```

[Senate Hearing 114-140]
[From the U.S. Government Publishing Office]

                                                       S. Hrg. 114-140

                  LIFELINE: IMPROVING ACCOUNTABILITY 
                           AND EFFECTIVENESS

=======================================================================

                                HEARING

                               BEFORE THE

    SUBCOMMITTEE ON COMMUNICATIONS, TECHNOLOGY, INNOVATION, AND THE 
                                INTERNET

                                 OF THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              JUNE 2, 2015

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation
                             
                             
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      SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                   JOHN THUNE, South Dakota, Chairman
ROGER F. WICKER, Mississippi         BILL NELSON, Florida, Ranking
ROY BLUNT, Missouri                  MARIA CANTWELL, Washington
MARCO RUBIO, Florida                 CLAIRE McCASKILL, Missouri
KELLY AYOTTE, New Hampshire          AMY KLOBUCHAR, Minnesota
TED CRUZ, Texas                      RICHARD BLUMENTHAL, Connecticut
DEB FISCHER, Nebraska                BRIAN SCHATZ, Hawaii
JERRY MORAN, Kansas                  EDWARD MARKEY, Massachusetts
DAN SULLIVAN, Alaska                 CORY BOOKER, New Jersey
RON JOHNSON, Wisconsin               TOM UDALL, New Mexico
DEAN HELLER, Nevada                  JOE MANCHIN III, West Virginia
CORY GARDNER, Colorado               GARY PETERS, Michigan
STEVE DAINES, Montana
                    David Schwietert, Staff Director
                   Nick Rossi, Deputy Staff Director
                    Rebecca Seidel, General Counsel
                 Jason Van Beek, Deputy General Counsel
                 Kim Lipsky, Democratic Staff Director
              Chris Day, Democratic Deputy Staff Director
       Clint Odom, Democratic General Counsel and Policy Director
                                 ------                                

    SUBCOMMITTEE ON COMMUNICATIONS, TECHNOLOGY, INNOVATION, AND THE 
                                INTERNET

ROGER F. WICKER, Mississippi,        BRIAN SCHATZ, Hawaii, Ranking
    Chairman                         MARIA CANTWELL, Washington
ROY BLUNT, Missouri                  CLAIRE McCASKILL, Missouri
MARCO RUBIO, Florida                 AMY KLOBUCHAR, Minnesota
KELLY AYOTTE, New Hampshire          RICHARD BLUMENTHAL, Connecticut
TED CRUZ, Texas                      EDWARD MARKEY, Massachusetts
DEB FISCHER, Nebraska                CORY BOOKER, New Jersey
JERRY MORAN, Kansas                  TOM UDALL, New Mexico
DAN SULLIVAN, Alaska                 JOE MANCHIN III, West Virginia
RON JOHNSON, Wisconsin               GARY PETERS, Michigan
DEAN HELLER, Nevada
CORY GARDNER, Colorado
STEVE DAINES, Montana
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on June 2, 2015.....................................     1
Statement of Senator Wicker......................................     1
Statement of Senator Schatz......................................     2
Statement of Senator Nelson......................................     3
    Prepared statement...........................................     4
Statement of Senator Ayotte......................................    37
Statement of Senator Booker......................................    39
    Prepared statements from industry, civil rights and advocacy 
      groups supporting the Broadband Adoption Act of 2015.......    41
Statement of Senator Fischer.....................................    62
Statement of Senator Markey......................................    64
Statement of Senator Daines......................................    65
Statement of Senator Blumenthal..................................    67
Statement of Senator Manchin.....................................    69
Statement of Senator Sullivan....................................    71

                               Witnesses

Ronald A. Brise, Commissioner, Florida Public Service Commission, 
  National Association of Regulatory Utility Commissioners 
  (NARUC)........................................................     5
    Prepared statement...........................................     6
Michael Clements, Acting Director, Physical Infrastructure 
  Issues, U.S. Government Accountability Office..................    15
    Prepared statement...........................................    17
Scott Bergmann, Vice President, Regulatory Affairs, CTIA--The 
  Wireless Association..........................................    21
    Prepared statement...........................................    23
Randolph J. May, President, The Free State Foundation............    28
    Prepared statement...........................................    29
Jessica J. Gonzalez, Executive Vice President and General 
  Counsel, National Hispanic Media Coalition.....................    32
    Prepared statement...........................................    34

                                Appendix

Response to written questions submitted to Commissioner Ronald A. 
  Brise by:
    Hon. Hon. John Thune.........................................    77
    Hon. Joe Manchin.............................................    78
    Hon. Amy Klobuchar...........................................    79
Response to written questions submitted to Michael Clements by:
    Hon. John Thune..............................................    81
    Hon. Joe Manchin.............................................    82
Response to written questions submitted to Scott Bergmann by:
    Hon. John Thune..............................................    82
    Hon. Roger F. Wicker.........................................    84
    Hon. Joe Manchin.............................................    85
    Hon. Amy Klobuchar...........................................    86
Response to written questions submitted to Randolph J. May by:
    Hon. John Thune..............................................    86
    Hon. Roger F. Wicker.........................................    87
    Hon. Hon. Joe Manchin........................................    88
Response to written questions submitted to Jessica J. Gonzalez 
  by:
    Hon. John Thune..............................................    88
    Hon. Joe Manchin.............................................    89
    Hon. Amy Klobuchar...........................................    91

 
                  LIFELINE: IMPROVING ACCOUNTABILITY 
                           AND EFFECTIVENESS

                              ----------                              

                         TUESDAY, JUNE 2, 2015

                               U.S. Senate,
       Subcommittee on Communications, Technology, 
                      Innovation, and the Internet,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 9:31 a.m. in 
room SR-253, Russell Senate Office Building, Hon. Roger Wicker, 
Chairman of the Subcommittee, presiding.
    Present: Senators Wicker [presiding], Ayotte, Fischer, 
Moran, Sullivan, Gardner, Daines, Schatz, Nelson, McCaskill, 
Blumenthal, Markey, Booker, Manchin, and Peters.

          OPENING STATEMENT OF HON. ROGER F. WICKER, 
                 U.S. SENATOR FROM MISSISSIPPI

    Senator Wicker. This subcommittee hearing on 
Communications, Technology, Innovation, and the Internet will 
come to order.
    I think we will go ahead. We have a vote at 10:30, and we 
will probably be able to extend past that. Senator Schatz will 
be here shortly, but I don't think he will mind us going ahead 
and taking care of some of the preliminaries.
    Today, we examine the state of the FCC's Lifeline program, 
focusing our attention on two key issues: Is the program 
effective in reaching those it is meant to serve? And what more 
needs to be done to root out waste, fraud, and abuse in order 
to ensure the program is accountable to the consumers who fund 
it and, of course, ultimately, to the American public?
    The Lifeline program was established as part of the 
Universal Service Fund in 1985. The goal of the Universal 
Service Fund has always been to achieve universal service 
throughout the Nation. Lifeline, specifically, is intended to 
make telephone service available to qualifying low-income 
households. As mobile phone usage spiked in the early 2000s, 
Lifeline was extended to cover the cost of prepaid wireless 
service plans in addition to traditional landline service.
    Lifeline, like the entire Universal Service Fund, is paid 
for through a charge on consumers' phone bills. This major 
expansion of the program to wireless brought with it a dramatic 
increase in Lifeline disbursements, from $800 million in 2009 
to $2.2 billion at its peak in 2012.
    The FCC implemented reforms in 2012 to address the rising 
cost of the program as well as problems identified by a 2010 
GAO study. This has revealed a significant lack of agency 
control over waste, fraud, and abuse.
    Since the FCC's report in 2012, positive strides have been 
made, including a reduction in the size of the program from 
$2.2 billion in 2012 to $1.7 billion by the end of 2014. 
Certain reforms, however, still have yet to be implemented, 
contributing to lingering problems with the program.
    To examine the problems that persist with Lifeline, 
Chairman Thune requested that GAO study and report on the 
status of the FCC's reforms and the extent to which the FCC has 
evaluated the program's effectiveness. GAO's study, which was 
released earlier this year, revealed major outstanding issues. 
These include verification of eligibility, program growth, and 
extremely low participation in the FCC broadband adoption pilot 
program, the Commission's first step toward expanding Lifeline 
to cover the cost of broadband services.
    There are many benefits of broadband, which we saw at our 
last subcommittee hearing on connecting patients through 
telehealth.
    But today we are here to focus on our oversight role to 
ensure the Lifeline program is furthering its intended purpose 
and providing connectivity to those who cannot afford it. 
Before again expanding the program, we need to consider what 
problems remain and how we can address them, since consumers 
are bearing the cost of funding the program with increasing 
phone bills. Today we will examine outstanding reform issues 
and explore what can be done to curb issues.
    I look forward to the testimony of our distinguished panel, 
and I now turn to my distinguished colleague, the Ranking 
Member, Mr. Schatz.

                STATEMENT OF HON. BRIAN SCHATZ, 
                    U.S. SENATOR FROM HAWAII

    Senator Schatz. Thank you, Chairman Wicker. Good morning. 
And I thank the witnesses for participating in today's hearing.
    When Lifeline began almost three decades ago, the goal was 
to make sure that all Americans had the securities and 
opportunities that came with phone service, whether you needed 
to call an ambulance or call for a job interview.
    Just like that landline was necessary in the 1980s, 
everyone needs a broadband connection to participate in today's 
society, to perform the most basic tasks, like a video chat 
with your doctor, applying for a job, doing your homework, or 
paying for a parking ticket. Expanding Lifeline subsidies to 
broadband simply recognizes the reality of how people 
communicate today. Being connected today means being connected 
to the Internet.
    However, the program does need an overhaul. We must learn 
from the mistakes of the past, and we have to work on parallel 
tracks. That means reforming Lifeline and expanding it to 
broadband at the same time.
    Before discussing how to improve Lifeline, I also want to 
recognize, as does the GAO, that the FCC has made important 
progress since 2012. Reforms have helped to reduce Lifeline's 
spending by nearly 24 percent in the last 3 years. The FCC 
initiated 16 enforcement actions against ETCs, which led to 
more than $1 million in plan penalties.
    While progress has been made, we all agree Lifeline must be 
executed more efficiently, and the FCC recognizes that as well. 
In fact, last week, Chairman Wheeler circulated a set of 
proposals to revamp Lifeline. Based on the information we have 
seen so far, it seems that all of the tough issues are on the 
table for discussion.
    The FCC is proposing to overhaul the way they determine 
eligibility. The FCC will seek feedback on the right amount for 
the subsidy and whether subscribers should contribute 
themselves. The FCC will also be reviewing the need for a 
budget. Lifeline is the only USF program operating without one 
today.
    These reforms are necessary to ensure that Lifeline works 
well, but as we expand Lifeline to broadband, other 
considerations might come into play. For example, if the 
subsidy amount is the same for voice and broadband, we might 
assume that broadband services will cost the Lifeline 
subscriber more than a voice connection. We can also assume 
that faster service will be more expensive. We must consider 
how these program decisions will influence subscriber 
decisions.
    Most importantly, we need to consider training. The FCC and 
others have recognized that the cost of the service is only one 
of the barriers to broadband adoption, and study after study 
shows that simply making technology available is not enough. 
Successful programs provide training and tools so that people 
know how to use the technology in a way that is relevant to 
their life.
    The Internet Essentials program is the largest broadband 
adoption program for low-income Americans. That program seems 
to have successfully addressed this skills gap, and we need to 
take a look at this to make sure that Lifeline can do the same.
    We have to revamp Lifeline in order to make it an efficient 
program for participating carriers and for the contributors who 
help to pay for the program. Most important, we must make it 
work for the people who need it the most. This program, if done 
well, can empower low-income Americans with the access and the 
skills that they need to participate in the 21st century.
    I thank the Chairman.
    Senator Wicker. Thank you, Senator Schatz, for a very 
insightful and appropriate opening statement.
    I now turn to the distinguished Ranking Member of the full 
committee, Mr. Nelson, for his opening statement.

                STATEMENT OF HON. BILL NELSON, 
                   U.S. SENATOR FROM FLORIDA

    Senator Nelson. Thank you, Mr. Chairman. And I will make it 
very concise so we can get on. I am delighted to see our 
Commissioner from Florida here.
    It has been stated that the concept of universal service is 
the foundation of our Nation's communications policies. And, 
therefore, it is critical that we not forget the importance of 
the FCC's Lifeline program to keeping that universal service 
goal.
    We have seen now for over 30 years Lifeline provide basic 
telephone service. Without this relatively small subsidy, many 
of those families would go without and find themselves cutoff 
from any kind of communication with family and friends and 
employers and emergency services.
    In the intervening time, there have been attempts at 
modernization of the program to eliminate waste and fraud and 
improve accountability--and where there have been cases of 
abuse, the FCC has responded with targeted programs. But now 
the FCC is contemplating how to improve it to better meet 21st-
century communications needs, including what has been 
mentioned, broadband. And so I commend the FCC for beginning 
this inquiry.
    As this digital economy continues, access to broadband is 
absolutely necessary. And at a time when a lot of employers 
require--an overwhelming number of employers require, if you 
are going to apply for a job, you have to apply online, then 
those that are economically disconnected, we have to provide 
for them to be able to do this.
    When 7 out of 10 teachers assign homework that requires 
access to the Internet, obviously we must close the homework 
gap to address those low-income students who cannot do their 
homework because they don't have a broadband connection.
    At the same time, basic voice telephone service is 
essential as well. Any modernization of Lifeline should keep in 
mind the need for the balance between the voice and the 
broadband. And I have stated this as we have visited with the 
FCC. I am confident that the FCC will keep this critical 
balance in mind.
    Thank you, Mr. Chairman.
    [The prepared statement of Senator Nelson follows:]

   Prepared Statement of Hon. Bill Nelson, U.S. Senator from Florida
    I want to welcome all of our witnesses. In particular, I would like 
to thank Commissioner Ronald Brise for coming up from Tallahassee. You 
have been deeply involved in Lifeline and other universal service 
issues both during your time in the Florida House and on the Florida 
Public Service Commission.
    The concept of universal service has long been a foundation of our 
Nation's communications policies. With this enduring principle in mind, 
it is critical that we not forget the importance of the FCC's Lifeline 
program to advancing our universal service goals. For three decades, we 
have seen Lifeline provide basic telephone service to millions of 
vulnerable Americans. Without this relatively small subsidy, many of 
these families would go without and find themselves cut off from 
family, friends, employers and emergency services.
    Over the past few years, the FCC has undertaken modernization of 
the Lifeline program to eliminate waste, fraud, and abuse, and improve 
accountability. Where cases of abuse in the program have been 
identified, the FCC has responded with targeted reforms and robust 
enforcement actions against bad actors.
    Now, the FCC is contemplating how to improve the Lifeline program 
to better meet 21st century communications needs, including improving 
access to broadband. I commend the FCC for beginning this inquiry.
    There is no denying that, as we move to a digital economy, access 
to broadband has become essential. At a time when an overwhelming 
majority of employers require online job applications, we must help the 
economically disconnected have the opportunity to compete in the 
digital economy. When seven out of 10 teachers assign homework that 
requires access to the Internet, we must work to close the so-called 
homework gap to address those low-income students who cannot do their 
homework because they lack a broadband connection.
    At the same time, basic voice telephone service remains an 
important communications service for many of our most vulnerable 
populations, including the poor and elderly.
    Any modernization of Lifeline should keep in mind the need to 
balance preserving support for voice service with a proposed expansion 
to cover broadband. I am confident the FCC will carefully consider this 
critical balance.
    Finally, the Lifeline program has always been a bipartisan program. 
It was created during the Reagan administration and expanded to 
wireless services in the Bush administration. In Florida, this program 
has enjoyed the support of governors of both parties and the state 
legislature. We should not lose sight of the broad support for the 
goals of this important program.
    I look forward to hearing from the witnesses here today.

    Senator Wicker. And thank you very much, Mr. Ranking 
Member.
    We now proceed to the opening statements of our witnesses. 
And I think we will go from left to right as I look out over 
the audience.
