Deal collapses to cap U.S. low-income telecommunications subsidy

Reuters News
Posted: Mar 31, 2016 11:56 AM

By David Shepardson

WASHINGTON (Reuters) - A deal reached by a majority of Federal Communications Commissioners to approve a $2 billion a year budget cap as part of an expansion of a subsidy for low-income Americans for phone and Internet services collapsed on Thursday, Republicans said.

Matthew Berry, chief of staff to FCC Commissioner Ajit Pai, a Republican, told reporters that Democratic Commissioner Mignon Clyburn had signed onto a deal with Republicans earlier in the day after intensive negotiations, then changed his decision.

Berry said FCC Chairman Tom Wheeler had "bullied" his fellow Democrat Clyburn into withdrawing from the "moderate, bipartisan deal," which would also have set a minimum standard on broadband speeds. Three of the commissioners are Democrats while the other two are Republicans.

Wheeler's office did not immediately respond to a request for comment. Clyburn's office did not immediately respond to several attempts to reach the commissioner for comment. Neither immediately addressed the controversy at the start of the meeting.

The FCC took the unusual step of delaying the start of its meeting by three and a half hours as talked to continued, which started at 2 p.m. EDT (1800 GMT).

At issue is Wheeler's proposal, unveiled earlier this month, to expand the $9.25 monthly mobile phone subsidy to include broadband Internet access.

Republicans have pushed for a budget cap for the $1.5 billion annual program, called Lifeline, which has helped lower-income Americans get access to telecommunications technologies since 1985. There is currently no cap.

Wheeler has said he wants to give those receiving the subsidy a choice of using it for phone services, high-speed Internet, or both. But households will get only a single $9.25 per month subsidy that would apply to both services.

The program currently helps about 12 million U.S. households afford landline and mobile phones, according to agency estimates.

Wheeler had proposed setting a budget of $2.25 billion a year, indexed for inflation, for the program. The extra funds would allow program access for more than 5 million additional households.

The FCC estimates that some 95 percent of U.S. households with incomes of at least $150,000 have access to high-speed Internet, while less than half of households with incomes lower than $25,000 have Internet access at home.

The proposal requires phone providers to offer unlimited talk time for all plans for subsidy users after December 2016, and by the end of 2019 providers would have to offer both phone and broadband services to qualify under the program.

FCC Republican Commissioner Michael O'Rielly said this month Wheeler's proposal would "massively expand the size and scope" and "balloon a program plagued by waste, fraud, and abuse."

Democratic presidential candidate Bernie Sanders, a Senator from Vermont, has urged the FCC to act on the program.

(Reporting by David Shepardson; editing by Alan Crosby)