The FCC’s Lifeline Modernization Order
The Federal Communications Commission’s Lifeline Modernization Order makes significant revisions to the rules governing the universal service Lifeline program, including new minimum Lifeline service standards for voice and broadband, a phase-out of support for standalone voice service, a limitation on the requirement to offer Lifeline broadband service, and forbearance, in certain instances, from the requirements to offer Lifeline voice and broadband services.[1]
When the order becomes effective, every fixed and mobile service provider that has been designated as an eligible telecommunications carrier (ETC) will have an obligation to offer broadband Lifeline service in addition to Lifeline voice service. For some ETCs, however, the FCC has decided to conditionally forbear from enforcing the broadband requirement and the voice requirement under certain circumstances. Some of the changes adopted in the order are rather confusing and will require additional clarification. Nevertheless, the order will have to be closely examined because it fundamentally changes the course of the Lifeline program for carriers and consumers.
The information below summarizes the most important parts of the FCC’s Lifeline Modernization Order.
The Lifeline Program Will Support Broadband Internet Access Service
The FCC has revised its rules to allow the universal service Lifeline program to support standalone fixed and mobile broadband Internet access service.[2] After the change becomes effective, eligible low income consumers may apply the monthly $9.25 Lifeline discount to standalone mobile or fixed broadband service offerings. Likewise, ETCs (Lifeline providers) will be reimbursed from the Lifeline program for providing discounted standalone mobile or fixed broadband service to eligible low income consumers.[3] As explained below, the FCC has also set minimum service standards for fixed and mobile Lifeline broadband service.
Pursuant to the FCC’s rules and Section 214(e)(1) of the Communications Act, ETCs are required to offer all universal service supported services throughout their ETC-designated service areas. Now that broadband has been designated a Lifeline-supported service, ETCs must offer discounted broadband service to eligible low income subscribers. However, many ETCs, including non-facilities based wireless resellers and local exchange carriers, have not deployed networks that are capable of meeting the newly-adopted minimum service standards for Lifeline broadband service. Because of this, the FCC will forbear from requiring certain ETCs to offer Lifeline broadband service in certain areas.
Minimum Lifeline Service Standards: Fixed Broadband Service
The Commission has adopted minimum service standards for fixed Lifeline broadband that contain a speed requirement and a monthly usage allowance. In order to ensure that Lifeline-supported service meets the newly-adopted minimum service standards, Lifeline providers will be required to annually certify compliance with applicable minimum service level rules using FCC Form 481.[4]
The minimum Lifeline broadband speed requirement is based on the service to which a “substantial majority” of consumers subscribe as determined using FCC Form 477 data.[5] The Commission has adopted a minimum monthly data usage allowance which is initially set at the standard currently used in the Connect America Fund for rate of return carriers electing cost model support. For the fixed broadband minimum service standards, the Bureau will, on an annual basis, release a Public Notice on or before July 31 notifying the public of the updated standard levels for speed and data usage allowance to be effective on December 1 for the next twelve months. The two requirements are summarized below.
Speeds – The initial minimum service speeds for fixed Lifeline broadband service are 10 megabits per second (Mbps) for download and 1 Mbps for upload. An offering must meet both download and upload speed minimums to be considered to meet the minimum service standards.
Monthly Usage Allowance – The initial data usage allowance for fixed Lifeline broadband service is 150 GB per month.[6] The minimum service standards for data usage will be updated as necessary in the future based on data in the Urban Rate Survey and other appropriate and relevant data sources.
Minimum Lifeline Service Standard: Mobile Broadband Service
The minimum service standards for mobile broadband will contain a speed requirement and a monthly usage allowance. To claim Lifeline support for a mobile broadband service, a provider must offer service at 3G speeds or better. The initial mobile speed minimum service standard of 3G will be effective beginning on the later of December 1, 2016 or 60 days after Paperwork Reduction Act (PRA) approval of necessary information collection requirements. The speed standard will not be subject to automatic annual increases. Instead it will only be adjusted if the Bureau determines such action is necessary.