    Our first witness will be Commissioner Ronald A. Brise, 
Florida Public Service Commission, Member of the Board of 
Directors of the National Association of Regulatory Utility 
Commissioners.
    He will be followed by Mr. Michael Clements, Acting 
Director for Physical Infrastructure Issues at GAO, and then 
Mr. Scott Bergman, Vice President, Regulatory Affairs, CTIA--
The Wireless Association. Our next witness will be Mr. Randolph 
May, President of The Free State Foundation. And our fifth 
witness will be Ms. Jessica Gonzalez, Executive Vice President 
and General Counsel, National Hispanic Media Coalition.
    We very much appreciate each of the witnesses being with us 
today. And we hope that they will be as successful as previous 
panels have been in adhering to the strict 5-minute rule for 
opening statements.
    Of course, your entire statement will be submitted to the 
record and will be printed therein.
    So let's begin by hearing from Commissioner Brise.

  STATEMENT OF RONALD A. BRISE, COMMISSIONER, FLORIDA PUBLIC 
SERVICE COMMISSION, NATIONAL ASSOCIATION OF REGULATORY UTILITY 
                     COMMISSIONERS (NARUC)

    Mr. Brise. Good morning, Chairman Wicker, Ranking Member 
Schatz, and all the members of the Subcommittee. And to my 
Senator, Senator Nelson, thank you for allowing me to be here 
this morning testifying today.
    I am representing NARUC, the National Association of 
Regulatory Utility Commissioners, the state commission experts 
on these topics in your states.
    You, Congress, established the universal service and the 
low-income Lifeline program as shared responsibilities of 
Federal and state regulators. I take this responsibility 
seriously as an individual, as do my colleagues across this 
nation.
    There are three points that I would like to make this 
morning.
    First, as my written testimony demonstrates, NARUC's member 
commissions have proven time and time again to be a crucial 
bulwark against fraud, waste, and abuse. Neither Congress nor 
the FCC should do anything to these state cops off the beat or 
diminish their authority.
    Continued coordination is absolutely crucial. The explosive 
growth in the program in the past decade shows what happens 
when proper safeguards are not in place. Florida, like many 
other states, implemented a real-time verification procedure 
before the FCC revised its rules. We also, like other states, 
have stopped some abuse through revoking or, in some cases, not 
granting the ETC designations.
    Second, it is time for policymakers to formally consider 
expanding the Lifeline program to cover broadband. But that 
involves building a solid record, and there are a myriad of 
questions that need examination.
    Which takes me to my last point. The joint board process 
established by Congress should be used again because it works. 
Indeed, state experience filtered through the joint board 
process was the basis for the last set of changes that the FCC 
made to its Lifeline rules--changes that clearly eliminated 
quite a bit of fraud and inefficiency in the program.
    Any expansion raises a host of questions that should be 
first examined by a Federal joint board to appropriately 
balance the interests of those that pay the costs of the 
program with the program's policy goals.
    Whether Congress or FCC acts, the joint board process will 
improve any final action. Lifeline certainly is a program that 
we all support, and the joint board process will be useful as a 
starting point in any discussions as the reforms move forward.
    As a nation, we should not continue to subsidize access to 
voice services alone. Broadband is vital to the economic growth 
and opportunity. I, my state colleagues, and NARUC stand ready 
and willing to work with you, the FCC, industry, the low-income 
community, and you in Congress on these issues.
    Thank you for the opportunity to testify, and I look 
forward to answering your questions.
    [The prepared statement of Mr. Brise follows:]

  Prepared Statement of Commissioner Ronald A. Brise, Florida Public 
      Service Commission on behalf of the National Association of 
                Regulatory Utility Commissioners (NARUC)
    Chairman Wicker, Ranking Member Schatz, and Members of the 
Subcommittee, thank you for the opportunity to testify today on the 
low-income Lifeline Program.
    I am a Commissioner with the Florida Public Service Commission 
(PSC) and currently serve as a NARUC representative on the Federal 
State Joint Board on Universal Service, the Board of Directors of the 
Universal Service Administrative Company, and on the FCC's 
Intergovernmental Advisory Committee. NARUC--like Congress--is a 
bipartisan organization. NARUC's members include public utility 
commissions (PUCs) in all of your states, the District of Columbia and 
U.S. territories with jurisdiction over telecommunications, 
electricity, natural gas, water and other utilities. NARUC member 
commissioners are the in-State experts on the impact of FCC programs in 
your state and on your constituents. The Universal Service Fund (USF) 
and the low-income Lifeline program we are discussing today are shared 
responsibilities of Federal and State regulators. I personally take 
this responsibility seriously, as do my colleagues across the country.
    Currently, Lifeline provides low-income consumers with discounts on 
monthly telephone service enabling them to connect to the vital 
telecommunications network. Established in 1985, the Federal program 
provides discounts for voice communications on monthly wireless or 
wired phone bills ($9.25 a month) to low-income households. At least 
half the states provide matching Lifeline funds ranging from $.75 to 
$8.50 a month with most states averaging about $3.50.
    NARUC has a long history of supporting this vital social 
program.\1\
---------------------------------------------------------------------------
    \1\ See, NARUC's July 2000 Resolution regarding Universal Service 
for Low Income Households at: http://www.naruc.org/Resolutions/
lifeline_summer00.pdf; July 2005 Resolution Supporting the efforts of 
the FCC and NARUC to promote Lifeline Awareness at: http://
www.naruc.org/Resolutions/LifelineAwareness_s0705.pdf; July 2009 
Resolution Proclaiming National Telephone Discount Lifeline Awareness 
Week, at http://www.naruc.org/Resolutions/Resolution%20on
%20Lifeline%20Awareness%20Week.pdf.
---------------------------------------------------------------------------
    We have also supported transitioning the program to include 
broadband service.\2\ Specifically, NARUC supports changes to ``defray 
a meaningful amount of the program participant's average cost for the 
installation/activation and monthly charges for broadband service and 
acquisition of enabling devices.'' \3\ We also believe a Joint Board 
referral on lifeline issues to, among other things, as per our February 
2009 Resolution, evaluate the FCC's Pilot program \4\ and ``to make 
recommendations regarding its continuation and configuration as a 
national program,'' should precede final FCC action.\5\ Our subsequent 
July 2011 Resolution specifically ``urges the FCC . . . and the states 
to work within the existing Federal Universal Service Fund's budget . . 
. to improve broadband service adoption . . . through coordinated 
Lifeline and Link-Up Broadband Service Pilot Program projects.''
---------------------------------------------------------------------------
    \2\ See, NARUC's February 2008 Resolution to Support Equal Access 
to Communication Technologies by People with Disabilities, at http://
www.naruc.org/Resolutions/People%20with%20
Disabilities%20Resolution1.pdf; February 2009 Resolution on Lifeline 
and Link-Up Program Support for Broadband Internet Access Services and 
Devices, at: http://www.naruc.org/Resolu
tions/TC%20Resolution%20on%20Lifeline%20and%20Link-
Up%20Program%20Support%20for%
20Broadband%20Internet%20Access%20Services%20and%20Devices.pdf; 
November 2009 Resolution on Legislation to Establish a (Permanent) 
Broadband Lifeline Assistance Program, at http://www.naruc.org/
Resolutions/Resolution%20on%20Legislation%20to%20Establish%20a%
20Broadband%20Lifeline%20Assistance%20Program.pdf.
    \3\ See, NARUC's July 2011 Resolution Supporting Low-Income 
Broadband Adoption Program, at http://www.naruc.org/Resolutions/
Resolution%20Supporting%20a%20Low-Income%20Broad
band%20Adoption%20Program.pdf
    \4\ See, Veach, Julie, Chief, FCC Wireline Competition Bureau, 
Driving Lifeline Updates with Data: FCC Blog (May 22, 2015--1:10 PM) 
at: https://www.fcc.gov/blog/driving-life
line-updates-data. See also, the FCC's Low-Income Broadband Pilot 
Program data sets at: https://www.fcc.gov/encyclopedia/low-income-
broadband-pilot-program and the WCB Low-Income Broadband Pilot Program 
Staff Report (May 22, 2015) at: https://www.fcc.gov/document/wcb-low-
income-broadband-pilot-program-staff-report.
    \5\ The recent GAO Report suggests some additional review may be 
warranted. See GAO-15-335 Report to the Chairman, Committee on 
Commerce, Science, and Transportation, U.S. Senate: Telecommunications: 
FCC Should Evaluate the Efficiency and Effectiveness of the Lifeline 
Program (March 2015) http://www.gao.gov/assets/670/669209.pdf (``The 
usefulness of information FCC gathered through its broadband pilot 
program may be limited due to the lack of an evaluation plan and other 
challenges . . . Although GAO previously recommended in 2010 that FCC 
develop a needs assessment and implementation and evaluation plans for 
the pilot, FCC did not do so and now faces difficulties in evaluating 
the program without established benchmarks.'')
---------------------------------------------------------------------------
    As technology continues to move forward, it is critical to the 
economic well-being of our Nation that all Americans can communicate 
effectively. Broadband has become a vital communications conduit. It is 
time for Congress and the FCC to consider expansion.
    However, our experiences during the rapid expansion the Lifeline 
program since 2005 illustrates why sound safeguards, careful 
consideration, and continued oversight are necessary.
    NARUC and its members were quick to identify many of the concerns 
policymakers continue to focus on today.
    The Lifeline program grew from about $800 million in 2008 to $2.2 
billion in 2012.
    This explosive growth in the program indicated the business plans 
of the new prepaid wireless ETCs were both profitable and popular. 
Unfortunately, as later FCC enforcement actions would demonstrate,\6\ 
the framework in place was not adequate to shield the program from 
extensive fraud and abuse. The FCC's recent reforms, based on a 
Federal-State Joint Board recommended decision, were a significant step 
forward. But some problems still remain.\7\
---------------------------------------------------------------------------
    \6\ According to the FCC, by November 1, 2013, ``over 2 million 
duplicate subscriptions were eliminated, and the FCC's reform's are on 
track to save the fund over $2 billion over three years.'' FCC Proposes 
Nearly $33 Million in Penalties Against Lifeline Providers That Sought 
Duplicate Payments for Ineligible Subscribers, FCC Press Release 
(November 01, 2013), at https://transition.fcc.gov/eb/News_Releases/
DOC-323858A1.html; FCC Proposes Nearly $44 Million in Fines Against 3 
Lifeline Providers, FCC Press release (December 11, 2013) at https://
transition.fcc.gov/eb/News_Releases/DOC-324620A1.html; FCC Proposes 
$14.4 Million Forfeitures to Protect Lifeline Service, FCC Press 
Release (June 25, 2013) at https://transition.fcc.gov/eb/News_Releases/
DOC-323565A1.html.
    \7\ See, e.g., AT&T and SNET to Pay $10.9 Million for Overbilling 
Federal Lifeline Program, FCC Press Release (April 29, 2015), at: 
https://transition.fcc.gov/eb/News_Releases/DOC-333257A1.html See also, 
Notice of suspension and initiation of debarment proceeding, to Mr. Wes 
Yui Chew from Jeffrey J. Gee, Chief, Investigations and Hearings 
Division, FCC Enforcement Bureau, File No. EB-IHD-15-00019046, DA 15-
630 (May 26, 2015), at: https://apps.fcc.gov/edocs_public/attachmatch/
DA-15-630A1.docx, disbarring the addressee for his conviction of money 
laundering for transferring $20,455,829.10 to his personal bank account 
while knowing that Icon had thousands fewer lifeline customers than it 
reported. See also, footnote 5, supra. 
---------------------------------------------------------------------------
States Remain a Crucial Safeguard Against Waste, Fraud and Abuse
    As both Congress and the FCC consider whether to expand the program 
to include broadband service, it certainly would be prudent to 
reevaluate current safeguards and consider possible improvements.
    A 2009 NARUC resolution, responding to the post-2005 expansion, 
pointed out that ``some states are developing real-time access to 
information necessary to verify household eligibility and ensure that a 
household receives only one Lifeline Subsidy'' and called upon both 
states and the FCC to ``review existing procedures to verify 
eligibility. . .including consideration of real-time verification.'' 
\8\
---------------------------------------------------------------------------
    \8\ See, Resolution on Lifeline Service Verification (November 
2009), available online at: http://www.naruc.org/Resolutions/
Resolution%20on%20Lifeline%20Service%20Verification.pdf.
---------------------------------------------------------------------------
    My State, Florida, was one that implemented a real-time 
verification procedure in 2007. Consumers participating in the 
Supplemental Nutrition Assistance Program, Medicaid, or Temporary 
Assistance for Needy Families programs can electronically apply for 
Lifeline through the Florida Department of Children and Families or on 
the Florida PSC Website. In either case, applicants are verified as 
participants in one of those qualifying programs in real-time. 
Implementation of the electronic Lifeline Coordinated Enrollment 
Process in Florida has been a major success with over 734,000 
applications received since 2007.
    Our federalist system allows states like Florida to act as 
laboratories for programs providing useful and tested templates to 
guide Federal (and other State) policy makers' decisions.
    We commend the FCC for its 2012 reforms \9\ and aggressive 
enforcement to reduce waste, fraud and abuse, as well as its 
coordination with NARUC and States. Coordinated action removed more 
than 2 million duplicate subsidies, and brought the fund down to about 
$1.6 billion in 2014. At the same time, the Federal USF contribution 
factor remains in double digits--currently set at 17.4 percent of 
interstate revenues.
---------------------------------------------------------------------------
    \9\ See, FCC Reforms, Modernizes Lifeline Program for Low-Income 
Americans, FCC Press Release, (January 31, 2012), at: https://
www.fcc.gov/document/fcc-reforms-modernizes-lifeline
-program-low-income-americans.
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    Florida was not alone. Both before and after the FCC's 2012 action, 
several states enacted prophylactic measures such as databases on 
duplicates and eligibility and periodic compliance audits of carriers.
    According to an informal survey of our members, at least five 
states established programs to eliminate duplicative support and have 
been allowed to opt out of the FCC's National Lifeline Accountability 
Database.\10\ At least 15 of the states that responded to our informal 
surveys use State social service databases to confirm consumer 
eligibility for participation in the Lifeline program.\11\ At least one 
(more) state has initiated a pilot program. In two more, the largest 
Incumbent Local Exchange Carrier has a contract to access the social 
service database to confirm eligibility. But the costs of establishing 
these verification systems can be high. States, like the Federal 
government, are not immune to current economic conditions and fiscal 
restraints. As often happens, the FCC's announcement that it was 
creating databases was likely an incentive for other states to defer 
expending scarce resources to create a State-specific database.
---------------------------------------------------------------------------
    \10\ States establishing their own program to eliminate duplicates: 
California, Texas, Vermont, Oregon, and Puerto Rico.
    \11\ States responding to either the 2013 or 2015 they have a 
system or program in place to confirm the eligibility of Lifeline 
subscribers by using social service agency databases: CA, FL, ID, IL, 
IN, KS, MI, NE, NC, NY, OR, PA, WA, WI, WY. MN has a pilot program 
ongoing. In AZ & GA the largest ILEC in the state has contracted for 
access to the social service database but no other ETC has access at 
this point.
---------------------------------------------------------------------------
    Also, in many States, including mine, Eligible Telecommunications 
Carriers (ETCs) have been reluctant to take the steps and incur costs 
necessary to utilize available State social service databases for 
verification. This problem remains despite a specific FCC rule 
requiring all ETCs to utilize existing State databases.\12\ Though some 
may ascribe more venial motivations, it is clear that carriers are also 
hoping to avoid some compliance costs by waiting for a national 
database. This is a problem for states that offer eligibility 
verification resources. We have been unable to locate any formal agency 
action to enforce this rule.
---------------------------------------------------------------------------
    \12\ See 47 C.F.R. Sec. 54.410(c)(i)(A).
---------------------------------------------------------------------------
    Thirteen responding states have programs to periodically conduct 
compliance audits on ETCs and/or of Lifeline recipients.\13\ For 
example, California, in addition to financial and compliance audit 
provisions, has had annual renewal/recertification requirements since 
2006.
