCC can fully assess the changes it announced today to eliminate fraud would seem counterproductive.”

In the Chairman’s defense, as the famous saying goes, “Rome wasn’t built in a day,” seems to apply here. While the speed at which broadband can be accessible universally to everyone may not suit some, and we are likely to hear from others that this is just another case of government over-reaching its authority, the fact of the matter is that the Order seems to represent something very important. It recognizes that broadband needs to be this generation of universal service, and the FCC is living up to its mandate from the 1934 Act that created it to ensure everyone has access to affordable communications. 

If it takes modernization of the Lifeline program to start us down the road to getting rid of POTs as basic service, and end what has clearly been a regime suffering from both fraud and benign regulatory neglect, it seems we are moving the ball forward. So long as we remain committed to the marketplace driving us to a universal broadband world, instead of a government mandate, and with the concomitant recognition that digital literacy is critical as are transparency, accountability and collaboration, than the Order sounds like not a baby step but a good strive forward. It will be interesting to see who agrees and disagrees and on what grounds.

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO East 2012, taking place Jan. 31-Feb. 3 2012, in Miami, FL. ITEXPO (News - Alert) offers an educational program to help corporate decision makers select the right IP-based voice, video, fax and unified communications solutions to improve their operations. It's also where service providers learn how to profitably roll out the services their subscribers are clamoring for – and where resellers can learn about new growth opportunities. For more information on registering for ITEXPO registration click here.

Stay in touch with everything happening at ITEXPO. Follow us on Twitter.