The Commission will gradually phase-in minimum monthly data usage allowance requirements in the following manner:
On the later of December 1, 2016 or 60 days after the Commission receives PRA approval, the minimum monthly data usage allowance will be set at 500 megabytes (MB) (at 3G speeds).
Beginning December 1, 2017 the minimum monthly data usage allowance will increase to 1 gigabyte (GB).
Beginning December 1, 2018 the minimum monthly data usage allowance will increase to 2 GB on December 1, 2018.
Beginning December 1, 2019 the minimum standard for mobile data usage will be set based on the forward-facing updating mechanism described in paragraph 94 of the order.
The FCC Will Phase Out Lifeline Support For Standalone Voice Service
The Commission believes that affordability must remain a central touchstone within the Lifeline program, and that the program should directly support those services that are otherwise unaffordable to consumers but for a Lifeline discount. Based on a review of the record in the Lifeline proceeding, the Commission has concluded that the price for mobile and fixed voice service is declining, but cost remains a major barrier to broadband adoption. Consequently, the Commission has decided to shift the Lifeline program even further toward data services by phasing-out support for standalone voice services.
The phase-out of Lifeline support for standalone voice service will occur over a multi-year period that will begin December 1, 2019 and end December 1, 2021.[7] After completion of the transition period, the Lifeline program will only support voice service when it is bundled with a broadband service which meets the new minimum Lifeline broadband service standards.
The phase-out of Lifeline support for standalone voice service will apply equally to mobile and fixed providers of voice services. But, there is an exception for census blocks where there is only one Lifeline provider. In these areas, the sole Lifeline provider may receive Lifeline support of $5.25 per month for standalone voice service provided to eligible subscribers until the first year after the FCC announces that a second Lifeline provider has begun providing service in the area.
Near the end of the phase-out transition, the Wireline Competition Bureau (Bureau) will review the Lifeline market and submit a “State of the Lifeline Marketplace Report” to the full Commission recommending whether the phase-out should continue or be revised.[8] The phase-out of Lifeline support for voice-only service will occur as follows:
Present day to December 1, 2019, voice-only Lifeline support will stay at $9.25 per month.
Beginning December 1, 2019 voice-only Lifeline support will decline to $7.25 per month.
Beginning December 1, 2020, voice-only Lifeline support will decline to $5.25 per month.
Beginning December 1, 2021, there will no longer be Lifeline support for voice-only service, or voice service bundled with a broadband offering that does not meet the applicable minimum service standards, unless the Commission has acted upon recommendations to do otherwise that were presented in the State of the Lifeline Marketplace Report.
Minimum Lifeline Service Standard: Mobile Voice Service
Prior to the commencement of the phase-out of support for mobile voice service, the FCC will phase-in minimum service standards for mobile Lifeline voice service that will apply until Lifeline support for standalone voice service is eliminated.[9] The minimum service requirements for mobile Lifeline voice service will be implemented using the following transition:
Beginning the later of December 1, 2016 or 60 days after Paperwork Reduction Act (PRA) approval, Lifeline supported mobile voice offerings must include at least 500 minutes per month.
Beginning December 1, 2017 Lifeline supported mobile voice offerings must include at least 750 minutes per month.
Beginning December 1, 2018, and until voice telephony is no longer a supported service, Lifeline supported mobile voice offerings must include 1,000 minutes per month.
Fixed service providers should note that the FCC will not impose minimum service standards on fixed voice service offerings.
Lifeline Will Continue To Support Bundled Service Plans
In the 2012 Lifeline Reform Order, the FCC amended its rules to allow Lifeline providers to offer bundled packages of voice and data services. The Lifeline program will continue to support bundled voice and broadband services, if one of the supported services offered as part of the bundle satisfies the newly-adopted minimum service standard requirements.[10] In other words, the monthly Lifeline discount may be applied to a mobile bundle of voice and data services so long as either the voice service or the data service meets the applicable minimum service standard. Other non-supported services (e.g., texting) may be bundled with supported services and the Lifeline discount may be applied to the bundle. The following bullet points explain how the phase-in of minimum service standards will impact bundles.