---------------------------------------------------------------------------
    \13\ States responding to either the 2013 or 2015 surveys that have 
requirements for requiring periodic compliance audits on lifeline 
carriers or recipients: CA, CO, FL, KS, ME, MA, MO, MS, NE, NJ, OH, OR, 
WI.
---------------------------------------------------------------------------
    In some cases, states have revoked or refused to grant an ETC 
designation pursuant to Section 214(e) of the 1996 Act. This capability 
is a crucial component for policing the fund to eliminate bad actors. 
Six states responding to our survey have refused an application for ETC 
designation filed by a carrier. Seven others, including Florida, 
revoked designations for questionable practices and/or violating 
program rules.\14\ But these numbers do not tell the whole story. In 
many cases, a carrier whose ETC application or existing ETC designation 
is being challenged will withdraw its application or relinquish its ETC 
status once it becomes clear it will not be granted or may be revoked. 
Such actions are not reflected in any statistics. Florida, for example, 
has had 19 ETC filings withdrawn. Moreover, many states require ETCs to 
certify--when they are seeking designation or submitting annual 
filings--that it is in compliance with all Federal and State rules and 
whether the provider's ETC designation has been suspended or revoked in 
any jurisdiction.
---------------------------------------------------------------------------
    \14\ States responding they had revoked a carrier's ETC 
designation: FL, KS, KY, MI, MN, WA, WI. Florida revoked the 
designations of two companies for abuse of the Lifeline program, one of 
which faces criminal charges in Tampa Federal court this summer. See 
Florida PSC Docket No. 080065, Investigation of Vilaire Communications, 
Inc.'s eligible telecommunications carrier status and competitive local 
exchange company certificate status in the state of Florida, and Docket 
No. 110082-TP, Initiation of show cause proceedings against American 
Dial Tone, Inc., All American Telecom, Inc., Bellerud Communications, 
LLC, BLC Management LLC d/b/a Angles Communication Solutions, and 
LifeConnex Telecom, LLC for apparent violations of Chapter 364, F.S., 
Chapters 25-4 and 25-24, F.A.C., and FPSC Orders.
---------------------------------------------------------------------------
    Unfortunately, the ability of our members to audit and investigate 
waste, fraud, and abuse by wireless ETCs is hampered in some states 
because of current (but reversible) limitations on oversight over 
wireless carriers.\15\ For others, the ability to effectively oversee 
any broadband Internet access Lifeline providers might be hampered by 
other State laws targeting IP-based services.\16\ Questions remain: Can 
the FCC marshal the resources to properly oversee the program for all 
States? Should Congress encourage states to play a stronger compliance 
role? These are questions for Congress and this committee to consider.
---------------------------------------------------------------------------
    \15\ State Commissions generally designate carrier participation in 
the Lifeline program for wireline carriers. That is not always the case 
for wireless providers. Ten states and the District of Columbia do NOT 
grant ETC status for wireless carriers because they lack the 
jurisdiction under State statute, i.e., Alabama, Connecticut, Delaware, 
New Hampshire, North Carolina, New York, Tennessee, Texas, the 
Commonwealth of Virginia, Florida and the District of Columbia. In 
these jurisdictions a crucial line of defense against abuse--State 
oversight--is non-existent or at least more limited.
    \16\ Several states continue to designate wireless ETCs despite not 
having specific authority over them. It is anticipated that this will 
also be the case if the program is expanded to cover broadband. 
Additionally, many states with limited regulatory authority often work 
informally to resolve consumer complaints.
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Partnership, Not Preemption
    The Lifeline program, however modified, will continue to benefit 
from coordinated Federal and State oversight. There is simply no reason 
to reduce the number of State regulatory ``cops'' on the beat or 
further limit their enforcement/oversight authority.
    Managing the total size of the USF, and eliminating fraud and 
waste, is important to protect the consumers who pay for these programs 
through bill surcharges. Those surcharges burden consumers and can 
directly undermine and negatively affect the competitive market if 
effective accountability/screening mechanisms are not in place.
    NARUC represents states that are both net donors to and net 
recipients from the Federal lifeline programs. However, I come from a 
net donor State. As you might expect, I am personally and particularly 
sensitive to the clear need to balance the growth in the fund with the 
program's policy goals. Like all net donor States, Florida is 
necessarily concerned about the disparity between what Florida 
customers pay into the Federal USF versus what that USF disburses to 
our citizens. In 2013, for all Federal USF programs--including 
lifeline, Floridians paid-in $539 million but only received back $256 
million--leaving Florida as a net contributor of $283 million.
    In the Joint Board process, which includes State Commissioners from 
both net donor and recipient States, Congress has provided an excellent 
vehicle to:

   limit unintended disruptions to State programs,\17\
---------------------------------------------------------------------------
    \17\ See Appendix B ``Impacts on State.''

   assure national policy decisions benefit directly from 
        States' experiences (as was reflected in the pragmatic reforms 
        the FCC adopted to the lifeline program--based--in part on 
---------------------------------------------------------------------------
        existing State compliance mechanisms),

   critique proposals to update the program's policy goals, and

   maintain the crucial enforcement and compliance partnership.

    Our 2009 resolution suggests a referral would be a useful pre-
requisite to final FCC action expanding the program.\18\
---------------------------------------------------------------------------
    \18\ Over 8 years have passed since the November 2007 USF Joint 
Board initially recommended broadband Internet access be a supported 
service. Our 2009 resolution, which was after that referral (and cites 
it in the 4th Whereas), recognized that the record was already stale 
and specifically recommends that: ``the FCC direct the Federal State 
Joint Board on Universal Service to conduct an evaluation of the 
(Lifeline Broadband) Pilot program and make recommendations regarding 
its continuation and configuration as a national program.'' It has been 
almost 5 years since the last recommended decision on Lifeline 
discussed, infra. See, e.g., footnote 19, infra.
---------------------------------------------------------------------------
    Indeed, the last 2010 Lifeline Recommended decision, in  76-
78,\19\ highlights the need for additional Joint Board input before 
expansion of the Lifeline program to broadband services:
---------------------------------------------------------------------------
    \19\ Federal-State Joint Board on Universal Service Recommended 
Decision, November 4, 2010, at http://www.universalservice.org/_res/
documents/about/pdf/fcc-orders/2010-fcc-orders/
FCC-10J-3.pdf.

        76. Although the Referral Order requested that the Joint Board 
        consider whether the extension of the Lifeline program to 
        include broadband services would alter its recommendations . . 
        . it is difficult to consider whether any of the instant 
        recommendations should be modified prior to the appropriate 
        consideration of the broadband services that might be included 
        in such an extension of the low-income program. Indeed, some 
        members of the Joint Board would have preferred a more 
        extensive referral on these issues, and at least one commenter 
        noted that the Joint Board should have a more extensive role in 
        the consideration of extending the Universal Service Fund's 
        support to broadband. [] At the same time, the Joint Board 
        recognizes the need to ensure continued support for existing 
---------------------------------------------------------------------------
        voice networks.

        77. Neither the Commission nor this Joint Board can adequately 
        address potential changes to create a Broadband Lifeline plan 
        without initially determining the definition of the broadband 
        services or functionalities to be supported, sources of 
        funding, the funding and contribution rules, and the overall 
        approach to using low-income support to achieve universal 
        broadband service. In fact, the Joint Board would like to 
        emphasize that, as the Commission moves forward with 
        considering the National Broadband Plan's recommendations on 
        these and other universal service related issues, there are 
        many practical issues to be considered. They include, but are 
        not necessarily limited to: Conceptually, how should 
        ``broadband'' eligible for Federal USF Lifeline support be 
        defined and measured, including consideration of typical 
        (actual) versus advertised upload and download speeds; 
        Technology type and technology neutral funding mechanisms; 
        Price, affordability, subscribership, and penetration; 
        Broadband usage, when that usage is subject to some sort of 
        data or usage cap; How best to ensure availability of broadband 
        service in unserved and/or underserved areas; Terms and 
        conditions for data plans that include some form of broadband 
        Internet access or other broadband service; and Once broadband 
        is defined and a determination is made as to what to support 
        and how to provide that support, it would still be necessary to 
        determine whether the Lifeline discount would be applied as a 
        percentage or a fixed dollar discount off of some currently 
        undefined price, or some other measure.

        78. Furthermore, given the lack of a definition for the term 
        ``broadband'' as a supported service, and how such service 
        would be calculated and distributed, it would be extremely 
        difficult, if not impossible, to comply with even the 
        Commission's de minimis broadband-related requests that were 
        included in the Referral Order.[] In fact, NASUCA points out in 
        its comments that ``it is difficult to comment on `broadband 
        Lifeline' because the details have not been fleshed out, adding 
        further that reclassification is needed in order to ensure the 
        legality of broadband Lifeline support.'' [] The sheer number 
        of issues relevant to defining broadband creates a great deal 
        of uncertainty. This uncertainty is a significant issue, in and 
        of itself, because it makes it impossible to predict the impact 
        of adding support for broadband or the recommendations for 
        possible changes to eligibility, verification, and outreach, or 
        to measure the impact of such changes to the overall size of 
        the fund.'' (Footnotes omitted.)

    Since this recommended decision, the FCC has issued several crucial 
orders that could impact any changes to the program and suggest that a 
referral is appropriate and will be a useful exercise.\20\
---------------------------------------------------------------------------
    \20\ See, e.g., In the Matter of Protecting and promoting the Open 
Internet, GN Docket No. 14-28 (FCC No. 15-24) (rel. March 12, 2015), 
published in the Federal Register April 13, 2015 (80 Fed. Reg. 19737), 
at: https://www.federalregister.gov/articles/2015/04/13/2015-07841/
protec
ting-and-promoting-the-open-internet. The full text of the decision is 
at: https://apps.fcc.gov/edocs_public/attachmatch/FCC-15-24A1.pdf. 
(Among other things, reclassifying broadband as a Title II 
``telecommunications service.''); Connect America Fund, Report and 
Order and Further Notice of Proposed Rulemaking, 26 F.C.C. Rcd 17663 
(2011); and Federal State Joint Board on Universal Service; Universal 
Service Contribution Methodology; A National Broadband Plan For Our 
Future, WC Docket Nos. 96-45, 06-122, GN Docket No. 09-51, Order, 29 
FCC Rcd 9784 (2014).
---------------------------------------------------------------------------
    Certainly, the process works. I was pleased the FCC took action on 
Lifeline in 2010. In May of that year the FCC asked the Federal-State 
Joint Board on Universal Service to review the existing eligibility, 
verification, and outreach rules for the Lifeline and Link-Up universal 
service programs.\21\ The FCC also opened and maintains a robust and 
open dialogue with NARUC and the States. I give the FCC, especially the 
Wireline Competition Bureau, FCC Commissioner Clyburn--the former Chair 
of the Federal State Joint Board on Universal Service, her staff and, 
of course, the other sitting FCC Commissioners, much credit for 
tackling this issue and seeking vital State input throughout the 
process. This was a textbook example of how the Congressionally-
established Joint Board process can be properly utilized to address 
issues quickly and provide an excellent basic template for FCC action 
on this issue.
---------------------------------------------------------------------------
    \21\ Federal-State Joint Board On Universal Service; Lifeline and 
Link-Up, CC Docket No. 96-45, WC Docket No. 03-109, Order, 25 FCC Rcd 
5079 (2010).
---------------------------------------------------------------------------
    The Universal Service Joint Board came back with a recommended 
decision in record time--around six months--in November of 2010. It 
addressed the Lifeline questions asked by the FCC and more--
recommending that the FCC take into consideration the additional issues 
of broadband, overall fund size, and prepaid wireless Lifeline service 
as it moved forward with universal service reform.\22\ In the January 
31, 2012 Report and Order and Further Notice of Proposed Rulemaking, 
the FCC either enacted or sought additional comments on all of the 
Joint Board recommendations. Again, this is exactly how the 
congressionally mandated Federal-State Joint Board process should be 
used. The FCC should consider a referral here before taking final 
action.\23\
---------------------------------------------------------------------------
    \22\ Federal-State Joint Board on Universal Service Recommended 
Decision, November 4, 2010, at http://www.universalservice.org/_res/
documents/about/pdf/fcc-orders/2010-fcc-orders/
FCC-10J-3.pdf.
    \23\ Questions such as confidentiality of a Lifeline applicant's 
information, number of entities with access to the database, possible 
``opt out'' provisions of the national eligibility database for States, 
the interaction of State and Federal databases, and many other issues 
require additional illumination--and the Joint Board process is an idea 
vehicle to conduct the needed review.
---------------------------------------------------------------------------
Responsibility and Review
    Whatever else the FCC does, as both Congress and the FCC consider 
expanding the program to include broadband service, it certainly would 
be prudent to reevaluate current safeguards and consider possible 
improvements in oversight.\24\
---------------------------------------------------------------------------
    \24\ On April 25, 2013, NARUC President (and Washington State 
Commissioner) Phil Jones testified before the U.S. House of 
Representatives Energy and Commerce Committee, Subcommittee on 
Communications and Technology for NARUC on The Lifeline Fund: Money 
Well Spent? The text of his testimony is available online at http://
www.naruc.org/Testimony/
13%200425%20NARUC%20Pres%20%20P%20%20Jones%20House%20CT%20Subcmte%20Life

line%20Testimony%20FINAL%20_2_.pdf. In response to a question from 
Chairman Walden, Commissioner Jones said that when prepaid wireless 
carriers came in to his commission to obtain ETC designation., he asked 
them for cost information and they refused to give them data. The 
carriers stated that the requested data dealt with ``rates'' and states 
are preempted from regulating wireless rates. See, Archived Video, 
April 25, 2015 House Energy and Commerce Committee Lifeline Hearing at: 
http://energycommerce.house.gov/hearing/lifeline-fund-money-well-spent. 
Certainly, in considering the efficient level of benefits that must be 
offered to attract Lifeline service providers--one crucial input is the 
actual carrier costs (or a reasonable approximation thereof) of 
providing the service. Without such information, it is unclear how to 
determine if current subsidy levels are either too generous or not 
generous enough to assure carrier participation in the program.
---------------------------------------------------------------------------
    Continued coordination with states is crucial. And the FCC 
generally has continued coordination and outreach with NARUC's member 
commissions about possible new problems or compliance issues with the 
Lifeline program, through, in part, the commendable efforts of its new 
Enforcement Chief, Travis LeBlanc, USF Strike Force Director, Loyaan 
Egal, former Wireline Competition Bureau (WCB) Chief Julie Veach and 
her replacement Matt DelNero, WCB Deputy Bureau Chief Ryan Palmer, 
Consumer and Governmental Affair Bureau Chief Kris Monteith, and CGB 
Intergovernmental Affairs Chief Greg Vadas, among many other staff. The 
Universal Service Administration Company should also be commended for 
its recognition of the important role states necessarily play in this 
process.
    NARUC has not had an opportunity to formally consider specific 
positions on the Chairman Wheeler's May 28, 2015 proposal to issue a 
rulemaking on Lifeline services.\25\ And, while we have no resolution 
on point, it certainly seems logical, as the NPRM suggests, for the FCC 
to require providers to retain documentation of eligibility for a time 
that is at least long enough to allow for effective oversight and 
audits of the carriers' qualification procedures. That proposal also 
seems to raise questions that would benefit from a Joint Board 
recommended decision.
---------------------------------------------------------------------------
    \25\ FCC Chairman Wheeler Seeks Comment On Modernizing Lifeline To 
Make 21st Century Broadband Affordable For Low-Income Households (May, 
28, 2015), at: https://www.fcc.gov/document/chairman-seeks-comment-
modernizing-reforming-lifeline-broadband. See also, Wheeler, Tom, FCC 
Chairman, A lifeline for Low-Income Americans: FCC Blog (May 28, 2015-
01:25 PM) https://www.fcc.gov/blog/lifeline-low-income-americans.
---------------------------------------------------------------------------
    In preparation for my testimony here today, NARUC did a quick 
informal (and necessarily incomplete) survey of our members to elicit 
suggestions on improving the Lifeline program. The ideas provided by 
those that responded to last week's survey (combined with a similar 
survey conducted about a year ago under similar circumstances) are 
shown in appendix A to this testimony.
