ott revenueThe funding that low-income people receive to help cover the cost of phone service could be used to cover broadband if a bill introduced in the House of Representatives this week becomes law. Congresswomen Doris Matsui and Anna Eshoo, along with Congressman Henry Waxman, introduced the bill, to be known as the Broadband Adoption Act of 2013. Also sponsoring it are Reps. Diana DeGetter, Zoe Lofgren, Jan Schakowsky, G.K. Butterfield and Ben Ray Lujan.

Noting that 80% of job openings require online applications, Matsui in a press release said, “The Internet is increasingly the economic engine for growth and innovation. The Lifeline program provides a tangible service to lower-income Americans and it is imperative that the Lifeline program be reformed and modernized to account for broadband services. We must ensure lower-income Americans have a greater opportunity to participate in the digital economy, whether it be for workforce training, education, finding a job or creating the next big idea.”

The Broadband Adoption Act proposes additional reforms to the Universal Service program’s Lifeline program, which currently pays $9.25 toward the cost of monthly landline or wireless service for low-income homes. Reforms to that program made early last year included measures to better ensure that only qualified recipients were receiving funding and, according to the FCC, have saved hundreds of millions of dollars to date. Last year’s reforms also set in motion a pilot program to test how the Lifeline program might help low-income users pay for broadband.

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The new act would expand support for broadband beyond the trial phase and would add more accountability measures. In theory, at least, the program might not require substantial additional funding, as the bill would allow qualifying households to obtain support for one of three eligible services including broadband, voice or wireless service. The Lifeline program has seen an increase in recent years, however, as more and more network operators have launched low-income offerings – and that trend could continue. The bill also would require the FCC to routinely study the prevailing marketing price for service and the prevailing speed adopted by consumers of broadband service.

Other provisions of the Act include:

  • Requiring the FCC to establish a national database to determine consumer eligibility for Lifeline and prevent duplication
  • Encouraging the FCC to consider providing a preference to participating broadband providers that include digital literacy programs as part of their offerings
  • Eligible households would have to meet federal low-income guidelines or qualify for one of several social service programs including but not limited to SNAP, Head Start, WIC, National School Lunch Program, Tribal TANF and Medicaid.

Funding for the Lifeline and other Universal Service programs comes from the telecom industry. Network operators contribute to the fund based on a percentage of their long-distance revenues – and the percentage has been increasing as long-distance revenues decline. Some people have suggested that contributions should be made as a percentage of total service provider revenues, but based on the summary provided in Matsui’s release, the Broadband Adoption Act does not suggest any changes to program funding.

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