December 1, 2016 through November 30, 2019, a voice and broadband Lifeline bundle must include at least one supported service meeting the minimum service standards applicable at that time.
December 1, 2019 to November 30, 2021, a voice and broadband Lifeline bundle must include a broadband service offering that meets the broadband minimum service standards applicable at that time in order to receive the full $9.25 Lifeline benefit.
December 1, 2019 to November 30, 2021, a voice and broadband Lifeline bundle with a broadband offering that does not meet the applicable mobile broadband minimum service standards but does meet the mobile voice minimum service standard may receive the applicable support level for standalone mobile voice service.
Beginning December 1, 2021, there will no longer be Lifeline support for voice-only service, or voice service bundled with a broadband offering that does not meet the applicable minimum service standards, unless the Commission has acted upon recommendations to do otherwise that were presented in the State of the Lifeline Marketplace Report.
Exception To The Minimum Fixed Broadband Service Standard
The Commission has adopted an exception to the minimum Lifeline service standards for fixed providers who have yet to deploy broadband capable networks in specific geographic areas that meet the minimum service standards.[11] The exception applies in the following circumstances:
(1) The exception applies only to fixed broadband providers.
(2) The exception applies only where a fixed provider does not offer any generally available residential fixed broadband packages which meet the minimum service standards at a prospective subscriber’s residence.
(3) The exception only applies if the provider offers a generally available residential fixed broadband service to the prospective subscriber with speeds meeting 4 Mbps download and 1 Mbps upload.
In other words, in the event service at speeds of 10/1 Mbps is not available, ETCs are required to offer Lifeline-supported broadband if speeds at 4 Mbps/1 are commercially available. A provider qualifying for this exception may claim Lifeline support for a household even when providing service that does not meet the minimum standards for fixed broadband as long as the Lifeline discount is applied only to the purchase of its highest performing generally available residential offering that meets or exceeds 4Mbps/1Mbps.[12]
Lifeline-Only ETCs: Forbearance From The Requirement To Offer Lifeline Broadband Service
There are many service providers that have been designated as ETCs for the sole purpose of participating in and receiving support from the Lifeline program. These Lifeline-only ETCs are typically non-facilities based mobile wireless resellers that offer “no-charge” or “free” Lifeline voice service.
For existing Lifeline-only ETCs, the Commission will forbear from the obligation to offer broadband service, permitting such ETCs to solely offer voice if they so choose. To the extent that a Lifeline-only ETC elects to also offer broadband service to eligible low income subscribers, it may receive reimbursement for such service through the Lifeline program.
In order to avail itself of this forbearance relief, a Lifeline-only ETC must notify the FCC. Notification must be made by the later of 60 days after announcement of OMB approval of the requirement or 30 days after receiving designation as a Lifeline-only ETC.
Forbearance For Non-Lifeline-Only ETCs From The Requirement To Offer Lifeline Broadband Service In Certain Areas
Pursuant to Section 214(e)(1) of the Communications Act, ETCs are required to offer universal service supported services throughout their ETC-designated service areas. However, under the FCC’s current universal service rules, some ETCs do not receive high-cost support in certain census blocks within their ETC-designated areas, nor are they obligated to build-out broadband at 10 Mbps/1 Mbps speeds in these areas. Further, there are ETCs that receive support but have not deployed 10 Mpbs/1 Mbps capable networks throughout their entire ETC-designated service areas.
In light of these issues, the Commission will forbear from requiring existing ETCs that are not Lifeline-only ETCs to offer Lifeline-supported broadband service in certain areas.[13] Specifically, an ETC that receives high-cost support is not required to offer Lifeline-supported broadband service in census blocks where it does not commercially offer a broadband service that meets the minimum service standards of the Lifeline program pursuant to its high-cost obligations.