None of these ideas have been considered formally by NARUC or any 
        specific State commission. Accordingly none are endorsed by the 
        association or any specific member of the association.
    However, as they were offered by those most familiar with the on-
the-ground implementation of the Lifeline program, they certainly can 
provide a useful starting point in any discussion of needed reforms.
    The FCC's National Lifeline Accountability Database (NLAD) is up 
and running. This is a major step forward and can only significantly 
reduce duplicative support nationally. As with implementation of any 
new process, issues arise. Some NARUC commissions received complaints 
about the recertification process. For example, there are cases of 
recipients being improperly de-enrolled for duplicative service after 
they switched Lifeline providers or being told they were already in the 
database despite only subscribing to one Lifeline service. This is 
apparently an issue with how and when the database wasn't updated 
promptly. These concerns have already been shared with USAC and they 
have been very responsive. I am told corrections are in progress now.
    Although NARUC has not formally taken any position on such access, 
it does seem logical that providing State (read-only) access to the 
NLAD database would also be a step forward. Such access allows State 
PUCs to address such complaints as well as better monitor the in-State 
activity within the program. Indeed, the USAC recently held a webinar 
for State Commissions to learn what states would need and expect from 
access to the database. It seems likely USAC will look for ways to 
grant access to the duplicates database in the near future. Certainly, 
USAC has been very responsive to State concerns.
    I urge Congress to support the FCC and USAC efforts to complete the 
national eligibility database. NARUC fully recognizes the heavy lift 
facing the FCC in creating the much more complicated national 
eligibility database. The FCC needs more input on this and as some 
states have functioning databases, we are uniquely positioned to offer 
vital input to achieve this monumental task. This is another of many 
issues that would benefit from a Joint Board referral.
    Lifeline will once again be a major topic of discussion at the 
NARUC Summer Meeting this July in New York City. FCC Commissioners 
Mignon Clyburn and Michael O'Rielly will attend to jointly discuss 
their competing proposals for reforming Lifeline.\26\
---------------------------------------------------------------------------
    \26\ See, Clyburn, Mignon, FCC Commissioner, Reforming Lifeline for 
the Broadband Era: Speech to the American Enterprise Institute in 
Washington, DC (November 12, 2014), online at: https://www.fcc.gov/
document/commissioner-clyburn-remarks-american-enterprise-institute; 
O'Rielly, Michael, FCC Commissioner, Sound Principles for Lifeline 
Reform: FCC Blog (February 13, 2015--03:51 PM), online at: https://
www.fcc.gov/blog/sound-principles-lifeline-reform.
---------------------------------------------------------------------------
    I am proud to say that Florida has been a leader in Lifeline reform 
and continues enforcing safeguards to prevent waste, fraud, and abuse 
of the Universal Service Fund. Florida's leadership in instigating a 
National ETC State Coordinating Group (SCG) to monitor prospective and 
existing ETCs across the country, has fostered additional information 
sharing with all 50 states and the District of Columbia. Chairman 
Wheeler's FCC USF Strikeforce \27\ has reached out to both the SCG (and 
NARUC's full and Staff Telecommunications Committees) in its efforts to 
ensure the efficiency and viability of the Lifeline program.
---------------------------------------------------------------------------
    \27\ See, FCC Chairman Wheeler Announces Universal Service Fund 
Task Force, FCC Press Release (July 14, 2014), at https://www.fcc.gov/
document/fcc-chairman-wheeler-announces-universal-service-fund-strike-
force.
---------------------------------------------------------------------------
    Let me close by reiterating my support for the Lifeline program 
with proper verification and accountability measures in place. This 
vital program is supported by the FCC and State commissions for voice 
services. It is time to consider how to migrate the program to some 
level of broadband service. We appreciate the efforts of the FCC and 
USAC working with states on these crucial issues. A continued 
partnership will minimize fraud, waste, and abuse in the program. 
NARUC's member commissions stand ready and willing to work with the 
FCC, industry, the low-income community, and you in Congress on these 
issues. Thank you for the opportunity to testify. I look forward to 
your questions.
                                 ______
                                 
                               Appendix A
States suggestions on how to further improve the Lifeline program
    Below is a list of ideas offered by individual NARUC members and 
staff that work on Lifeline on a regular basis. The suggestions have 
not been considered or endorsed by NARUC or any specific State 
commission. NARUC specified that NARUC would not attribute particular 
responses to any State or individual. This anonymity encouraged a 
broader range of recommendations for the consideration of the 
Subcommittee.
Databases:

   The FCC should develop & implement the national eligibility 
        database as soon as possible as it will help eliminate much 
        waste, fraud and abuse.

   FCC should work with states on ways to incentivize the 
        utilization of State social service databases to be used for 
        Lifeline eligibility verification.

   Provide states access to the recently created National 
        Lifeline Accountability Database (NLAD, aka. Duplicates 
        database). Access to the database will allow State commissions 
        to resolve complaints regarding de-enrollment/duplicates and 
        better monitor enrollment/de-enrollment in the program with 
        specific states (USAC is apparently working on this now).
Marketing of Lifeline and Consumer Information:

   Require ETCs to provide customers with consumer helpline at 
        the FCC and State level agencies.

   The FCC/Congress should prohibit the practice of advertising 
        ``free government cellphones'' and handing out free cellphones 
        from tents and temporary kiosks. Providing information on the 
        program and how to apply could be allowed at such temporary 
        locations but the customer should be directed to a permanent 
        facility before obtaining a phone after eligibility is 
        verified.

   The FCC should require all ETCs to call their service 
        ``Lifeline'' and prohibit the misleading practices used by some 
        carriers of ``doing business as'', e.g., Assurance Wireless and 
        SafeLink to avoid customer confusion.
Enforcement:

   The FCC should prohibit someone that falsifies an 
        application from participating in the program for some period 
        of time and/or require reimbursements to the fund of any losses 
        caused by the fraud prior to re-qualifying for the program.

   The FCC should impose significant fines and, when 
        appropriate because of the magnitude of the abuse (and the 
        threshold should be small) suspend companies AND their officers 
        from any participation in the Lifeline programs when ETCs or 
        their officers/principals/owners/third party vendors violate 
        rules. Repeat offenders should be permanently banned program 
        participation.

   The FCC should prohibit any ETCs with a validation/
        recertification rate of less than a reasonable benchmark, such 
        as 75 percent, from enrolling new customers and subject them to 
        an FCC/USAC/State audit.

   The FCC should require more than one month of reimbursement 
        of lifeline funds whenever duplicate Lifeline recipients are 
        discovered.

   The FCC should remind ETCs that where available they are 
        required to utilize State social service databases to verify 
        eligibility.
Eligibility Verification/Recertification Process:

   Take the of verification of consumer eligibility out of the 
        hands of the ETC/carrier

   The FCC should simplify the recertification process to 
        assure eligible customers are not de-enrolled from the program 
        mistakenly.

   The FCC should consider requiring all ETCs located in a 
        particular State to use the same Lifeline application form that 
        lists all Lifeline providers in that State so applicants will 
        be more likely to ask questions if they already have service.

   If an ETC elects to have USAC undertake recertification then 
        the carrier should notify the customer to expect USAC notices 
        on recertification.

   ETCs using USAC for recertification should be allowed to 
        attempt contact with the customer after a specified time of 
        non-response to USAC.

   The FCC should establish a program for retention of customer 
        eligibility verification documentation by all ETCs (TracFone 
        petition).

   The FCC should prohibit the use of third-party agents hired 
        by carriers to sign up Lifeline subscribers

   The FCC should grant the USTelecom petition filed April 2, 
        2012 for reconsideration of 47 C.F.R. 
        Sec. Sec. 54.410(b)(2)(ii) and 54.410(c)(2)(ii) to allow states 
        that administer the Lifeline program and determine eligibility 
        to provide lists to carriers of subscribers that qualify for 
        Lifeline instead of requiring that copies of application forms 
        be provided to carriers.
Transparency/Operational Changes:

   The cost basis of Lifeline subsidy level should be 
        reexamined on a periodic basis to evaluate the subsidy against 
        the benefit (i.e., for wireless does the set number of minutes 
        align with the monthly Lifeline amount. A separate level for 
        wireless, wirelines voice and Broadband. For example, Should 
        the subsidy be less for prepaid wireless or the amount of 
        minutes increased?).

   Require a customer to contact the ETC each month and verify 
        identity to receive their free allotment of minutes.

   FCC should clarify FCC Form 555's (Annual Lifeline Eligible 
        Telecommunications Carrier Certification Form) filed by the 
        carriers are not confidential (if confidential ETCs can deny 
        State PUC access).

   FCC should publish an annual report of the findings in the 
        annual FCC Form 555 FCC should conduct a cost study to 
        establish a subsidy level that appropriately reflects services 
        offered.

   The FCC or USAC should create a list of customer service 
        contacts for each ETC for use by Federal and State officials.

   Modify USF contributions before expanding program to 
        broadband
                                 ______
                                 
                               Appendix B
Impact of FCC Reform on States
    This information illustrates the crucial role the states play in 
Lifeline enforcement and why State input for any program changes is 
vital to efficient implementation. The FCC reforms to address waste, 
fraud and abuse also had some unintended consequences on states with 
existing programs. NARUC again removed all attribution and indicia of 
particular states to encourage responses. These comments are, like the 
statements in Appendix A--not specifically considered or endorsed by 
NARUC or any specific State Commission.

   The expansion of the Lifeline eligibility criteria in the 
        FCC's reform order proved to be very costly to states.

     Added social service programs were not in existing 
            state databases and it was costly to add the needed data

     The state low income program database was not matching 
            the national database since the state has a different set 
            of eligibility requirements.

     Programs added to eligibility lists were ones that the 
            State Lifeline administrator did not have control over or 
            access to.

     Addition of ``income level'' to eligibility criteria 
            complicated process since there is no database, requiring 
            manual collection of sensitive personal financial 
            information to verify consumer eligibility.

     Forced the State to spend hundreds of thousands of 
            dollars to expand the scope of our state database queries 
            and expand hours of access to it. For example, adding the 
            Free School Lunch program has required creating an 
            additional interface to obtain data from another database

   The State required the ETC ``kick in'' a certain amount in 
        matching funds as a requirement of being an ETC. After the 
        reform the ETCs interpreted the FCC rules to mean this was no 
        longer required.

   The changes, while adding complexity to our efforts given 
        the additional requirements, have enhanced our ability to 
        review Lifeline provider's activities and identify concerns.

   As a result the State increased the amount of matching 
        support for landline Lifeline ETCs.

   As a result some states reduced the State matching level.

   The State expanded and strengthened requirements for ETC 
        applications and annual reporting.

   Under the old system there were tiered levels and matching 
        effect. This was replaced with the flat Federal $9.25 monthly 
        subsidy. As a result, the State regulations no longer matched 
        the Federal regulations causing confusion. The State continues 
        to evaluate if and how to alter State laws and rules to reflect 
        the new Federal regime.

    Senator Wicker. Thank you, Mr. Commissioner.
    Mr. Clements?

   STATEMENT OF MICHAEL CLEMENTS, ACTING DIRECTOR, PHYSICAL 
            INFRASTRUCTURE ISSUES, U.S. GOVERNMENT 
                     ACCOUNTABILITY OFFICE

    Mr. Clements. Chairman Wicker, Ranking Member Schatz, and 
members of the Subcommittee, good morning. I am pleased to be 
here today to discuss our March 2015 report on FCC's Lifeline 
program.
    My statement today will highlight three key findings from 
our report: first, FCC's progress with program reforms; second, 
the need for program evaluation; and, third, the challenges 
with the broadband pilot program.
    Our work highlights that FCC needs sufficient and reliable 
information to make important policy choices for the Lifeline 
program, both for support of voice service and also the 
possible support of broadband service.
    Our first key finding: FCC has made progress implementing 
Lifeline reforms, but some reform efforts remain incomplete.
    As has been mentioned, in 2012, FCC adopted a reform order 
that sought to improve internal controls, addressing problems 
we identified in 2010, and also to evaluate the inclusion of 
broadband into the program. The order included 11 key reforms, 
and FCC has fully implemented eight of those reforms, including 
the National Lifeline Accountability Data base, which companies 
query to verify an applicant's identity and check whether the 
applicant already receives Lifeline service.
    FCC has ongoing work to implement the three remaining 
reform efforts.
    Our second key finding: FCC has not evaluated the 
efficiency or effectiveness of the Lifeline program.
    FCC officials have told us that the structure of the 
program has made it difficult to determine a causal connection 
between the program itself and whether low-income households 
subscribe to telephone service. However, FCC officials noted 
that two academic studies have assessed the program.
    These studies suggest that many low-income households would 
choose to subscribe to telephone service in the absence of a 
Lifeline subsidy. Thus, the Lifeline program as it is currently 
structured may be an inefficient and costly mechanism to 
increase telephone subscribership among low-income households.
    Our work on program evaluation has shown that it can allow 
agencies to understand whether the program is addressing the 
problem it is intended to and also assess the effectiveness of 
the program. Therefore, we recommended that FCC conduct a 
program evaluation to determine the extent to which the program 
is efficiently and effectively reaching its performance goals.
    The results of such an evaluation could assist the FCC in 
making changes to improve both the design and management of the 
program. FCC agreed and said staff would address our 
recommendation.
    Our third key finding: The lack of an evaluation plan and 
other challenges may limit the usefulness of the broadband 
pilot program.
    FCC's broadband pilot program included 14 projects that 
tested an array of options. For example, one project we 
reviewed offered consumers three different discount levels and 
four different broadband speeds, thereby testing 12 different 
program options.
    We identified several challenges with the broadband pilot 
program. First, FCC did not conduct a needs assessment or 
implementation and evaluation plans for the broadband pilot, as 
we recommended in 2010. Second, FCC officials noted that there 
was a lack of third-party or FCC oversight of the program, 
meaning that the pilot projects themselves were largely 
responsible for administration of the program. Third, the pilot 
projects experienced lower than anticipated enrollment, and a 
preliminary finding from the pilot was that service offered at 
deeply discounted or free monthly rates had high participation 
rates.
    To conclude, FCC needs sufficient and reliable information 
to make important policy choices for the Lifeline program. To 
help accomplish this, we recommended that FCC conduct a program 
evaluation, and FCC agreed with that recommendation. This 
information will allow FCC to make sure that low-income 
households have access to the valuable services they need while 
minimizing the burden on households and businesses that support 
the program.
    Chairman Wicker, Ranking Member Schatz, and members of the 
Subcommittee, this completes my prepared statement. I would be 
pleased to respond to any questions you may have at this time. 
Thank you.
    [The prepared statement of Mr. Clements follows:]

   Prepared Statement of Michael Clements, Acting Director, Physical 
      Infrastructure Issues, U.S. Government Accountability Office
Telecommunications
FCC Should Evaluate the Efficiency and Effectiveness of the Lifeline 
        Program
    Chairman Wicker, Ranking Member Schatz, and Members of the 
Subcommittee:

    I am pleased to be here today as you discuss the Federal 
Communications Commission's (FCC) efforts to promote telephone 
subscribership among low-income households. Through the Lifeline 
program, companies provide discounts to eligible low-income households 
for telephone service. The Lifeline program supports these companies 
through the Universal Service Fund, which is funded through mandatory 
fees that are usually passed along to consumers through a charge 
applied to their monthly telephone bills. The Lifeline program was 
created in the mid-1980s and has traditionally centered on wireline 
residential telephone service. However, FCC actions in 2005 and 2008 
paved the way for prepaid wireless companies to begin offering Lifeline 
service in 2008; at the time, FCC did not quantify or estimate the 
potential increases in participation from its decision. Subsequently, 
Lifeline experienced rapid growth in participation and disbursements. 
