The FCC should not approve any additional providers to offer service through the Universal Service low-income Lifeline broadband program, said FCC Chairman Ajit Pai today. According to Pai, the previous FCC administration unlawfully assumed responsibility for Lifeline broadband provider approval when that responsibility actually belongs to the states.

“Congress gave state governments, not the FCC, the primary responsibility for approving which companies can participate in the Lifeline program under Section 214 of the Communications Act,” said Pai in a statement. “This is how the program worked over two decades, over three administrations and over eight chairmanships.”

The decision to move Lifeline broadband provider approval to the FCC came amid a range of reforms to the Lifeline program, which previously covered only voice service.

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Pai essentially pledged to reverse the previous administration’s decision, while also essentially pledging not to approve any additional providers at the federal level. Noting that some Lifeline broadband provider applications are pending at the FCC, Pai said “[i]t would be irresponsible for the bureau to allow companies to sign up customers for subsidized broadband service through an unlawful federal authorization process that will soon be withdrawn.”

Pai noted that 12 states are currently challenging the legality of the FCC’s order in an appeals court and said he is instructing the commission’s general counsel to ask the court to send the case back to the commission for further consideration. The commission, he said, “will soon begin a proceeding to eliminate the new federal designation process.”

Lifeline Broadband Provider Approval
What does this mean for Lifeline broadband coverage and for carriers offering or wanting to offer Lifeline broadband service?

According to Pai, more than 3.5 million Americans currently receive subsidized broadband service through 259 companies that are approved as “eligible telecommunications carriers.” Pai apparently is using that term to distinguish carriers approved by the states to offer service under the traditional Lifeline program from “Lifeline broadband providers” approved by the FCC.

“Hundreds of companies have been approved to participate in the Lifeline program through a lawful process,” Pai said. He noted that 99.6% of Americans currently participating in the broadband portion of the program receive service from one of the state-approved companies, adding that “New companies can enter the program using this process and I encourage them to continue to do so.”

What about the .04% of Americans who apparently are getting Lifeline broadband through a provider approved by the FCC rather than at the state level?

Pai’s statement implies that those people may have to switch to a state-approved provider if the FCC indeed gives approval responsibility back to the states. That would seem to be the correct interpretation of Pai’s comment that the FCC should not approve any additional Lifeline broadband providers because doing do “would force many consumers to switch broadband providers in a relatively short period of time, which wouldn’t be fair to them.”

A Controversy-Ridden Program
This isn’t the first time in recent months that the Lifeline broadband program has experienced controversy.

Soon after Pai became chairman in January, the FCC reversed previous commission approval of several Lifeline broadband providers against the protests of consumer groups and the commission’s only remaining Democratic commissioner Mignon Clyburn.

Meanwhile, some large carriers – including AT&T – have opted not to participate in the Lifeline broadband program except in areas where required to do so under terms of the high-cost Universal Service program. AT&T cited concerns about a different approval process – approval of consumers for participation in the program.  The FCC’s Lifeline broadband reforms call for establishment of a federal database of eligible households but according to AT&T, that won’t be ready until 2019.

Rural carriers also have expressed concerns about the program, but for a different reason. Their concern is that they do not expect to be able to offer stand-alone broadband service at rates that are comparable with those in metro areas. The $9.25 per month discount that the Lifeline program offers wouldn’t go very far toward making broadband more affordable for low-income consumers when the cost of that service is expected to exceed $100 monthly, the rural carriers argue. Rural carriers have urged the FCC to address this issue by fully funding the high-cost USF program, which is currently experiencing a budget shortfall.

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