The week of June 26, 2016

The Lifeline program, “Obamaphones,” and the struggle to provide broadband for all Americans

By Kari Paul

In a video of a 2012 protest of then Republican presidential candidate Mitt Romney, a black woman loudly proclaims that she is voting for President Obama because he is passing out free cell phones to “every minority” in Cleveland.

“Keep Obama president!” she shouts. “He gave us a phone, he’s going to do more.”

The video quickly made its way to the front page of the Drudge Report and appeared in a segment of the conservative Rush Limbaugh Show. Despite being denounced as misleading and racist (or at least racially charged), the video officially coined the term “Obamaphones.” It also politicized what had formerly been, according to supporters, a program with bipartisan backing. The woman in the video was likely referring to the Lifeline program: providing subsidies for landline and cellphone plans, it’s perhaps America’s most comprehensive legislation addressing connectivity. And a recent expansion is bringing Lifeline to the next frontier of the digital divide: internet access. That is, unless the efforts to defund it are successful.  

The Federal Communications Commission passed an order in March which, when it takes effect in December will allow those who qualify to allot their $9.25 per month subsidy toward a broadband subscription, eventually phasing out voice-only services altogether as the program modernizes. Although the update officially passed, the Lifeline program’s reputation for fraud and waste persists, threatening to derail its expansion before the new benefits are officially extended in December. Several efforts have been introduced to limit or eliminate the program altogether. One of them, a bill introduced by U.S. Rep. Austin Scott called the End Taxpayer Funded Cell Phones Act and written to eliminate Lifeline’s mobile subsidies, was rejected by the House on Tuesday. An appropriations rider, added by the same U.S. representative who introduced that rejected bill, on a House bill meant to limit Lifeline was also withdrawn this week following backlash from human rights groups.

The program was not always so controversial. First launched by the FCC due to a bipartisan effort under President Ronald Reagan’s administration in the 1980s to provide emergency phone services to the poor, Lifeline was codified by the Telecommunications Act of 1996 during President Bill Clinton’s administration. The act also established the Universal Service Fund to support the Lifeline program, which takes contributions from telecommunications service providers who pass the charges onto their customers. After Hurricane Katrina, an FCC initiative under President George W. Bush was launched so families could keep in touch in the aftermath of the disaster, giving those affected 300 minutes of free wireless service and a handset. Lifeline was updated once more in Obama’s first term and once more this year, with the expansive overhaul to include broadband.

Public Knowledge counsel Phillip Berenbroick says the 2012 “Obamaphone” video was a major turning point for Lifeline, which was previously considered largely bipartisan.

“This confluence created a political dynamic around Lifeline that had never existed,” he says. “It became all of a sudden a partisan program where Republicans said ‘this is a government giveaway to undeserving people,’ and Democrats said, ‘this is a program that helps low-income people have vital connectivity.’ That is the world we have been living in ever since.”

Waste accusations are not without merit: in 2013, several cell phone companies were fined $14.4 million for defrauding Lifeline. The 2005 expansion to the program tasked the companies behind the prepaid cellphones with ensuring each consumer only had one Lifeline subscription. The companies, having little incentive to do so, often failed to check their customer records, resulting in 2.2 million duplicate subscriptions by 2010. The FCC then launched a series of reforms to the program to eliminate waste, including the creation in 2011 of an independent eligibility database to enforce a one-per-household rule for the subsidies.

“The politicization of Lifeline has blown the actual amount of issues with the program far out of proportion.”

More checks and balances are still being cemented before the official enaction of the Lifeline broadband expansion later this year. However, Berenbroick and other advocates of the program assert that even before an overhaul of these rules, Lifeline “in a lot of cases stacks up to the private sector” in terms of efficiency. A report from the U.S. Government Accountability Office showed the government-wide error rate was 4.5 percent and an FCC report found Lifeline has an estimated improper payment rate that is ten times less, at 0.32 percent for fiscal year of 2014.

“In any government program there is going to be a certain amount of waste, fraud, or abuse, but the politicization of Lifeline has blown the actual amount of issues with the program far out of proportion,” Berenbroick says.

He added that Lifeline is actually underutilized: 13 million households–––only approximately one-third of eligible households––participated in it in 2015. Eligibility is based on several factors, including income. In order to qualify, a person’s income must be at or below 135 percent of federal poverty guidelines. Participants can also qualify automatically if they participate in other government assistance programs like food stamps or Medicaid. Many of these people are the most vulnerable to slipping through the cracks of the digital divide, including underprivileged children unable to study or complete schoolwork, senior citizens unable to fully participate in society, and low-income users unable to sign up for government assistance programs.

Reaching the approximately 28 million qualified homes that do not use Lifeline, especially as the program expands, is a priority for the FCC. Projects involved in the expansion are being developed to educate low-income families on the relevance of broadband. Many low-income families lack stable housing and are less likely to invest in broadband or home internet infrastructure, opting instead for mobile access, something that FCC member Mignon Clyburn says the program must directly address.

“They are complements but not substitutes because there are certain things that can’t be done on smartphones,” she says.

Ev Ehrlich, who served as undersecretary of commerce under Clinton when the Lifeline program was first expanded, says the program was one of the administration’s “greatest triumphs.” He says Lifeline’s importance as a tool for addressing internet freedom is overlooked by progressives in favor of focusing on issues like net neutrality, but is just as important.

“It’s our number one tool for confronting the digital divide,” he says of Lifeline. “If the progressive community that cares so hard about a theoretical construct can’t care as hard about a program that affects the welfare of disadvantaged Americans, then the progressive movement has a problem.”

He added that it is imperative to get more people connected and to help the students who have to rush to finish homework on the bus before they leave a Wi-Fi connection, or be driven to McDonald’s parking lots to use the free internet just to study. According to Ehrlich, Lifeline is the biggest program yet, but it shouldn’t the only one. Its expansion marks a shift toward government programs targeting internet access and inclusion in American society. Just as the Tennessee Valley Authority program brought lights to rural areas around the U.S. as part of an ambitious New Deal effort, Lifeline and similar programs will connect the most vulnerable Americans to the rest of the world.

“Without internet, my ability to communicate would be severely limited, and I would feel more isolated than I already am.”

“The way electricity and telephony once defined the boundaries and lines of demarcation in our society, broadband portends the same thing—the same way public schools address literacy—connectivity is a form of literacy. It is a means of economic advancement, and citizenship, and civic participation. It is hard to have those things without connectivity. That’s what makes the digital divide such a pressing issue.”

Indeed, Lifeline recipients, far beyond the “Obamaphone” woman, have praised the program for the connectivity it brings them, affecting every part of their lives. The Center for Media Justice collected some of their stories to share how the program, and access to connectivity in general, affects the poorest Americans, including David Amrod, a disabled man from New York who relies on Lifeline.

“Without internet, my ability to communicate would be severely limited, and I would feel more isolated than I already am,” he says. “If rates could even be more reduced I would be happy to not have to cut things so close to the bone every month. … The citizens of this country deserve more.”

Illustration by Bruno Moraes