In particular, from mid-2008 to mid-2012, Lifeline enrollment increased 
from 6.8 million households to 18.1 million households and annual 
disbursements increased from $820 million in 2008 to $2.2 billion in 
2012, a 167 percent increase. In 2010, we found that the Lifeline 
program lacked some features of internal controls, such as the ability 
to detect duplicate benefits across companies.\1\ We recommended that 
FCC take actions to improve management and oversight, including 
conducting a robust risk assessment and implementing a systematic 
process for considering the results of company audits; FCC agreed with 
our recommendations.
---------------------------------------------------------------------------
    \1\ Telecommunications: Improved Management Can Enhance FCC 
Decision Making for the Universal Service Fund Low-Income Program, GAO-
11-11 (Washington, D.C.: Oct. 28, 2010).
---------------------------------------------------------------------------
    To comprehensively reform and modernize the program, among other 
things, FCC adopted a Reform Order in January 2012 that sought to 
improve the program's internal controls and included a pilot program to 
evaluate the inclusion of broadband into the program (see Table 1 for 
the Order's key reforms).\2\ For example, to reduce the number of 
ineligible consumers in the program, the Order adopted measures to 
check consumers' initial and ongoing eligibility for Lifeline. After 
FCC began implementing the Order in mid-2012, Lifeline participation 
declined to 12.4 million households by the end of 2014, while 
disbursements declined to approximately $1.7 billion in 2014.
---------------------------------------------------------------------------
    \2\ See Lifeline and Link Up Reform and Modernization, Report and 
Order and Further Notice of Proposed Rulemaking, 27 FCC Rcd. 6656 
(2012). See also 47 C.F.R. Sec. Sec. 54.400-54.422.

 
 
------------------------------------------------------------------------
 

Table 1.--Key Reforms Contained in the Federal Communications Commission
                   (FCC) Lifeline Reform Order (2012)
------------------------------------------------------------------------
    Lifeline reform                        Description
------------------------------------------------------------------------
One-per-household rule   The Order limits Lifeline to a single
                          subscription per household.
------------------------------------------------------------------------
Elimination of Link-Up   The Link Up program was originally designed to
 support on non-Tribal    offset the activation charges wireline
 lands and phase out      providers charged to install telephone
 support for toll         service; the Order eliminated Link Up on non-
 limitation service       Tribal lands. In addition, subsidies for toll
                          limitation service, which allowed consumers to
                          block or restrict long-distance telephone
                          service, were phased out and eliminated
                          beginning January 2014.
------------------------------------------------------------------------
Uniform eligibility      Requires all states to use, at a minimum,
 criteria                 eligibility criteria including (1) household
                          income at or below 135 percent of the Federal
                          poverty guidelines or (2) participation in at
                          least one of the following: Supplemental
                          Nutrition Assistance Program, Medicaid,
                          Supplemental Security Income, Temporary
                          Assistance for Needy Families, National School
                          Lunch Program's free lunch program, Low-Income
                          Home Energy Assistance Program, and Federal
                          Public Housing Assistance or Section 8.
                          Households residing on Tribal lands may be
                          eligible through additional programs.
------------------------------------------------------------------------
Non usage requirements   Lifeline providers delivering service without a
                          monthly bill must notify and de-enroll
                          subscribers that do not use the service after
                          a specified period of time--60 consecutive
                          days of nonuse and a 30-day notice period.
------------------------------------------------------------------------
Payments based upon      Lifeline providers receive payment based on
 actual support claims    actual support claims. Before this, payments
                          were based on projections that were ``trued
                          up'' against actual claims.
------------------------------------------------------------------------
Independent and first    In addition to audits that were previously
 year audit               ongoing, Lifeline providers that receive more
 requirements             than $5 million in annual support are required
                          to hire independent auditors to conduct an
                          audit of their compliance with the Lifeline
                          rules on a biennial basis. In addition, all
                          new Lifeline providers are audited by the
                          program administrator--the Universal Service
                          Administrative Company (USAC)--within their
                          first year of service.
------------------------------------------------------------------------
National Lifeline        Lifeline providers are required to query NLAD
 Accountability           at enrollment to verify an applicant's
 Database (NLAD)          identity and to verify the individual is not
                          already receiving Lifeline services. NLAD also
                          checks applicants' addresses against U.S.
                          Postal Service software in part to ensure
                          compliance with the one-per-household
                          requirement.
------------------------------------------------------------------------
Broadband pilot program  The Order called for a pilot program to gather
                          data on whether and how Lifeline could be
                          structured to promote broadband and called on
                          FCC to select, fund, and gather data from
                          pilot projects offering broadband to Lifeline-
                          eligible consumers. FCC selected 14 pilot
                          projects that completed offering subsidized
                          service at the end of October 2014. In May
                          2015, FCC published the results of these
                          projects.
------------------------------------------------------------------------
Flat-rate reimbursement  The Order implemented an interim $9.25 flat
                          rate reimbursement on non-Tribal lands.
                          Previously, Lifeline had a tiered structure of
                          support, with average monthly non-Tribal
                          support ranging from $4.25 to $10.00 per
                          subscriber in September 2011.
------------------------------------------------------------------------
Initial eligibility      Effective June 2012, Lifeline providers must
 verification and         verify an applicant's eligibility at
 annual recertification   enrollment and annually through
 procedures               recertification. In addition, to reduce the
                          burden on consumers and providers, the Order
                          directed FCC and USAC to establish an
                          automated means for determining eligibility.
------------------------------------------------------------------------
Performance goals and    The Order specified three performance goals:
 measures                 (1) to ensure the availability of voice
                          service for low-income Americans, (2) to
                          ensure the availability of broadband for low-
                          income Americans, and (3) to minimize the
                          Universal Service Fund contribution burden on
                          consumers and businesses. The Order directed
                          FCC to define performance measures to evaluate
                          progress made towards these goals.
------------------------------------------------------------------------
Source: GAO summary of FCC Order.

    My remarks today highlight key findings from our recently issued 
report, Telecommunications: FCC Should Evaluate the Efficiency and 
Effectiveness of the Lifeline Program.\3\ I will discuss: (1) the 
status of FCC's Lifeline reform efforts, (2) the extent to which FCC 
has evaluated the effectiveness of the program, and (3) how FCC plans 
to evaluate the broadband pilot program and the extent to which the 
pilot program will enable FCC to decide whether and how to include 
broadband in the Lifeline program. For our report, we reviewed FCC 
orders and other relevant information; analyzed 2008-2012 Census Bureau 
data to estimate trends in the number of households that would satisfy 
the Federal Lifeline criteria; and interviewed FCC officials, officials 
at four broadband pilot projects selected based on features such as 
technology, and officials from 12 Lifeline providers and four states 
that were selected based on factors such as disbursements and 
participation. We also reviewed two academic studies that examined the 
effect of the Lifeline program. More detailed information on our 
objectives, scope, and methodology can be found in the issued report. 
We conducted the work on which this statement is based in accordance 
with generally accepted government auditing standards. Those standards 
require that we plan and perform the audit to obtain sufficient, 
appropriate evidence to provide a reasonable basis for our findings and 
conclusions based on our audit objectives.
---------------------------------------------------------------------------
    \3\ GAO-15-335 (Washington, D.C.: Mar. 24, 2015).
---------------------------------------------------------------------------
FCC Has Made Progress Implementing Lifeline Reforms, but Some Reform 
        Efforts Remain Incomplete
    Our March 2015 report found that FCC has made progress implementing 
reform efforts contained in the Order.\4\ In particular, FCC has 
implemented eight reforms, including the one-subscription-per-household 
rule, uniform eligibility criteria, non-usage requirements, payments 
based on actual claims, and the audit requirements. Furthermore, FCC 
eliminated Link-up on non-Tribal lands and support for toll limitation 
service, and the National Lifeline Accountability Database (NLAD) is 
operational in 46 states and the District of Columbia. In May 2015, FCC 
reported the results of the broadband pilot program.\5\ However, FCC 
has not fully implemented three reform efforts:
---------------------------------------------------------------------------
    \4\ We did not evaluate the effectiveness of these reform efforts. 
GAO has ongoing work assessing the internal controls of the Lifeline 
program. Results from this work will be available in fall 2015.
    \5\ Federal Communications Commission, Wireline Competition Bureau, 
Low-Income Broadband Pilot Program Staff Report, WC Docket No. 11-42 
(May 22, 2015).

   Flat-rate reimbursement: To simplify administration of the 
        Lifeline program, FCC established a uniform, interim flat rate 
        of $9.25 per month for non-Tribal subscribers. FCC sought 
        comment on the interim rate, but has not issued a final rule 
---------------------------------------------------------------------------
        with a permanent reimbursement rate.

   Initial eligibility verification and annual recertification 
        procedures: To reduce the number of ineligible consumers 
        receiving program benefits, the Order required that Lifeline 
        providers verify an applicant's eligibility at enrollment and 
        annually through recertification; these requirements have gone 
        into effect. In addition, to reduce the burden on consumers and 
        Lifeline providers, the Order called for an automated means for 
        determining Lifeline eligibility by the end of 2013. FCC has 
        not met this time-frame or revised any timeframes for how or 
        when this automated means would be available.

   Performance goals and measures: FCC established three 
        outcome-based goals: (1) to ensure the availability of voice 
        service for low-income Americans, (2) to ensure the 
        availability of broadband for low-income Americans, and (3) to 
        minimize the Universal Service Fund contribution burden on 
        consumers and businesses. FCC identified performance measures 
        it will use to evaluate progress towards these goals, but it 
        has not yet fully defined these measures. FCC officials noted 
        they are working on defining them using the Census Bureau's 
        American Community Survey data, which were made available in 
        late 2014.
FCC Has not Evaluated the Extent to which Lifeline is Efficiently and 
        Effectively Reaching its Performance Goals
    In our March 2015 report, we found that FCC has not evaluated the 
effectiveness of the Lifeline program, which could hinder its ability 
to efficiently achieve program goals. Once adopted, performance 
measures can help FCC track the Lifeline Program's progress toward its 
goals. However, performance measures alone will not fully explain the 
contribution of the Lifeline program toward reaching program goals, 
because performance measurement does not assess what would have 
occurred in the absence of the program. According to FCC, Lifeline has 
been instrumental in narrowing the penetration gap (the percentage of 
households with telephone service) between low-income and non-low-
income households. In particular, FCC noted that since the inception of 
Lifeline, the gap between telephone penetration rates for low-income 
and non-low-income households has narrowed from about 12 percent in 
1984 to 4 percent in 2011. Although FCC attributes the penetration rate 
improvement to Lifeline, several factors could play a role. For 
example, changes to income levels and prices have increased the 
affordability of telephone service, and technological improvements, 
such as mobility of service, have increased the value of telephone 
service to households.
    FCC officials stated that the structure of the program has made it 
difficult for the commission to determine causal connections between 
the program and the penetration rate. However, FCC officials noted that 
two academic studies have assessed the program.\6\ These studies 
suggest that household demand for telephone service--even among low-
income households--is relatively insensitive to changes in the price of 
the service and household income. This suggests that many low-income 
households would choose to subscribe to telephone service in the 
absence of the Lifeline subsidy. For example, one study found that many 
households would choose to subscribe to telephone service in the 
absence of the subsidy.\7\ As a result, we concluded that the Lifeline 
program, as currently structured, may be a rather inefficient and 
costly mechanism to increase telephone subscribership among low-income 
households, because several households receive the subsidy for every 
additional household that subscribes to telephone service due to the 
subsidy. FCC officials said that this view does not take into account 
the Lifeline program's purpose of making telephone service affordable 
for low-income households. However, in the Order, the commission did 
not adopt affordability as one of the program's performance goals; 
rather, it adopted availability of voice service for low-income 
Americans, measured by the penetration rate.\8\
---------------------------------------------------------------------------
    \6\ Olga Ukhaneva, ``Universal Service in a Wireless World'' (Paper 
presented at The 42nd Research Conference on Communication, Information 
and Internet Policy, Washington, D.C., September 2014). Daniel A. 
Ackerberg, David R. DeRemer, Michael H. Riordan, Gregory L. Rosston, 
and Bradley S. Wimmer, Estimating the Impact of Low-Income Universal 
Service Programs, Center for Economic Studies, CES-13-33 (2013).
    \7\ Olga Ukhaneva, ``Universal Service in a Wireless World'' 
(2013).
    \8\ FCC officials noted that voice service is only available to 
low-income consumers to the extent it is affordable. In the Order, FCC 
found that affordability is a component of the goal of ensuring the 
availability of voice service. See para. 28 of Order.
---------------------------------------------------------------------------
    These research findings raise questions about the design of 
Lifeline and FCC's actions to expand the pool of eligible households. 
We estimated approximately 40 million households were eligible for 
Lifeline in 2012.\9\ The Order established minimum Lifeline 
eligibility, including households with incomes at or below 135 percent 
of the Federal poverty guidelines, which expanded eligibility in some 
states that had more limited eligibility criteria. Further, FCC 
proposed adding qualifying programs, such as the Special Supplemental 
Nutrition Program of Women, Infants, and Children (WIC) program, and 
increasing income eligibility to 150 percent of the Federal poverty 
guidelines. We estimated that over 2 million additional households 
would have been eligible for Lifeline in 2012 if WIC were included in 
the list of qualifying programs. These proposed changes would add 
households with higher income levels than current Lifeline-eligible 
households. Given that the telephone penetration rate increases with 
income, making additional households with higher incomes eligible for 
Lifeline may increase telephone penetration somewhat, but at a high 
cost, since a majority of these households likely already purchase 
telephone service. This raises questions about expanding eligibility 
and the balance between Lifeline's goals of increasing penetration 
rates while minimizing the burden on consumers and businesses that fund 
the program.
---------------------------------------------------------------------------
    \9\ We estimated the number of Lifeline-eligible households using 
Census Bureau data. The Census data approximate, but do not completely 
align with, Lifeline eligibility. For example, the Census data do not 
reflect state Lifeline eligibility that extends beyond the FCC minimum 
requirements or qualifying programs specific to Tribal areas.
---------------------------------------------------------------------------
    In our March 2015 report, we recommended that FCC conduct a program 
evaluation to determine the extent to which the Lifeline program is 
efficiently and effectively reaching its performance goals of ensuring 
the availability of voice service for low-income Americans while 
minimizing program costs. Our prior work on Federal agencies that have 
used program evaluation for decision making has shown that it can allow 
agencies to understand whether a program is addressing the problem it 
is intended to and assess the value or effectiveness of the program. 
The results of an evaluation could be used to clarify FCC's and others' 
understanding of how the Lifeline program does or does not address the 
problem of interest--subscription to telephone service among low-income 
households--and to assist FCC in making changes to improve program 
design or management. We believe that without such an evaluation, it 
will be difficult for FCC to determine whether the Lifeline program is 
increasing the telephone penetration rate among low-income customers, 
while minimizing the burden on those that contribute to the Universal 
Service Fund. FCC agreed that it should evaluate the extent to which 
the Lifeline program is efficiently and effectively reaching its 
performance goals and said that it would address our recommendation.
Usefulness of Broadband Pilot Program May Be Limited by FCC's Lack of 
        Evaluation Plan and Other Challenges
    In our March 2015 report we also found that FCC's broadband pilot 
program includes 14 projects that test an array of options and will 
generate information that FCC intends to use to decide whether and how 
to incorporate broadband into Lifeline. According to FCC, the pilot 
projects are expected to provide high-quality data on how the Lifeline 
program could be structured to promote broadband adoption by low-income 
households. FCC noted the diversity of the 14 projects, which differed 
by geography (e.g., urban, rural, Tribal), types of technologies (e.g., 
fixed and mobile), and discount amounts. FCC selected projects that 
were designed as field experiments and offered randomized variation to 
consumers. For example, one project we reviewed offered customers three 
different discount levels and a choice of four different broadband 
speeds, thereby testing 12 different program options. FCC officials 
said they aimed to test and reveal ``causal effects'' of variables. FCC 
officials said this approach would, for example, test how effective a 
$20 monthly subsidy was relative to a $10 subsidy, which would help FCC 
evaluate the relative costs and benefits of different subsidy amounts. 
