The Commission proposes broadband subsidies.

The Federal Communications Commission (FCC or the Commission) today adopted a Second Further Notice of Proposed Rulemaking, Order on Reconsideration, Second Report and Order, and Memorandum Opinion and Order on further modernizing its Lifeline program. The Lifeline program was created in 1985 to provide qualifying low-income consumers with a discount on phone service. Today’s order was adopted on a 3-2 party-line vote.

Calling this order the “next step” in Lifeline reforms, the Commission proposed to make several sweeping changes to the program, most notably the possible expansion of the program to include subsidizing broadband. The Commission also took immediate steps to further prevent waste, fraud, and abuse in the program.

The further rulemaking proposes to maintain the existing $9.25 per-month subsidy, seeks to require minimum service standards for both voice and broadband (formalizing an informal process whereby the Wireline Bureau would require new entrants to commit to minimum service levels), and permit consumers to use their subsidy to purchase broadband service. The FCC also generally seeks comment on how to encourage more competition for Lifeline service, how states can be more involved in the process, and whether using direct consumer vouchers would improve the program. Based on comments during today’s meeting, it also appears that the Commission will consider reinstating subsidies for initiating service called Link Up, which is often used to tacitly subsidize equipment.

The order also proposes numerous process reforms, including the creation of a national eligibility database (that builds on the models of certain states, such as California and Texas). The Commission seeks comment on whether the program should have a budget, although it appears that the proposal is short of an outright “cap” on the size of the program.

With regard to immediate reforms, the Commission appears to have reversed a prior rule and will now require companies to keep proof of a customer’s eligibility so that companies can later be audited. Providers and members of Congress had heavily criticized this rule.

The full order has not yet been released, but we will provide a more detailed summary at that time.