As posted on the Hispanic Technology and Telecommunications Partnership Blog.
By Jason A. Llorenz, Esq., HTTP Executive Director, and Enrique Cortez, President, Enitial Advanced Communications.

Reforming the Universal Service Fund: Adapting Lifeline and LinkUp to Serve Universal Broadband, Part 1

The ongoing conversation about reform of the Universal Service Fund includes many proposals and evolving ideas for making the program more efficient and aligned with 21st Century goals.  Recent  activity and dialogue has focused on the USF’s Low Income programs, Lifeline and LinkUp. Earlier this week, former Federal Communications Commission (FCC) official Blair Levin, who is widely credited for authoring the National Broadband Plan, spoke to the Joint Center on Political and Economic Studies disavowing a part of that plan, especially proposals for these low-income programs, as flawed.

Universal Service has been central to the FCC’s goal of making vital communications services accessible to all Americans.  Accordingly, the FCC believes that the USF is key to ensuring universal access to high-speed Internet.
For communities of color and many Latino families who live on limited means, the USF Low Income programs have served as a true lifeline, providing basic telephone service and the ability to stay connected – with schools, doctors, emergency services, family and loved ones. Many expect USF reform to increase adoption rates for these historically underutilized programs – today, only “7 million of an estimated 24.5 million eligible households (less than 29 percent) participated in Lifeline in 2008”.

Despite its successes, policymakers, industry and advocates widely agree that USF has become wasteful and inefficient.  The Fund is openly criticized for such waste as providing more than $20,000 a year for a single household’s phone service in some areas, while providing little or no support in other communities that lack broadband.

On Thursday, the FCC voted to launch a notice of proposed rulemaking (NPRM) that asks for public comments on options for reforming the Lifeline and LinkUp programs to include broadband. The NPRM also seeks comment on ways to eliminate waste and abuse in the programs, and asks if the overall budget should be capped.  The impact and process of the FCC’s NPRM will be explored in a forthcoming blog.

Highlighting the need for reform, Mr. Levin’s comments frame the political realities of today’s Washington where all spending is under scrutiny.

Adding to the cacophony of voices calling for reform, Craig Settles, a broadband industry analyst, recently debated Mr. Levin and wrote about how best to update the Low Cost program.  In consensus with Levin, Mr. Settles argues that Lifeline and LinkUp must be scrapped and recreated to exclusively serve universal broadband.

In order to do more with the same pot of USF dollars, Settles believes the FCC must transform Lifeline and LinkUp into a tool that its consumers can use to aspire to something beyond the already ubiquitous telephone.  In a conversation with HTTP, Mr. Settles expressed his frustration with public assistance programs and with Lifeline in particular that only serves a basic need and asks for nothing in return.

“We don’t have an Independence Day built into these programs,” stated Settles, meaning that programs such as Lifeline and LinkUp “do not have a set date when users can free themselves because they no longer need the program”.

This can be achieved by designing what Settles calls “Catapult, a program to launch low-income people onto a path to transform themselves from mere consumers of technology to contributors to community economic growth”, through “community-owned broadband infrastructure… combined with public, nonprofit and corporate programs”.

In his remarks, Levin provided a four-part plan to accomplish much of what he and Settles agree must be done with repurposed Lifeline and Linkup funds.  His plan describes the main problem with the National Broadband Plan’s current proposals, which is based on “yesterday’s logic, based on the phone world, [that was] about availability of service, not use of service…  With broadband, we care about use, for which availability is a pre-requisite, but not the ultimate purpose.  As the National Broadband Plan noted, ‘promoting access and adoption are necessary steps, but utilization is the goal’”.

The new proposal by Levin calls for (1) an Executive Order to move most if not all government operations to paperless, thereby driving the overall consumer need for broadband, (2) Multi-source Mini Vouchers to secure lower prices and increased choice for low income consumers, (3) a focused training effort until the issues of digital literacy, search literacy and basic word literacy are overcome for the purposes of universal broadband, and finally (4) Reverse Auctions and Demand Aggregations, a volume discount in the spirit of a government-run Groupon whereby “in any given region, cable, telecoms and potentially wireless–if speeds are sufficient–would compete through a reverse auction to offer a low cost option that any person eligible for low-income assistance would have an opportunity to purchase.”

Latino-serving institutions and advocates will have an important role in the debate, as a voice for the needs of Latino families who will directly benefit from the final broadband and USF reform plans. Important questions for the Latino community remain — including the actual process of transitioning Lifeline and LinkUp from voice to broadband service while ensuring already vulnerable constituents do not lose services on which they rely. For its part, HTTP will continue to seek suitable answers to these questions for Latino stakeholders.