However, FCC officials noted that there was a lack of FCC or third 
party oversight of the program, meaning that pilot projects themselves 
were largely responsible for administration of the program.
    We found that FCC did not conduct a needs assessment or develop 
implementation and evaluation plans for the broadband pilot program, as 
we had previously recommended in October 2010. At that time, we 
recommended that if FCC conducted a broadband pilot program, it should 
conduct a needs assessment and develop implementation and evaluation 
plans, which we noted are critical elements for the proper development 
of pilot programs.\10\ We noted that a needs assessment could provide 
information on the telecommunications needs of low-income households 
and the most cost-effective means to meet those needs. Although FCC did 
not publish a needs assessment, FCC officials said they consulted with 
stakeholders and reviewed research on low-income broadband adoption 
when designing the program. Well-developed plans for implementing and 
evaluating pilot programs include key features such as clear and 
measurable objectives, clearly articulated methodology, benchmarks to 
assess success, and detailed evaluation time frames. FCC officials said 
they did not set out with an evaluation plan because they did not want 
to prejudge the results by setting benchmark targets ahead of time. FCC 
officials said they are optimistic that the information gathered from 
the pilot projects will enable FCC to make recommendations regarding 
how broadband could be incorporated into Lifeline.\11\ FCC officials 
noted that the pilot program is one of many factors it will consider 
when deciding whether and how to incorporate broadband into Lifeline, 
and to the extent the pilot program had flaws, those flaws will be 
taken into consideration. Since our report was issued, FCC released a 
report on the broadband pilot program, which discusses data collected 
from the 14 projects.
---------------------------------------------------------------------------
    \10\ GAO-11-11.
    \11\ Under the Administrative Procedure Act, the law that governs 
agency rulemakings, FCC must give notice and seek public comment on any 
proposed regulations prior to their enactment through a Notice of 
Proposed Rulemaking. See 5 U.S.C. Sec. 553. FCC officials noted that 
the commission may draw on many sources of information in crafting its 
final rule, such as outside studies.
---------------------------------------------------------------------------
    We also found that the broadband pilot projects experienced 
challenges, such as lower-than-anticipated enrollment. The pilot 
projects enrolled approximately 12 percent of the 74,000 low-income 
consumers that FCC indicated would receive broadband through the pilot 
projects. According to FCC's May 2015 report, 8,634 consumers received 
service for any period of time during the pilot. FCC officials said 
that the 74,000 consumers was an estimate and was not a reliable number 
and should not be interpreted as a program goal. FCC officials said 
they calculated this figure by adding together the enrollment estimates 
provided by projects, which varied in their methodologies. For example, 
some projects estimated serving all eligible consumers, while others 
predicted that only a fraction of those eligible would enroll. FCC 
officials told us they do not view the pilot's low enrollment as a 
problem, as the program sought variation. Due to the low enrollment in 
the pilot program, a small fraction of the total money FCC authorized 
for the program was spent. Specifically, FCC officials reported that 
about $1.7 million of the $13.8 million authorized was disbursed to 
projects.
    FCC and pilot project officials we spoke to noted that a 
preliminary finding from the pilot was that service offered at deeply 
discounted or free monthly rates had high participation.\12\ FCC 
officials and representatives from the four pilot projects we 
interviewed noted that broadband offered at no or the lowest cost per 
month resulted in the highest participation. For example, we found one 
project that offered service at no monthly cost to the consumer 
reported 100 percent of its 709 enrollees were enrolled in plans with 
no monthly cost as of October 2013, with no customers enrolled in its 
plans with a $20 monthly fee. This information raises questions about 
the feasibility of including broadband service in the Lifeline program, 
since on a nationwide scale, offering broadband service at no monthly 
cost would require significant resources and may conflict with FCC's 
goal to minimize the contribution burden.
---------------------------------------------------------------------------
    \12\ In its May 2015 report, FCC noted that the cost to consumers 
affects their adoption choice.
---------------------------------------------------------------------------
    Chairman Wicker, Ranking Member Schatz, and Members of the 
Subcommittee, this completes my prepared statement. I would be pleased 
to respond to any questions that you may have at this time.

    Senator Wicker. Thank you, sir. We appreciate your 
testimony.
    Mr. Bergman?

    STATEMENT OF SCOTT BERGMANN, VICE PRESIDENT, REGULATORY 
            AFFAIRS, CTIA--THE WIRELESS ASSOCIATION

    Mr. Bergmann. Chairman Wicker, Ranking Member Schatz, and 
members of the Subcommittee, on behalf of CTIA, thank you for 
the opportunity to speak about the important role of mobile 
wireless services in the Federal Lifeline program.
    Thirty years after its creation, Lifeline continues to 
advance the goal of ensuring that every American has access to 
telecommunication services that enable public safety, health 
care, educational, occupational, and other important 
communications.
    CTIA appreciates the opportunity to work with the 
Subcommittee, the FCC, and interested parties to ensure that 
Lifeline is efficient and fiscally responsible while 
continually evolving to connect all Americans to essential 
communication services.
    Increasingly, consumers and particularly low-income 
consumers view wireless as their primary means of 
communications, and Lifeline has evolved to reflect that 
reality. The CDC's most recent data show that 44 percent of all 
households are now wireless-only. Low-income households are 
significantly more likely to have cut the cord.
    Recognizing this trend, the FCC established a framework to 
enable wireless participation in Lifeline in 2005, and today 
the majority of Lifeline subscribers have chosen mobile 
wireless. They use wireless Lifeline services to communicate 
with 911 and medical professionals, seek job and learning 
opportunities, and access critical government services.
    Robust competition from the wireless industry has increased 
the effectiveness of the program, enabling greater 
participation by eligible consumers and offering more services 
without increasing the subsidy amount.
    The wireless industry is also the largest funder of Federal 
universal service programs. Wireless carriers and their 
consumers currently pay 44 percent of the USF contribution 
burden. So CTIA's members have a significant interest in 
ensuring that all universal service programs are fiscally 
responsible and managed efficiently.
    For this reason, CTIA advocated for Lifeline reforms that 
deter waste, fraud, and abuse. We supported the FCC's efforts 
to enact new and much needed Lifeline accountability measures 
in 2012, and we supported the development of a duplicates 
database to ensure that no one double dips from Lifeline. The 
National Lifeline Accountability Data base has been an 
important and successful tool in combating misuse of Lifeline.
    The FCC announced last week that the database and a dozen 
other reforms adopted in 2012 have reduced Lifeline spending by 
nearly 24 percent. Yet more can be done.
    The role of carriers today in determining Lifeline 
eligibility is unique among Federal low-income programs. So, as 
part of the 2012 reforms, the FCC committed to develop an 
automated means of determining Lifeline eligibility. An 
automated approach could reduce fraud and abuse, lower barriers 
to carrier participation, and permit opportunities for 
coordinated enrollment and automatic de-enrollment.
    Last week, the FCC announced a proceeding to consider 
changes to Lifeline, including whether Lifeline should be 
expanded to support broadband access. CTIA and our member 
companies are committed to this evolution, consistent with 
Congress's directive in section 254 of the Communications Act 
to provide an evolving level of service.
    As the FCC and this subcommittee examine opportunities for 
expanding Lifeline to broadband, there are a number of 
important considerations that must be weighed, and let me 
highlight three.
    First, we urge the FCC to ensure that any Lifeline reforms 
reflect consumers' clear preference for mobile services to meet 
their voice and broadband communications needs.
    In addition, the FCC must also carefully balance 
appropriate subsidy levels so that it can meet its objectives 
while minimizing burdens on consumers who fund the Federal 
Universal Service Fund.
    And, finally, we are encouraged that the FCC will also 
evaluate transitioning decisions about consumer eligibility 
into the hands of appropriate government agencies.
    Over the nearly three decades since its creation, Lifeline 
has served an important purpose. It should evolve to meet the 
communications needs of the 21st century. CTIA believes this 
objective can be achieved in a way that both recognizes low-
income Americans' reliance on mobile wireless services and 
ensures the fiscal integrity of the program.
    Thank you for the opportunity to testify today, and I look 
forward to your questions.
    [The prepared statement of Mr. Bergmann follows:]

  Prepared Statement of Scott Bergmann, Vice President of Regulatory 
                Affairs, CTIA--The Wireless Association
    Chairman Wicker, Ranking Member Schatz, and members of the 
Subcommittee, on behalf of CTIA--The Wireless Association (``CTIA''), 
thank you for the opportunity to speak with you today on the subject of 
the Federal Universal Service Fund's (USF) Lifeline program.
    Throughout its history, the Lifeline program has helped advance the 
goal of ensuring that every American has access to telecommunications 
services that enable public safety, health care, educational, 
occupational, and other important communications for low-income 
consumers. The wireless industry plays an increasingly important role 
in furthering that objective. CTIA looks forward to working with the 
Subcommittee, the Federal Communications Commission (``Commission'' or 
``FCC''), and other industry stakeholders to ensure that the FCC's 
Lifeline program is run in an efficient, responsible manner that 
fulfills the mission of connecting all Americans to essential 
communications services.
    Today, my testimony will focus on three areas. First, I will 
discuss how wireless has become the communications platform of choice 
for consumers, including the low-income, people with disabilities, 
older adult, and minority communities. Second, I will provide a brief 
history of the Lifeline program and demonstrate that wireless has 
brought competition and efficiency to the Lifeline program. Third and 
finally, I will offer CTIA's views on additional steps the FCC should 
consider to further improve administration of the Lifeline program and 
meet the evolving needs of low-income consumers.
Wireless is the 21st Century Communications Platform of Choice
    As the Subcommittee is aware, consumers increasingly view wireless 
as their primary means of communications, particularly for low-income 
and diverse, underserved communities. Year-over-year, the Center for 
Disease Control reports indicate that the number of households relying 
exclusively on a wireless connection for voice services is increasing, 
up to 44 percent of U.S. households by July 2014. (CDC Wireless 
Substitution: Early Release Estimates from the National Health 
Interview Survey, January-June 2014, released December 2014). Indeed, 
the CDC report demonstrates that low-income consumers are significantly 
more likely to reside in wireless-only households than other consumers, 
with over 59 percent of adults living in poverty relying exclusively on 
wireless services.
    The findings of the Pew Internet & American Life Project illustrate 
the importance of mobile wireless services to low income consumers. Pew 
found that approximately 60 percent of Americans with incomes less than 
$30,000 per year use wireless for occupational or health reasons 
compared to 30 percent of Americans earning more than $75,000 per year. 
That is, low-income consumers are roughly twice as likely to use mobile 
wireless services for work and health reasons as their more affluent 
counterparts.
    A growing number of consumers are also using their wireless service 
as their on-ramp to the Internet. According to the Pew Internet & 
American Life Project, 13 percent of Americans with incomes of less 
than $30,000 per year are ``totally smart-phone dependent,'' while 
another 24 percent of low-income consumers report that they primarily 
rely on the smartphone for Internet access and have limited options 
other than their cell phones for getting online. An additional 19 
percent of low income Americans report using smartphones to access the 
Internet but have no Internet access at home.
    In particular, wireless empowers people with disabilities, older 
adults, and underserved communities. Specifically, some reports suggest 
that more than 84 percent of people with disabilities own a wireless 
device. (Wireless Technology Use and Disability: Results from a 
National Survey, Wireless RERC, released 2013). In addition, 77 percent 
of older adults have a cell phone, up from 69 percent in April 2012. 
(Pew Internet Research Report, Older Adults and Technology Use, April 
3, 2014). Importantly, African American and Latino/Hispanic consumers 
are significantly more likely to rely exclusively on wireless 
broadband, according to recent data from Pew.
Wireless and the Lifeline Program
The Evolution of the Lifeline Program
    The Lifeline program was created by the FCC in 1985 to ensure that 
any increase in local rates that occurred following the break-up of the 
Bell System would not put phone service out of reach for low-income 
households. The FCC was concerned that changes in the long distance 
industry structure could force low-income consumers to drop voice 
service, which, the FCC found, ``had become crucial to full 
participation in our society and economy.''
    That notion--that access to telecommunications service is essential 
to full participation in our economy--led Congress to enact Section 254 
of the Act as part of the Telecommunications Act of 1996, which 
includes specific universal service principles to ensure that low-
income consumers have access to telecommunications service. The 1996 
amendments also directed the FCC to consider ``such other principles as 
the Joint Board and the Commission determine are necessary and 
appropriate.'' Upon the recommendation of the Federal-State Joint 
Board, the Commission adopted rules that universal service support 
mechanisms should be ``competitively neutral'' and ``not unfairly 
advantage one provider, nor favor one technology.'' The Commission also 
endorsed the Joint Board's recommendation that ``all eligible 
telecommunications carriers, not just ILECs, should be able to receive 
support for serving qualifying low-income consumers.''
    In 2005, the Commission established a framework to enable wireless 
participation in the Federal USF program. First, the FCC permitted 
wireless providers serving rural areas to be designated as ``eligible 
telecommunications carriers,'' or ``ETCs,'' making them eligible for 
support from the high-cost fund and enabling consumers in rural areas 
to access mobile wireless services. Designation of wireless providers 
as ETCs was conditioned on the offering of Lifeline services to 
qualified low-income consumers. Second, in response to the unique 
challenges posed by Hurricane Katrina, the FCC further modernized the 
Lifeline program by granting relief from the statutory requirement that 
a carrier designated as an ETC for purposes of Federal universal 
service support provide service over its own facilities. The Commission 
concluded that the requirement that a Lifeline provider be facilities-
based would impede greater provision of Lifeline services and that 
forbearance from the facilities requirement would promote competitive 
market conditions.
    In the decade since Hurricane Katrina, the FCC's reforms to the 
Lifeline program have enabled wireless providers to bring competitive 
telecommunications services to millions of low-income consumers. Nearly 
three decades after its creation, and through an evolution shaped by 
Congress and FCC leaders from both parties, Lifeline has been a 
critical component in the effort to expand telephone subscribership 
among low-income consumers. As the NAACP has explained to Congress, 
without the wireless services made available through the Lifeline 
program ``our most vulnerable populations would not have the ability to 
call 911, contact prospective and current employers, connect with 
health, social, and educational services, or keep in touch with family 
and friends.'' (Letter from NAACP et al. to Chairman Walden and Ranking 
Member Eshoo, Apr. 23, 2013)
The Lifeline Program Enables Opportunity
    Today, Lifeline enables more than 12 million low-income consumers 
to communicate with 9-1-1 and medical professionals, seek educational 
and occupational opportunities, and access critical government 
services. The impact of the Lifeline program has been especially 
dramatic with respect to households with incomes of less than $10,000. 
Telephone penetration for those lowest income households increased from 
80 percent in 1984 to 93.1 percent in 2014. And the gap in telephone 
subscribership between low-income households and all households shrank 
from more than 11 percent to less than 4 percent.
    In particular, since 2005, when the FCC first started permitting 
wireless carriers to receive Lifeline funds, the gap has nearly halved, 
from 6.3 percent to 3.2 percent. To put this in perspective, for every 
1 percent increase in telephone penetration, approximately 1.2 million 
households gain access. These low-income consumers realize the value 
and opportunity to reach critical services and communicate with family 
and care givers that wireless offers through Lifeline support.

    Source: FCC Monitoring Reports
Wireless Brings Competition and Efficiency to the Lifeline Program
    In the decade since wireless entered the Federal Lifeline program, 
competition among wireless ETCs has more than quadrupled available 
voice minutes from about 60 to 250 and more, including added text 
messages and other services, such as roaming, while the subsidy amount 
has remained steady at $9.25 since 2011. In other words, wireless 
competition has greatly increased the efficiency of the Lifeline 
program by offering more services to low-income consumers without 
increasing the subsidy amount.
    It may be helpful to clarify that the current Lifeline program only 
supports voice services, not devices. Thus, the Lifeline program does 
not fund ``free cell phones.'' Nor are smartphones and tablets 
supported through the Lifeline program. The truth is that some wireless 
providers offer a basic feature phone at low-or no-cost simply to 
enable the low-income consumer to access Lifeline-eligible voice 
services. Lifeline-eligible consumers can choose from a very limited 
selection of provider-offered phones. For example, Sprint's Assurance 
Wireless affiliate offers a single wireless handset--the Kyocera Jax--
for use by Lifeline customers and TracFone's Safelink Wireless 
provides only two handset options with its Lifeline offering. 
