For the first time, the proposal would allow program participants to apply their discounts to standalone high-speed Internet service. Although Lifeline supports broadband when it comes bundled with phone service, it currently does not allow the poor to use the $9.25-a-month subsidy to pay for independent Internet plans.
The amount of the monthly credit will not rise under Wheeler's proposal, an agency official said. Rather, it will focus on expanding choices for low-income consumers so that they aren't limited to buying certain devices or plans. It will also establish a minimum standard for the kind of service available to Lifeline benefit recipients. For instance, the program could require service providers to offer Internet to Lifeline subscribers of at least a certain speed, or voice service with a certain number of minutes. The proposal will also seek to increase the number of telecom and broadband providers that participate in Lifeline.
"As communications technologies and markets evolve, the Lifeline program also has to evolve to remain relevant," said Wheeler in a blog post. "Broadband is key to Lifeline’s future."
The FCC could approve the measure by as early as its next meeting, on June 18. In so doing, Wheeler would be reinforcing his argument that the Internet is as crucial a tool for connectivity and development as phone service was in the 20th century.
Ninety-nine percent of the wealthy are connected to the Web in some way, according to the Pew Research Center. But poorer Americans lag far behind. Top FCC officials have argued that greater Internet access would help pull these Americans out of poverty.
"Too many of our citizens are stuck in digital darkness," FCC Commissioner Mignon Clyburn said in a speech last week, "without the primary tool needed for seamless communications for health care, education, civic participation and professional advancement."
The lack of connectivity among low-income Americans disproportionately affects minorities and children. As many as 5 million U.S. households with kids do not have access to high-speed Internet at home, driving some to seek out WiFi at fast-food joints just so they can complete their homework.
Compared with their wealthier peers, families that make less than $50,000 a year and have kids ages 6-17 are roughly four times as likely to lack high-speed Internet, according to the Pew Research Center.
The agency's Democratic commissioners, such as Clyburn, are likely to welcome Wheeler's proposal. But it will provoke a fight with Republicans on the commission who believe that the fund supporting Lifeline and other FCC subsidy programs has grown too large, too quickly.
"If it's going to balloon the size of the fund, I think the vote will fall along party lines," said Robert McDowell, a former Republican FCC commissioner. But if the overall fund stays the same size, he added, "then there's the potential for a unanimous vote."
The debate is likely to focus on two key issues, analysts say. First will be how Lifeline recipients can apply their discount to broadband. Wheeler's proposal, which was first reported by the New York Times, is expected to offer program participants a choice of either phone service, broadband or "a mix of both."
Another point of contention is who should be responsible for determining participants' eligibility, and how. Telecom companies are required to perform checks to ensure that no Lifeline recipient is benefiting from the program more than once. But this approach places unwelcome burdens on companies, said the FCC, and the system has come under scrutiny amid allegations of waste and fraud in the program.
"The FCC has failed to manage Lifeline efficiently in its current form," said Sen. David Vitter (R-La.), who has sought to end aspects of the program with legislation. "I cannot support any expansion of a program that has so few safeguards in place."
The FCC has in recent years sought to eradicate duplication in Lifeline. In 2012, the agency began a series of reforms which it says has reduced program spending by 24 percent. Wheeler's proposal Thursday weighs whether to appoint a third party that can verify eligibility for Lifeline. Providers of phone service have requested that an independent third party be appointed to manage the process, and Wheeler's proposal is likely to address the issue.
"We look forward to working with the FCC as it evolves this critical program in a manner that is fiscally responsible as well as responsive to Americans’ reliance on mobile solutions," said Scott Bergmann, vice president of regulatory affairs for the wireless industry trade group CTIA.
The coming fight over Lifeline raises inevitable questions over who should help pay for the low-income discounts. The program is funded by fees from telephone companies and consumers. But with the FCC poised to add broadband to the program, it's possible that the agency could ask Internet providers to chip in, too.
For the moment, the FCC has explicitly decided not to do so. The agency is waiting for a formal recommendation on the matter from a bipartisan group of state and federal officials known as the Federal State Joint Board on Universal Service. But on the heels of the FCC's net neutrality rules — which technically open the door to fees for Lifeline and other aid programs — industry advocates fear Internet providers would be required to pay up.