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Summary:

Much like the welfare-to-work reform bill had bipartisan support because it moved people from welfare into a job, the FCC needs to reform the Lifeline program to provide broadband so it moves people from government assistance into jobs. Not just any jobs, but tech-oriented jobs.

telephone

The Federal Communications Commission should look to welfare reform legislation from 1996 for clues in revamping its Lifeline program. The program, which provides basic phone service for the poor, is getting a facelift for the broadband age.

And much like the welfare-to-work reform bill had such bipartisan support because it moved people from welfare into a job, the FCC needs to reform the Lifeline program so it moves people from government assistance into jobs. Not just any jobs, but tech-oriented jobs.

How might taxpayers respond if reform meant more than putting a modern digital face on an old-time subsidy, and put the same billion dollars a year to work producing thousands of 21st century digital workers?  These two stories illustrate the potential if we can get industry and government to “Think Different” about what Lifeline should be.

George Jefferson vs. George Jetson

The Lifeline program (for which everyone who pays a phone bill supports) currently provides $10/month to low-income people to get basic phone service. The FCC wants that $10 investment to eventually lead to broadband access for recipients. The challenge here is that the agency wants a program developed in the age of George Jefferson reformed for the age of George Jetson.

Lifeline started in 1984. It covered the cost of one telephone line for a family, one or two phones and local phone calls. The FCC paid an eligible telecommunications carrier (ETC) for each family that qualified. Lifeline served, and continues to serve, its purpose by enabling hundreds of thousands of families in urban and rural areas to get service they otherwise could not afford.

Lifeline now distributes about $1.3 billion a year nationwide. This year, the FCC commissioners, to their enormous credit, have decided it’s time to change the rules to support broadband adoption.

FCC Chairman Genachowski’s speeches on the subject are uplifting. They allude to futuristic technological benefits some might associate with the George Jetson-era. But intent and reality seem worlds apart if those involved with this program view this reform through the standard “subsidy for the poor” lens.

The FCC’s Notice of Proposed Rulemaking (NPRM) is somewhat underwhelming in regards to how reform will affect broadband adoption. The majority of the NPRM’s focus (see summary) is on ways to eliminate fraud and waste, which seems fine for making a program more efficient at distributing subsidies. But it could be more.

When the whole is greater than the sum of the subsidies

An earlier GigaOM article describes how the Long Beach YMCA Youth Institute annually provides 2,500 low-income high school, middle school and elementary school kids with training that builds business-level proficiency in a range of digital media skills. Students in the broadband-driven program become technology instructors, print publication editors and producers of original movies and music while in school, paid interns upon leaving school and for some, managers and staff at the Institute. The Institute has even spun off a nonprofit company that generates $400,000 annually providing digital media consulting services to clients around the country.

Handing individuals a $10 month stipend by itself, even for Internet access, won’t provide the type of personal economic development the Youth Institute delivers. However, if the Lifeline program were transformed to a broadband-to-work program (which is more than just digital literacy training), here’s how things might change.

A community organization develops a comprehensive plan for digital literacy, job skills development, internships, job placement and entrepreneurship that costs $500,000, for example. Maybe $300,000 could come from grants and foundations. Another $100,000 could come from the FCC’s eRate program for broadband infrastructure since the rules were changed to allow communities to access that infrastructure during after-school hours. And $100,000 could come from Lifeline, not as individual subsidies paid to a telco carrier, but as a grant to a local organization that selects a carrier (or endures the process to become an ETC) to serve low-income constituents who qualify for Lifeline. FCC Commissioner Clyburn responds to this and related ideas on the radio show Gigabit Nation.

By expanding the vision, modifying rules and adding requirements for participants to get jobs or become entrepreneurs, Lifeline becomes a catalyst to promote recipients to captains of their financial destiny. Would taxpayers prefer to spend $1.3 billion every year to have people be financially no better off in 10 years than they are today? Or use that money to make an earnest effort to transform potentially thousands of citizens into a digital workforce?

If the FCC is going to spend $25 million for pilot programs to test moving Lifeline into the broadband era, they and policymakers in general should expand their worldview. Communities need to be driving theses programs and policies. Programs such as the Youth Institute come from leaders in the communities and are facilitated rather than dictated by corporate and government sources.

We’re seeing little interest in putting communities in the driver’s seat of Lifeline reform but rather the continued reliance mainly on big carriers that are the bulk of ETCs. Sure, communities are asked for input from the passenger seats, but the steering wheel seems firmly planted in the hands of corporate entities that will always put stockholder interests above local communities and businesses. Programs such as Comcast’s Internet Essentials are still subsidy programs, just weighted ultimately in the best interests of the corporations. Will communities be allowed key roles in these Lifeline pilot projects? More importantly, will communities step up and demand that role?

Craig Settles is an industry analyst, consultant and host of the Gigabit Nation radio talk show.

  1. Great piece and Couple of nice zingers !

    > But intent and reality seem worlds apart if those involved with this program view this reform through the standard “subsidy for the poor” lens.
    > We’re seeing little interest in putting communities in the driver’s seat of Lifeline reform but rather the continued reliance mainly on big carriers that are the bulk of ETCs. Sure, communities are asked for input from the passenger seats, but the steering wheel seems firmly planted in the hands of corporate entities that will always put stockholder interests above local communities and businesses.

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  2. Jeffrey Bacot Saturday, March 24, 2012

    People do not remember how unpopular welfare reform was in the democratic party. President Clinton mad a bold move to do what he thought was the right thing. He was called a tractor and many other bad things by his party.

    If the republican party gains more seats in the Senate you will see this kind of reform. The democratic base uses people on welfare programs to keep their job. If they keep them on welfare they keep the vote.

    I work with employers and employees on their benefits. We enroll people in the CHiPS program (without monetary compensation). I enjoy making sure as many children as possible have coverage. The problem is I had one employee turn down a raise from her employer because it would put her over the income limit for the program. The raise would not have been enough to cover the cost of covering her children on her employer’s plan.

    If they wanted her off the program the politicians would have a scaled income model that helped people step off. She paid $50 a year for all three of her kids. She told me she would have gladly paid $500 a year if they would let her take the $2K a year raise.

    I think a program that taught people a skill and required those who succeeded to come back and teach or pay a portion of their income (10%) back to the program would be great. If you give people something for nothing that is the amount they value it – nothing. If they have to pay-it-back they will take it seriously. We all benefit.

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