Commenters can argue whether the existing Lifeline subsidy offers too 
little or too much, but wireless competition in the Lifeline program 
has efficiently and effectively brought innovative products and 
affordable services to low-income consumers.
The FCC's Reforms to Lifeline Are Successful, but Unfinished
    CTIA's member companies have a significant interest in ensuring 
that the full range of universal service programs are administered in a 
responsible manner that prevents waste, fraud, and abuse. Contributions 
from wireless carriers and their consumers currently make up 44 percent 
of the overall Federal USF. CTIA has long advocated for reforms to the 
USF that deter waste, fraud, and abuse to minimize the impact on 
wireless consumers who support these contributions. CTIA and its 
members share the view of the Government Accountability Office (GAO), 
expressed in its recent report, that the FCC has made progress in 
reforming the Lifeline program to improve its benefits and reduce 
waste, fraud, and abuse, but also believe there is more work to be 
done.
    Specifically, we supported the FCC in its efforts to enact new 
Lifeline accountability measures in 2011 and 2012. In particular, CTIA 
called for and supported the adoption of a ``duplicates'' database, the 
National Lifeline Accountability Database (``NLAD''), to address the 
issue of consumers seeking more than one Lifeline benefit from multiple 
providers. The NLAD launched for all states in March 2014 and has 
already demonstrated great success, largely eliminating the problem of 
consumers receiving multiple Lifeline benefits. The database is a 
comprehensive list of all Lifeline customers against which a carrier 
must run a check to make sure they are not signing up a customer who is 
already receiving the Lifeline benefit. CTIA's position has and always 
will be that no consumer should ``double dip'' from the Lifeline 
program, and the NLAD has been a critical tool in combating misuse of 
Lifeline funds by consumers.
    The Commission also adopted additional reform measures--as 
described by the GAO in its recent report--which included rules 
eliminating Lifeline support for more than one connection per 
household, standards for determining Lifeline eligibility, requirements 
for ETCs to review Lifeline subscribers' eligibility (something 
carriers previously were prohibited from doing), a monthly minimum 
usage requirement that is intended to ensure that support is awarded 
only in instances that will actually benefit low-income consumers, a 
requirement that providers annually recertify the eligibility of their 
Lifeline subscribers, and rigorous audit requirements. The FCC also 
eliminated subsidies that had been questioned, including toll 
limitation support and Link-Up support outside of tribal areas. The FCC 
announced last week that these reforms have reduced Lifeline spending 
by nearly 24 percent.
    Yet, more work is necessary. In the 2012 Lifeline Reform Order, the 
Commission directed ``the Bureau and USAC to take all necessary actions 
so that, as soon as possible and no later than the end of 2013, there 
will be an automated means to determine Lifeline eligibility for, at a 
minimum, the three most common programs through which consumers qualify 
for Lifeline.'' Unfortunately, these efforts have not moved as quickly 
as with the NLAD. CTIA continues to strongly support the development of 
an automated mechanism for determining eligibility, which we believe 
will be the most effective way to improve administration of the 
program. It is important that the Commission complete its work to 
create and operationalize an automated eligibility mechanism as soon as 
possible to continue to reduce fraud and abuse.
Lifeline for the 21st Century
Federal Universal Service Policy Must Recognize Consumer Preferences 
        for Mobile Wireless
    The FCC has announced that it will open a proceeding to consider 
whether Lifeline can effectively encourage providers to offer broadband 
service to low-income consumers and CTIA and its member companies are 
committed to this evolution, consistent with Congress's directive to 
provide an ``evolving level'' of services through the USF. As the 
Commission and this Subcommittee examines opportunities for expanding 
broadband access for low-income consumers, there are a number of 
important questions that must be addressed and we welcome the 
opportunity to highlight some of the central considerations.
    First, we urge the Commission to ensure any reforms reflect 
consumers' clear preference for wireless services to meet their voice 
and data communications needs. As the data on low-income adoption of 
mobile services described above demonstrates, it is clear that mobile 
wireless broadband will be integral to developing solutions targeted 
for low-income consumers. The FCC's reforms must not exclude--
intentionally or unintentionally--wireless solutions and should 
encourage greater wireless participation in the program to meet the 
needs of low-income Americans.
    At the same time, the Commission must carefully balance appropriate 
subsidy levels and funding requirements to minimize burdens on 
consumers who fund Federal universal service programs. Given that 
wireless consumers contribute 44 percent of the overall Federal USF, 
CTIA has a strong interest in ensuring that consumers are not subject 
to an unreasonable contribution burden. As the Commission and the 
Subcommittee consider potential increases to the size and scope of 
programs supported by USF, Congress should continue to evaluate how all 
of the universal service programs are funded and whether it may be more 
appropriate to support programs of general benefit to the public out of 
general revenue funds.
    Similarly, the role of carriers in determining eligibility in the 
Lifeline program is unique across Federal low-income support programs. 
As the FCC considers reform, we are encouraged that the FCC will 
evaluate transitioning eligibility decisions into the hands of 
appropriate government agencies. Such an approach could reduce the 
current significant regulatory burdens and risks for providers 
interested in participating in the program, and permit opportunities 
for coordinated enrollment and automatic de-enrollment when 
participants are no longer eligible to participate in the program.
    We look forward to working with this Subcommittee and the FCC as it 
seeks to evolve this critical program in a manner that is fiscally 
responsible as well as responsive to Americans' reliance on mobile 
solutions.
Barriers to the Lifeline Program are Barriers to Communication
    Notwithstanding the Commission's recent reforms, questions have 
also been raised about additional proposals that may inadvertently act 
as barriers to low income access to basic communications services. For 
example, some have suggested that the FCC impose a mandatory minimum 
charge on Lifeline subscribers. CTIA remains concerned that such 
approach may have a significantly adverse impact on participation in 
the Lifeline program. While a minimum charge of $5.00 per month may 
seem modest to some, it may represent a significant financial burden 
for those who fall within the income threshold for Lifeline 
eligibility. For those subscribers who do not have a bank account or 
credit of any sort, as is the case for a significant number of Lifeline 
subscribers, the logistics of simply making a co-payment may be an even 
more formidable challenge. For carriers to accept a co-payment, 
arrangements will have to be made with retailers and others to accept 
payment, increasing the cost of program administration, with the also 
likely effect that consumers will receive fewer minutes of use. 
Finally, the FCC's recent report on the Broadband Pilot Projects 
demonstrates the price sensitivity of low-income consumers with respect 
to broadband services. Unsurprisingly, increasing the cost of service 
had an adverse impact on low-income participation.
    While CTIA appreciates the interest some have expressed in limiting 
the size of the Lifeline program through a cap or budget on the total 
amounts that USAC may distribute, CTIA believes that capping the 
Lifeline program may be counterproductive to encouraging low-income 
consumers to adopt essential communications services. A cap or budget 
on the Lifeline program will inherently exclude--or reduce the benefits 
for--an undetermined number of the eligible low-income consumers. 
Because the Lifeline program provides support only to means-tested 
recipients and serves a purpose more akin to other low-income 
government programs that aren't subject to caps or budgets, it is 
reasonable for the Commission to distinguish this program from other 
Federal USF programs that are appropriately subject to a cap. Moreover, 
while there was significant growth in the Lifeline program between 2008 
and 2011, that growth correlated to increased demand for other social 
welfare programs during the economic downturn. As the economy has 
improved and the 2012 reforms have been implemented, the level of 
funding authorized for support of Lifeline has reduced from a high of 
$2.18 billion in 2012 to $1.6 billion in 2014. We believe that a 
properly administered fund can address fund growth while continuing to 
meet the Lifeline program's core mission.
    Over the nearly three decades since its creation, the Lifeline 
program has served an important purpose by enabling low-income 
consumers to access essential communications services, justifiably 
earning bi-partisan support. CTIA appreciates the opportunity to work 
with the Subcommittee, the Commission, and other interested parties to 
ensure that low-income Americans continue to have affordable access to 
increasingly essential communications services of the 21st Century. 
CTIA believes this objective can be accomplished in a way that both 
recognizes the important role of wireless for low-income Americans and 
ensures the fiscal integrity of the program, and we look forward to 
engaging with you to accomplish these objectives.
    Thank you for the opportunity to testify today. If CTIA can provide 
any additional information you would find helpful, please let us know.

    Senator Wicker. And thank you very, very much.
    Mr. May?

           STATEMENT OF RANDOLPH J. MAY, PRESIDENT, 
                   THE FREE STATE FOUNDATION

    Mr. May. Chairman Wicker, Ranking Member Schatz, Ranking 
Member Nelson, and members of the Committee, thank you for 
inviting me to testify.
    I am President of the Free State Foundation, a free market 
think tank primarily devoted to focusing its research in the 
communications law and policy area. I have served as Associate 
General Counsel of the FCC, and I have been closely involved in 
the communications policy area for over 35 years.
    The principle of promoting universal service has been 
central to communications policy for many decades, and this is 
as it should be. The universal service principle supports 
access to basic communications service for all Americans. And 
Lifeline is an important means of effectuating the policy of 
promoting universal service through a safety net mechanism.
    Indeed, if Lifeline service is properly formulated and 
implemented so that it aids low-income persons in an efficient 
and effective manner, free from fraud and waste, then it should 
be a cornerstone of the Nation's universal service policy. This 
is because Lifeline is the most targeted means of providing 
subsidies to those in need of assistance.
    Before turning to my specific reviews, I want to make an 
often-overlooked point. Many of the existing FCC regulations 
are unnecessary, and they have the effect of raising the price 
of access to communications services for all consumers, 
including low-income persons.
    Likewise, the USF surcharge that all consumers pay for all 
interstate calls currently stands at 17.4 percent. Call it what 
you will, but the reality is this is a tax that depresses usage 
for all consumers, including low-income persons.
    That said, I support a properly implemented Lifeline 
program that is further reformed so the program remains viable. 
Lifeline should be a safety net that operates within boundaries 
to aid those truly in need, not another Federal entitlement 
program that evolves in a way so that its subsidies inevitably 
expand to subsidize those further up the income scale.
    This boundary constraint becomes more important as the gap 
in telephone penetration rates between low-income and non-low-
income persons has narrowed over time, because studies show 
that many households receiving the subsidy would choose to 
subscribe in the absence of the subsidy.
    Regarding near-term reforms, the Commission should take 
further steps to prevent waste and fraud. I won't take time to 
address them here, but I do in my written testimony.
    As for expanding Lifeline support to include broadband 
service, the Commission and Congress should proceed with 
caution. While there is considerable merit to the notion that 
at some point and in some way broadband service should be 
supported with Lifeline subsidies, any revamping of the 
original concept of Lifeline as a safety net for access to 
basic voice service should be undertaken in a way that doesn't 
threaten the existing program's sustainability.
    The results from the FCC's broadband pilot program 
demonstrate the challenges inherent in attempting to expand the 
program to include broadband without substantially increasing 
the total amount of subsidies provided.
    GAO reports that the FCC did not conduct a needs assessment 
or develop implementation and evaluation plans prior to 
establishing the broadband pilot. A proper needs assessment, 
along with these plans, should be undertaken before committing 
to a major revamp of the program that could involve substantial 
cost.
    The realization that expanding the program to include 
broadband likely will be costly should prompt consideration of 
significant reforms in the way the current program is 
structured. For example, ultimately, it probably makes sense to 
provide a nontransferable, portable voucher that an eligible 
subsidy recipient can take to any participating service 
provider. Any provider that accepts a voucher would agree to 
provide a Commission-defined basic broadband service to voucher 
recipients at no more than the Commission-defined subsidized 
rate.
    Obviously, it is far easier to describe the concept for a 
voucher program than it is to formulate the parameters of an 
efficient and effective program. But a portable voucher 
structure gives purchasing power directly to low-income 
individuals, allowing them to participate in the communications 
marketplace like any other consumer. And it allows the fund to 
benefit directly from competition among broadband providers.
    Moreover, in order to provide more accountability to the 
Lifeline program, indeed to each of the USF programs, 
consideration should be given to funding them through the 
appropriations process rather than through subscriber 
surcharges.
    To conclude, I support continuation of a Lifeline program 
that provides subsidy support to those truly in need. But in 
order for the program to remain viable and sustain public 
support, meaningful reforms aimed at reducing waste, fraud, and 
abuse should continue to be pursued. And any expansion to 
include broadband should be pursued cautiously.
    Thank you for giving me the opportunity to testify today, 
and I will be pleased, of course, to answer any of your 
questions.
    [The prepared statement of Mr. May follows:]

           Prepared Statement of Randolph J. May, President, 
                       The Free State Foundation
    Mr. Chairman, Ranking Member Schatz, and Members of the Committee, 
thank you for inviting me to testify. I am President of The Free State 
Foundation, a non-profit, nonpartisan research and educational 
foundation located in Rockville, Maryland. The Free State Foundation is 
a free market-oriented think tank that focuses its research primarily 
in the communications law and policy and administrative law and 
regulatory practice areas. I have served as Associate General Counsel 
at the Federal Communications Commission and have been closely involved 
with communications law and policy for over thirty-five years. I am a 
past Chair of the American Bar Association's Section of Administrative 
Law and Regulatory Practice. And I am currently a public member of the 
Administrative Conference of the United States and a Fellow at the 
National Academy of Public Administration.
    The principle of promoting universal service has been central to 
Federal and state communications policy for many decades, and this is 
as it should be. The universal service principle supports access to 
basic communications service for all Americans. And Lifeline service, 
the focus of today's hearing, is an important means of effectuating the 
policy of promoting universal service through a ``safety net'' 
mechanism. Indeed, if Lifeline service is properly formulated and 
implemented, so that it aids low-income persons in an efficient and 
effective manner, free from fraud and waste, then it should be a 
cornerstone of the Nation's universal service policy. This is because 
Lifeline is the most targeted means of providing subsidies to those 
truly in need of assistance.
    Importantly, keeping all members of society connected, regardless 
of income, redounds to the benefit of those who can afford to pay as 
well as those who cannot afford to pay for access to the network. This 
result is attributable to the ``network effects'' principle: The larger 
the number of people a network reaches, the more valuable the network 
is to each user.
    Now I will turn to some of my specific views, having in mind the 
context of where matters stand today. But, first, from my free market-
oriented perspective, I want to make an important, too often 
overlooked, point. Many of the FCC's existing regulations are unduly 
burdensome, if not outright unnecessary, and these regulations have the 
effect of raising the price of access to--and, therefore, decreasing 
the availability of--communications services for all consumers, 
including low-income persons. And, in the same vein, the USF surcharge 
(from an economic perspective, in reality, a ``tax'') that all 
consumers pay for all interstate and international calls currently 
stands at 17.4 percent.\1\ This surcharge also has the effect of 
depressing usage for all consumers, including those at the lower end of 
the income scale.
---------------------------------------------------------------------------
    \1\ FCC Contribution Factor and Quarterly Filings, available at: 
https://www.fcc.gov/encyclopedia/contribution-factor-quarterly-filings-
universal-service-fund-usf-management-support
---------------------------------------------------------------------------
    That said, as a long-time supporter of a properly formulated and 
implemented Lifeline subsidy program, I support measures to further 
reform the program so it remains viable,\2\ and so it sustains public 
support. In my view, Lifeline should be a ``safety net'' that operates 
within boundaries to aid those truly in need, not another Federal 
entitlement program that is structured, or that evolves, in a way so 
that its subsidies inexorably expand to subsidize those further up the 
income scale who are not truly in need.\3\ From the perspective of 
sound policy, this ``program boundary'' constraint becomes more 
important as the gap in telephone penetration rates between low-income 
and non-low-income persons narrows. As the March 15, 2015, GAO Report 
points out, as the penetration rate gap has narrowed over time, studies 
show that, due to price insensitivity, ``many households receiving the 
Lifeline subsidy would choose to subscribe to telephone service in the 
absence of the subsidy.'' \4\ Thus, GAO cautions that the Lifeline 
program, as currently structured, ``may be a rather inefficient and 
costly mechanism to increase telephone subscribership among low-income 
households. . . .'' \5\
---------------------------------------------------------------------------
    \2\ Lifeline and Link Up Reform and Modernization, Report and Order 
and Further Notice of Proposed Rulemaking (Lifeline Reform Order), 27 
FCC Rcd 6656 (2012). I acknowledge that this order, championed by 
Commissioner Mignon Clyburn, was a positive step in the direction of 
reform.
