FCC Moves to Subsidize Internet as Republicans Warn of 'Tax' Hike

Denis Rozhnovsky/Shutterstock.com

The agency wants to help poor Americans get online, but Republicans warn of pouring money into the controversial "Obamaphone" program.

The Federal Communications Commission moved forward Thursday with an ambitious plan that could help millions of low-income Americans get online.

The agency proposed overhauling its Lifeline program, which currently covers only phone service, to subsidize high-speed Internet access. The proposal is a recognition of how critical the Internet is now for everyday tasks like finding a job, doing homework, and staying in touch with family.

But the commission's three Democrats had to override opposition from the two Republicans, who argued that the agency should root out fraud and waste in the program before considering paying for new services. Conservatives often mockingly refer to Lifeline as the "Obamaphone" program, but, as the FCC's Democrats repeatedly emphasized Thursday, the program was actually created during the Reagan administration.

"I am befuddled at how this Republican-developed program has suddenly become so partisan," FCC Chairman Tom Wheeler said.

But Republican Commissioner Ajit Pai argued that the Lifeline program today bears little resemblance to the program of the Reagan era. Although he didn't use the controversial "Obamaphone" term, he argued that the program has "exploded" in size under Obama's watch.

"The reality is this: Adjusting for inflation, the Lifeline program is over 23 times as large today as it was at the end of the Reagan administration," he said. "To equate the two is like saying thatThe Godfather: Part II is the same as Paul Blart: Mall Cop 2 because both are movie sequels."

Republican Commissioner Michael O'Rielly argued that the Democrats are trying to spend as much money as possible before the end of Obama's term.

The Lifeline program, which is currently about $1.7 billion, is funded through "universal-service" fees on consumers' monthly phone bills.

The commission voted to seek comment on its proposal, but it will need to vote again in several months to finalize the changes.

In addition to covering Internet access, the agency's proposal includes measures aimed at cracking down on abuse of the program. For example, phone companies, which get more funding for enrolling more people, would no longer be in charge of verifying that someone is eligible for the program. The agency also asks for comment on whether to cap the size of the program.

So consumers would be allowed to spend their $9.25 monthly subsidy on voice, mobile data, or home Internet access, but the size of that subsidy might not actually increase under the proposal.

"No one is more outraged at some of the absurdities and some of the actions that have occured in the marketplace by unscrupulous people," Wheeler said, arguing that changes made to the program by the George W. Bush-era FCC are primarily to blame for the explosion in fraud. 

Although the Republicans said they are open to considering covering Internet service, they argued that the proposal doesn't go far enough to protect the public's money.

"Despite some positive aspects to parts of this item, the commission's main proposal would take us in the wrong direction," Pai said. "It would expand a broken program. It would waste even more money. And it would raise taxes on the American people."

Commissioner Mignon Clyburn, a Democrat and fierce advocate for Lifeline, acknowledged that the program has become a political powder keg.

"The safe course would be one of inaction. But the oath I took requires that I try and use all the tools in my arsenal to close chronic divides and stay true to those words in the statute," she said. "We must not wait, remain idle, or play it safe when it comes to this program, for we know that broadband is the greatest technology equalizer of our time, but it can only be so, if everyone has access. If we fail or never try, the promises that broadband brings will be reserved only for the privileged."

(Image via Denis Rozhnovsky/ Shutterstock.com)