Last month we discussed the fact that the FCC's proposal to remove most of the "waste, fraud and abuse" in the Lifeline program by limiting support to facilities-based providers was trashed by almost the entire industry. That is because the estimated 70 percent of Lifeline customers that participate in the program through resellers (many of them wireless providers) would have no other options available to them, or have their prices increase if they are forced to purchase service from providers who own facilities-based networks.

Moreover, FCC Chairman Pai's contention that this change would spur investment in facilities is simply not credible. The sad truth is that Lifeline customers are generally the poorest Americans and it simply doesn't make sense economically for a company to build a network to attract customers who lack the resources to purchase anything other than subsidized services.

That is why when reply comments were filed on March 24th in this proceeding (Docket 17-287), Pai's proposal continued to get "thumbs down" from the industry. As the National Association of Regulatory Commissioners (NARUC) noted,

Of all the initial comments filed in this proceeding since mid-January 2018, the undersigned could only locate one that supports this proposed limitation on resellers. Like NARUC’s initial comments, many explain how that change will undermine the purpose and functioning of the program. The NPRM suggests...that limiting Lifeline subsidies to facilities-based carriers might spur additional investment in infrastructure. However, there is also no credible evidence that eliminating non-facilities-based service will spur additional investment in voice-and broadband-capable networks. After all, it seems unlikely that any network owner would be selling unused airtime in large blocks to Lifeline resellers if that sale was not profitable and thus did not also contribute to the maintenance and improvement of the “resold” facilities. (NARUC Reply Comments, Docket 17-287, filed March 29, 2018, at pp. 18-19).

Now Congress is getting involved. Last month 68 Democratic members in the House of Representatives wrote a letter to Chairman Pai requesting him to keep Lifeline as is. This was recently followed up by a similar letter from 11 Senators.

The majority of Lifeline’s recipients, at least 6.5 million Americans, use the program to receive internet service. From an economic standpoint, it is unclear why the FCC would spend billions of dollars to expand access to broadband while at the same time make Lifeline less accessible to those who need it most. Your proposal impacts over 70 percent of current Lifeline-recipient households by eliminating their wireless providers from the program, leaving less affordable and fewer Lifeline options, while making it more difficult for the companies trying to serve Lifeline customers. Instead of cutting the program, we should ensure Lifeline reaches more Americans in need of access to communication services.

The Senators demanded the Commission respond to the following questions:

The December 1, 2017, Notice of Proposed Rulemaking (NPRM) provides no evidence, analysis, or data to support its assumption that the FCC's proposed changes to Lifeline will spur facilities-based broadband deployment and additional affordable services for low-income families. Provide any specific data, analysis, academic studies, economic reports, etc. that you relied on to support this assumption. Explain why the NPRM included no evidence or data to support this assumption.

1. What is the FCC’s plan for the millions of Americans that would lose service due to your actions to cut the Lifeline program?
2. How many Americans in total, broken down by state, would lose their current service provider under your proposal? How many Americans would be left without any provider offering Lifeline service?
3. How will you ensure the integrity of the comment record is intact, and that it will be taken into your decision-making process?
4. How does your proposal help to increase the already terrible connectivity situation in Puerto Rico after its devastation by recent hurricanes?
5. How does your proposal ensure connectivity/affect availability of Lifeline for the following groups (please provide current Lifeline participation statistics for each, where available):
   1. Tribal members
   2. Rural Americans
   3. Low-income Americans
   4. Veterans
   5. Elderly populations

Based on the incredibly negative response to his proposals, it is hard to believe that Pai will follow through and remove resellers from Lifeline. It might save some money, but it will make him even more of a pharaoh to Democrats and poor Americans. A final order is expected later this year/