Subsidized Broadband: FCC Chairman Plans to Expand ‘Obama Phone’ Program to Internet

Rudy Takala | May 29, 2015 | 10:59am EDT
Font Size
Federal Communications Commission (FCC) Chairman Tom Wheeler testifies before the House Oversight and Government Committee on March 17, 2015. (AP Photo)

( - Federal Communications Commission (FCC) Chairman Tom Wheeler announced on Thursday that he intends to expand Lifeline, popularly known as the “Obama Phone” program, to the Internet.

“I am circulating new proposals to “reboot” Lifeline for the Internet age,” Wheeler wrote in a blog post on the FCC’s Website. He said the reboot would include “establishing minimum standards of service for voice and broadband,” in addition to subsidies for low-income consumers.

Lifeline is a government benefit program that provides a monthly subsidy of $9.95 on telephone service for those at or below 135 percent of the poverty line so they can connect to the nation's communications networks, find jobs, access health care services, connect with family and their children's schools, and call for help in an emergency.

The money comes out of the Universal Service Fund (USF), which is funded through fees paid by consumers on telephone service.  The fee is generally itemized on customers’ monthly telephone bills and is currently assessed at a rate of 16.1 percent of the bill.

The size of the Lifeline program has doubled since 2008, increasing from $819 million to $1.6 billion in 2014. It reached a high of $2.19 billion in 2012 amid allegations of fraud and abuse.

The USF, meanwhile, has increased from $7.2 billion in 2008 to $10.34 billion in 2014, with Chairman Wheeler’s staff estimating a level of $12.1 billion in 2016. However, that estimate does not account for prospective Internet subsidies.

In his post, Wheeler said, “30 percent of Americans still haven’t adopted broadband at home…. While more than 95 percent of households with incomes over $150,000 have broadband, only 48 percent of those making less than $25,000 have service at home.”

According to Census Bureau data released in September, 74 percent of Americans already have access to the Internet at home. Accounting for those who can access it at work, school, or public libraries, Pew Research found that just 15 percent of Americans reported not using the Internet at all.

Of the 15 percent who do not use the Internet, one-third said they had no desire to do so. “They are not interested, don't want to use it or don't need it,” Pew reported in 2013. Overall, just 3 percent of Americans reported that they did not use the Internet due to financial reasons.

The Lifeline expansion was made possible largely through the FCC’s Open Internet Order, which reclassified Internet service as a utility and allows the FCC to impose the USF fee on Internet service if it chooses to do so.

The role of government in the Internet has already been likened to the ‘Obama Phone’ program, with Rep. Marsha Blackburn saying in a statement, “The age of ObamaNet is upon us.”

The FCC is now seeking comment on how to modernize Lifeline “while further combatting waste and better targeting the program to those who need it most."

The FCC will vote on Wheeler’s proposal on June 18.

Rep. Marsha Blackburn: ‘I Will Take the Lead’ in Defunding Net Neutrality

mrc merch