Conversely, an ETC has the obligation to offer the Lifeline discount on all qualifying services in areas where the ETC receives high-cost support, has deployed a network capable of delivering service that meets the Lifeline program’s minimum service standards, and commercially offers such service pursuant to its high-cost obligations. However, ETCs receiving frozen high-cost support – whether incumbent providers or competitive ETCs – are not required to offer Lifeline-supported broadband services in their designated service areas.
In areas where an ETC receives high-cost support but has not yet deployed a broadband network consistent with its high-cost service obligations, the obligation to provide Lifeline-supported broadband service begins only when the provider has deployed a high-cost supported broadband network to that area and makes its broadband service commercially available.[14]
In order to avail itself of the forbearance, an ETC must first notify the FCC. In its notification, an ETC must identify the areas by census block where it intends to avail itself of the forbearance relief. The notification must be filed by the later of 60 days after announcement of OMB approval of the Lifeline Modernization Order or 30 days after receiving designation as an ETC.[15]
Conditional Forbearance From The Lifeline Voice Service Obligation For ETCs That Are Not Lifeline-Only
For existing ETCs with designations enabling receipt of both high-cost support and Lifeline voice support, the FCC has granted forbearance from the obligation to offer and advertise Lifeline voice service where the following conditions are met:
1. 51 percent of Lifeline subscribers in a county are obtaining broadband service;
2. There are at least three other providers of Lifeline broadband service that each serve at least five percent of the Lifeline broadband subscribers in that county; and
3. The ETC does not actually receive federal high-cost universal service support.
The FCC’s conditional forbearance from the obligation to offer Lifeline voice service does not encompass an ETC’s existing Lifeline voice service subscribers served at the time the condition is met.[16] These subscribers effectively are “grandfathered” to avoid possible disruption that otherwise might occur when the forbearance criteria is met in the area in which they live.
It should be noted that the conditional forbearance from the Lifeline voice service obligation does not preclude carriers from electing to provide the supported Lifeline voice service and from receiving universal service support for doing so. Rather, it simply eliminates the mandatory obligation for them to do so under Section 214(e)(1) of the Communications Act and the FCC’s rules.
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[1] Lifeline and Link Up Reform and Modernization, WC Docket No. 11-42, Telecommunications Carriers Eligible for Universal Service Support, WC Docket No. 09-197, Connect America Fund, WC Docket No. 10-90, Third Report and Order, Further Report and Order, and Order on Reconsideration, FCC 16-38 (rel. Apr. 27, 2016) (Lifeline Modernization Order).
[2] Specifically, the FCC has amended Section 54.401 to include broadband Internet access service as a Lifeline-supported service.
[3] The Commission has clarified that the current rule that prohibits the collection of service deposits for plans that do not charge subscribers additional fees for toll calls applies only to standalone voice services. Thus, the FCC has amended Section 54.401(c) of its rules to clarify that Lifeline service providers are not precluded from collecting service deposits for eligible broadband services.
[4] See Lifeline Modernization Order at ¶106; 47 C.F.R. § 54.422(b).
[5] In order to determine what fixed broadband speeds a “substantial majority” of Americans subscribe to, the FCC will use the 30th percentile of subscribed to speeds based on FCC Form 477 data. By using the 30th percentile, the FCC arrives at a speed to which 70 percent of Americans already subscribe, and thus concludes that 70 percent constitutes a substantial majority. See Lifeline Modernization Order at ¶86.
[6] See Lifeline Modernization Order at ¶84.
[7] See Lifeline Modernization Order at ¶52.
[8] Lifeline Modernization Order at ¶48.
[9] Lifeline Modernization Order at ¶102.
[10] Lifeline Modernization Order at ¶102.
[11] See Lifeline Modernization Order at ¶107. The FCC will consider waivers on a case-by-case basis for mobile providers that do not meet the minimum speed standard for mobile broadband in particular areas.
[12] See Lifeline Modernization Order at ¶112.
[13] See Lifeline Modernization Order at ¶311.
[14] See Lifeline Modernization Order at ¶318.
[15] See Lifeline Modernization Order at ¶313.
[16] See Lifeline Modernization Order at ¶335.