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Posted at 04:11 PM ET, 01/31/2012

FCC votes to fund broadband service for low-income homes

The Federal Communications Commission on Tuesday approved the overhaul of a phone subsidy program that would dedicate federal funds to bring broadband Internet service to low-income households.

In a unanimous vote, the FCC voted to make several changes to its Lifeline program that for the past 25 years has subsidized landline phone and wireless services to poor areas. The fund has been criticized for waste and abuse.

The FCC voted to improve data collection so that multiple carriers can’t seek federal funds for supplying service to the same subscriber. The agency also approved the creation of a database that made it easier to verify a consumer’s eligibility and ensure one home doesn’t receive multiple reimbursements for service.

The agency agreed to start a pilot project that would dedicate $25 million to provide broadband services to low-income families. The Lifeline program was estimated to have cost $1.3 billion in 2010.

The changes are part of bigger efforts to reform the $9 billion universal service fund which subsidizes phone and Internet service to rural areas. The FCC has said the Lifeline program needed to be updated and to focus on Internet service as consumers increasingly drop their home phone lines to communicate over the Web.

“We are infusing it with fiscal discipline for the first time,” said Commissioner Robert McDowell.

Telecom companies, however, raised questions about the agency’s role in the program. They and some analysts say the FCC has a spotty track record in distributing the funds, which come from a line-item fee in consumers’ phone bills.

“Policymakers must begin to discuss whether it continues to make sense for an independent agency to administer a fund this size with no congressional oversight or decision-making input to the appropriate size of the fund,” said Bob Quinn, AT&T’s senior vice president of federal regulatory affairs. “Counterpart programs for both energy and food are not administered in this manner.”

Separately, Comcast announced Tuesday that in one year, 41,000 households have signed up for its $9.99 a month broadband service to eligible low-income families. The service was offered as part of the FCC’s regulatory approval of the company’s joint venture with NBC Universal.


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