Broadband group calls for reform of 'Obamaphone' subsidy program

The FCC's Lifeline program should subsidize broadband, not just voice service, for low-income US residents, the group says

A controversial U.S. Federal Communications Commission program that subsidizes telephone or mobile service for poor people needs to move into the 21st century by expanding into broadband, a broadband advocacy group said.

The FCC or Congress should reform the Lifeline program, called "Obamaphone" by some critics, by expanding its coverage to include broadband service and by giving its monthly subsidy directly to eligible U.S. residents, instead of paying it to telephone and mobile carriers, the Internet Innovation Alliance [IIA] said in a white paper released Thursday.

The 30-year-old Lifeline program, which subsidizes voice service in 14 million U.S. households, "is now badly outdated," said Rick Boucher, a former Democratic congressman from Virginia and honorary chairman of the IIA. "It's in urgent need of fundamental reform."

Lifeline subsidies only for telephone and mobile service do not serve the needs of low-income U.S. residents, Boucher said. While more than 90 percent of all low-income residents have voice service, only about half of U.S. households with incomes below $25,000 have broadband, he said.

Boucher called on the FCC or Congress to reform the way the subsidies are distributed and the way program eligibility is determined. The program sends the subsidies directly to telecom carriers, which then decide who is eligible to receive services under the program.

If the subsidy goes directly to consumers, they could decide what service to buy with it, and what carrier or broadband provider to use, Boucher said. In the modern communications market, "consumers are, in fact, in charge," he said. "They no longer passively receive services that are approved by regulators and then produced by carriers. Consumers don't respect that model today; they shop with their dollars."

In addition, the program should stop allowing carriers to determine eligibility of participants, Boucher said. "Service providers, who have financial incentives to increase enrollment, should not be responsible for administering a government assistance program," he said. "That role should be performed by a governmental agency."

Traditional wireline telephone carriers are required to participate in Lifeline, but mobile and VoIP carriers are not. That doesn't make sense, Boucher said. Broadband providers may participate if they are eligible, he added.

Some critics of Lifeline call it "Obamaphone," saying it provides free mobile phones and service to poor people as a way to entice them to support the president. But the program started in the mid-1980s, under Republican President Ronald Reagan, and its expansion into mobile services happened under the presidency of Republican George W. Bush.

While Obama appoints FCC members, he has no direct influence over Lifeline. Carriers decide who is eligible for the subsidies, and some mobile carriers have provided inexpensive mobile phones for free.

FCC commissioners and lawmakers from both the Democratic and Republican parties have voiced support for Lifeline reform in recent years, Boucher noted. The Lifeline program has "enjoyed broad, bipartisan support" over the years, he said. "Am I concerned that political rhetoric is going to swamp these reforms? No."

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is

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Tags telephonytelecommunicationInternet Innovation AllianceRick BoucherregulationU.S. Federal Communications Commissiongovernmentbroadband

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