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America’s poor can now get cheaper Internet access

(Atsushi Tomura/Getty Images)
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Federal regulators have approved a historic expansion of subsidies for the poor, fleshing out for the first time a set of Reagan-era discounts on phone service to include home Internet access.

The 3-2 vote by the Federal Communications Commission Thursday will let roughly 40 million Americans on food stamps, Medicaid or other federal assistance register for and use an existing benefit worth $9.25 a month to purchase broadband service, either as part of a voice bundle on cellular or fixed networks, or on a standalone basis with no voice plan attached. Of those eligible for Lifeline, more than 13 million have no Internet service, according to federal officials.

At a time when many Americans rely on the Internet to apply for jobs, take educational courses or look up information online, a lack of affordable service prevents the country's poorest from accessing the same opportunities as their wealthier peers, FCC Chairman Tom Wheeler has said. Thursday's measure to update the subsidy program, known as Lifeline, aims to narrow that gap.

"It's a simple concept: to provide assistance so that low-income Americans can access the dominant communications network of the day," Wheeler said.

A nation on the Internet, but disparate in speed and skill

The move does not mean poor Americans will pay $9.25 a month for Internet. Rather, the program works by providing a $9.25-a-month credit that can then be applied toward broadband, voice service or a mix of both.

The decision had broad support from consumer groups as well as the telecom industry, which was seeking a more streamlined program. But before it had a chance to pass, a series of frantic, eleventh-hour negotiations turned the scheduled vote into a desperate scramble by Democrats to preserve their coalition. The last-minute issues very nearly derailed the measure, according to people familiar with the matter.

At the center of the fight was a defection by Democratic Commissioner Mignon Clyburn — who spent the hours leading up to the vote hammering out a different compromise with Republicans than the one favored by Wheeler, the agency's top Democrat.

Wheeler's plan required Internet providers to offer download speeds of at least 10 Mbps to Lifeline customers. And it set a proposed budget for Lifeline at $2.25 billion a year. This plan, along with some minor modifications, was ultimately approved by a party-line vote Thursday.

But Republicans at the FCC have criticized Wheeler's approach as being fiscally irresponsible. In a last-minute side deal with Clyburn that did not include Wheeler, GOP commissioners proposed a more stringent budget of $2 billion. Their alternative also required Internet providers to offer much faster Internet speeds to low-income Americans, starting at 25 Mbps.

Consumer advocates said faster Internet might sound reasonable, but because the Lifeline benefit is only $9.25 per month, low-income Americans would have to pay out of pocket for the difference in speeds, undermining the point of the program. Wheeler's plan would allow Lifeline users to purchase a faster connection if they choose, but the plan from commissioners Ajit Pai and Michael O'Rielly would raise the costs of participating in Lifeline as a consumer, said Matt Wood, policy director for the advocacy group Free Press.

The Republican plan would also have driven up the costs of participating as an Internet provider, according to some industry officials. By requiring a faster speed standard, the FCC would have forced carriers to devote more resources to complying with the program's requirements.

Clyburn decided to back the Republican plan late Wednesday night, but Wheeler successfully pressured her not to support the deal, said Matthew Berry, an aide to Pai.

"What was done was very unfair to Commissioner Clyburn because now she's flip-flopped and it looks very bad," Berry told reporters Thursday.

But Clyburn said Thursday that her decision was voluntary.

"I negotiated in good faith to have a budget mechanism in place," she said in her written remarks. "Upon further deliberation, I concluded that such a mechanism could not fully achieve my vision of a 21st-century Lifeline program."

She later added: “I know I'm just five-foot-two-and-a-half, but I'm not easily bullied … I don't respond well to that.”

The dramatic confrontation behind closed doors Thursday underscores the political tensions at the FCC, which have reached a fever pitch in recent years. That's partly a reflection of increased partisanship on Capitol Hill. But it is also a result of highly controversial fights at the FCC itself, such as one over net neutrality. Wheeler has shown a willingness to push through numerous measures on party-line votes, in contrast to predecessors who often sought a more deliberative approach, analysts have said.