    \3\ For this reason, I do not favor Lifeline eligibility criteria 
that provide subsidies to those persons whose income places them above 
the federally-defined poverty level, or at least much above the poverty 
level.
    \4\ GAO Report, ``FCC Should Evaluate the Efficiency and 
Effectiveness of the Lifeline Program,'' March 2015, at 14.
    \5\ Id.
---------------------------------------------------------------------------
    Regarding near-term reforms, the Commission should take steps to 
prevent waste and fraud that go beyond those salutary steps it took in 
the 2012 Lifeline Reform Order.\6\ For example, while the FCC's rules 
require service providers to determine eligibility for Lifeline, they 
prohibit the carrier from retaining any documentation provided by the 
consumer to demonstrate eligibility after a determination has been 
made. The Commission's concern that the privacy of Lifeline subscribers 
be protected is not unwarranted, but as TracFone and other carriers 
contend, there should be a means to do this without getting rid of 
records that might help prevent fraud and abuse.\7\ Another reform 
proposed by TracFone to inhibit fraud and abuse would prohibit in-
person distribution to prospective Lifeline customers. While this 
proposal may not be necessary if the document retention proposal is 
adopted as a means of discouraging fraud, in light of earlier reports 
concerning questionable on-street distribution of handsets, it may 
still warrant consideration if in-person distribution abuses 
continue.\8\ While the 2012 order's requirement for annual 
recertification was a step in the right direction as a means of weeding 
out ineligible recipients, the use of some form of Electronic Benefit 
Transfer card associated with an underlying Lifeline-qualifying program 
could be considered as a further reform. Without waiting for the annual 
recertification to come around, such an electronic payment vehicle has 
the advantage of promptly de-enrolling from Lifeline a cardholder who 
is de-enrolled from the associated benefits program to which the card 
is tied.
---------------------------------------------------------------------------
    \6\ After adoption of the Lifeline Reform Order, annual Lifeline 
disbursements declined from $2.2 billion in 2012 to $1.7 billion in 
2014. According to the GAO report, this was due, at least in part, to 
the reduction in the number of ineligible households receiving support. 
GAO Report, at 24. The establishment of the National Lifeline 
Accountability Database (NLAD) played a positive role in achieving this 
reduction.
    \7\ See TracFone Supplement to Petition to Require Retention of 
Program-Based Eligibility Documentation, May 30, 2012, available at: 
http://apps.fcc.gov/ecfs/document/view?id=7021920913
    \8\ I supported this TracFone proposal in June 2013 in comments 
filed with the FCC, available at: http://www.freestatefoundation.org/
images/TracFone_Petition_for_Rulemaking_Comm
ents_061713.pdf. If such a in-person prohibition were adopted, there 
would not appear to be a need to apply it to in-store distribution from 
established outlets.
---------------------------------------------------------------------------
    With regard to expanding Lifeline support to include broadband 
service, the Commission--and Congress--should proceed with caution. 
While there is considerable merit to the notion that, at some point and 
in some way, broadband service should be supported with Lifeline 
subsidies, any such revamping of the original concept of Lifeline--as a 
``safety net'' for access to basic voice service--should be undertaken 
in a way that does not threaten the sustainability of the existing 
program. The results from the FCC's broadband pilot program demonstrate 
the challenges inherent in attempting to expand the program to include 
broadband without, at the same time, increasing substantially the total 
amount of subsidies provided. As the GAO report points out, for one 
pilot project, with no monthly cost to subscribe, there was 100 percent 
enrollment. With a $20 monthly fee, there were no enrollees. The GAO 
report concludes, in understated fashion: ``This raises questions about 
the feasibility of including broadband service in the Lifeline program, 
since on a nationwide scale, offering broadband service at no monthly 
cost would require significant resources and may conflict with [the] 
FCC's goal to minimize the contribution burden.'' \9\ The GAO Report 
goes on to say: ``In addition, representatives from the projects we 
interviewed noted other challenges, such as difficulties with marketing 
the program and getting customers to pay their bills.'' \10\
---------------------------------------------------------------------------
    \9\ GAO Report, at 34. As pointed out above, the ``contribution 
burden'' surcharge is currently set at a hefty 17.4 percent.
    \10\ Id. As the Pew Research Center reports consistently have 
confirmed for years, lack of ``digital literacy'' and lack of interest 
are substantial obstacles to expanding access to broadband, more 
important for many people than the ability to pay or the price of 
service. Digital literacy programs may be worthwhile, but they 
certainly are not without costs either.
---------------------------------------------------------------------------
    Another consideration, often overlooked in discussing expansion of 
Lifeline subsidies to broadband, is that the devices used to access 
broadband service, whether a laptop, tablet, or smartphone, are, on 
average, considerably more expensive than the phone handsets typically 
used to access Lifeline-supported voice services.\11\ Support for 
``access'' without the means to acquire the associated devices is 
meaningless. This is just another factor relating to cost that must be 
considered in deciding whether Lifeline should be expanded to include 
broadband.\12\
---------------------------------------------------------------------------
    \11\ If Lifeline is expanded to include broadband, wireless 
services should play a prominent role. Pew reports that those with 
lower incomes and levels of educational attainment are much more 
dependent on smartphones for online access than those with higher 
incomes and levels of educational attainment. See ``U. S. Smartphone 
Use in 2015,'' April 1, 2015, available at: http://www.pewinternet.org/
2015/04/01/us-smartphone-use-in-2015/
    \12\ Another separate factor to consider is this: The FCC has just 
ratcheted up the definition of what constitutes ``broadband'' to 25 
Mbps from 10 Mbps, a standard which only recently had been adopted. 
Obviously, providing ``broadband'' service at higher and higher speeds 
is more costly. And it is unlikely that proponents of expansion of 
Lifeline to include broadband will be receptive to providing a level of 
service the Commission has deemed not to be ``broadband.''
---------------------------------------------------------------------------
    It is worth noting that GAO reports that ``the FCC did not adopt 
our previous recommendation to conduct a needs assessment or develop 
implementation and evaluation plans prior to establishing the [pilot 
broadband] program.'' \13\ While the efficacy of such measures may vary 
depending on their execution, a proper needs assessment, along with 
evaluation and implementation plans, is warranted when considering a 
major revamp of the Lifeline program that could involve a substantial 
increase in subsidies.
---------------------------------------------------------------------------
    \13\ Id.
---------------------------------------------------------------------------
    So, realistically, any expansion of the Lifeline program to include 
broadband, if it is to meet the objectives of its proponents, is likely 
to be costly. This realization should prompt consideration of 
significant reforms in the way the current program is structured. I 
have discussed many of these more fundamental restructuring reforms in 
the past. For example, ultimately, it probably makes sense to 
restructure Lifeline to provide a nontransferable portable voucher that 
an eligible subsidy recipient can take to any participating service 
provider. Any provider that accepts a voucher for broadband would agree 
to provide a Commission-defined basic broadband service to voucher 
recipients at no more than the Commission-defined subsidized rate. 
Obviously, it is far easier to describe the concept for a voucher 
program in broad outline than it is to formulate and implement the 
parameters of such an efficient and effective program. But, as a group 
of Free State Foundation-affiliated scholars said in a September 2014 
Response responding to the House Commerce Committee's #CommActUpdate 
Universal Service White Paper: ``[A] portable voucher structure gives 
purchasing power directly to low-income individuals, allowing them to 
participate in the telecommunications marketplace like any other 
consumer. And it allows the fund to benefit directly from competition 
among broadband providers. To attract recipients and avoid customer 
defection, providers must compete on price and service as they do in 
the marketplace generally.'' \14\
---------------------------------------------------------------------------
    \14\ Response to Questions in the Fifth White Paper, ``Universal 
Service Policy and the Role of the Federal Communications Commission,'' 
September 19, 2014, available at: http://freestatefoundation.org/
images/Response_to_Questions_in_the_Fifth_White_Paper_0919
14.pdf
---------------------------------------------------------------------------
    Moreover, in order to provide more accountability to the Lifeline 
program -indeed, to each of the USF programs--consideration should be 
given to funding them through the Federal budget and appropriations 
process rather than through subscriber surcharges. As the Free State 
Foundation-affiliated scholars said in the September 2014 
#CommActUpdate Response, this ``would improve the transparency of the 
program by vesting oversight in Congress,'' rather than in the ``murky, 
semi-private Universal Service Administrative Company.'' Funding 
universal service programs through the appropriations process ``would 
also apply a hard budgetary cap to expenditures established for a 
definite period of time, requiring the Commission to wring 
inefficiencies out of the system in order to serve the public within 
congressional funding restraints.'' \15\
---------------------------------------------------------------------------
    \15\ Id.
---------------------------------------------------------------------------
    In summary, I support continuation of a Lifeline program that 
provides subsidy support to those truly in need. But in order for the 
program to remain viable and sustain public support, meaningful reforms 
aimed at reducing waste, fraud, and abuse should continue to be 
pursued. And, when considering proposals to expand Lifeline to include 
broadband service, in light of the additional costs likely to be 
involved, policymakers should proceed cautiously.
    Thank you for giving me the opportunity to testify today. I will be 
pleased to answer any questions.

    Senator Wicker. Thank you, Mr. May.
    Ms. Gonzalez?

       STATEMENT OF JESSICA J. GONZALEZ, EXECUTIVE VICE 
    PRESIDENT AND GENERAL COUNSEL, NATIONAL HISPANIC MEDIA 
                           COALITION

    Ms. Gonzalez. Thank you, Chairman Wicker, Ranking Member 
Schatz, Ranking Member Nelson, and members of the Committee. 
Thank you for inviting me to testify.
    As a former Lifeline recipient, I know firsthand how 
effective and life-changing it can be. In 2004, when I was laid 
off from my teaching job, I was on Lifeline for a short time. 
With my subscription, I was able to list a reliable phone 
number on my resume and use my phone to communicate with the 
law school admissions and financial aid offices that ultimately 
enabled me to become an attorney.
    I can think of no better way of improving Lifeline than by 
supporting the FCC's process to modernize it for the broadband 
age. Home broadband access is critical to nearly every facet of 
modern American life. More than 80 percent of Fortune 500 
companies, including huge employers like Walmart and Target, 
only accept job applications online. In the next decade, nearly 
80 percent of jobs will require digital literacy skills. 
Students with home broadband graduate at higher rates than 
those without, and small businesses with broadband yield 
$200,000 more in annual revenues.
    Yet, despite the breakneck pace to embrace the benefits of 
Internet through all sectors of our economy and society, we as 
a country have not demonstrated a similar sense of urgency when 
it comes to ensuring that all Americans can access the 
Internet.
    Thirty percent of Americans lack home broadband access. The 
unconnected are more likely to be poor, African-American, 
Latino, Native American, rural, and/or seniors. For people 
under 65, the primary reason cited for non-adoption is cost.
    The divide touches all parts of American life but is 
particularly striking in education, rural life, and health 
care. I have time to address just one now.
    As a former public school teacher, I would be remiss not to 
underscore how the digital divide is creating strikingly 
unequal provision of public education across this great 
country. FCC Commissioner Rosenworcel has raised concerns about 
what she calls the homework gap--that is, that 7 in 10 teachers 
assign homework that requires broadband, but 1 in 3 households 
do not subscribe, including 5 million households with U.S. 
schoolchildren.
    Nearly 100 percent of high school students say that their 
teachers assign homework that requires broadband. Fifty percent 
have been able to complete it at certain times, and 42 percent 
say they have received a lower grade because of lack of access.
    A close friend of mine is still teaching the fourth grade 
in Inglewood, California. Inglewood is a low-income 
neighborhood; the majority of residents of African-American and 
Latino. Some of her students have come to school with shoes 
three sizes too big, jackets with holes in them, or, worse, 
hungry, and they are expected to learn and succeed before their 
basic needs are met.
    And with new state standards, these children, half of whom 
she estimates do not have broadband at home, will be taking 
their standardized exams online. The standards direct teachers 
to integrate tech into lesson plans and homework.
    The textbooks, shared one to every two to three students, 
are teeming with digital learning opportunities, yet she cannot 
assign online homework or even integrate tech into lessons 
because her students do not have the right tools.
    Simple research projects that should take a couple of days 
in classes where every student is connected drag on for weeks, 
as her students wait for their precious 30 minutes per week in 
the computer lab.
    In the beginning of the school year, my friend invited me 
to speak to her kids, and I was met with a roomful of bright, 
ambitious, and enthusiastic kids. They have little in the way 
of material possessions, but they have big dreams and unique 
ideas about how to give back to this country. It is our job to 
arm them with the tools to do so.
    To balk at this task, to delay isn't just to throw aside 
the core American value of educational equality; it is giving 
up on our country's future. Tomorrow is too late. We must act 
boldly, and we must act now.
    Lifeline, the only government initiative that addresses 
affordability, is well suited for the task. It already provides 
many with a pathway out of poverty. In fact, over 4.2 million 
households represented by members of this subcommittee alone 
currently rely on Lifeline telephone service. An estimated 90 
percent of them are without home broadband.
    I will be forever grateful for the investment that this 
country made in my future, and I will fight to give other 
Americans similar opportunity. Modernizing Lifeline is one 
fight worth fighting.
    Thank you.
    [The prepared statement of Ms. Gonzalez follows:]

Prepared Statement of Jessica J. Gonzalez, Executive Vice President and 
           General Counsel, National Hispanic Media Coalition
    Chairman Wicker, Ranking Member Schatz, esteemed members of the 
Subcommittee, thank you for inviting me to testify.\1\ Lifeline has 
tremendous potential to dramatically improve the lives of millions of 
Americans. This is an exciting moment in history: we have the 
opportunity to explore important improvements to the program and to 
modernize it for the digital age. This will provide a pathway out of 
poverty--a pathway to success--to some of our country's poorest people.
---------------------------------------------------------------------------
    \1\ I would like to thank my colleagues, Michael Scurato and 
Elizabeth Ruiz, for assisting me with the preparation of this 
testimony.
---------------------------------------------------------------------------
    As a former Lifeline recipient, I know firsthand how life-changing 
it can be. In 2004, after being laid off from my teaching job, I was on 
Lifeline for a short while. With my Lifeline telephone subscription, I 
was able to list a reliable phone number on my resume as I searched for 
jobs and use my phone to communicate with the law school admissions and 
financial aid offices that ultimately made it possible for me to become 
an attorney.
    Today, Lifeline infrastructure can--and should--be modernized to 
enable all Americans to participate in our society. As we look forward 
to the release of the Federal Communications Commission's (``FCC'') 
related notice of proposed rulemaking, and applaud yesterday's 
introduction of the Lifeline-centric Broadband Adoption Act of 2015, it 
appears we will have ample opportunity to do more than explore 
improvements to the program, and hopefully adopt a number of 
improvements at the FCC within the year.
    One of the questions posed in this hearing is how to improve the 
effectiveness of Lifeline. Lifeline is a program designed to help make 
modern communications services affordable to low-income families by 
providing a modest, $9.25 subsidy for households participating in a 
number of other assistance programs or living below 135 percent 
poverty. Yet, it has not been modernized to fully support broadband 
connections. As members of this subcommittee are well aware, broadband 
Internet access has become an essential service, and it has become 
increasingly critical in promoting the economy, public health, public 
safety, and education. I can think of no better way of improving the 
effectiveness of Lifeline than by supporting the FCC's efforts to 
modernize it for the broadband age and encouraging the agency to 
complete the process by the end of this year.
    I do not need to elaborate to this subcommittee how critical home 
broadband access is to nearly every facet of modern American life. The 
FCC's Broadband Adoption Taskforce has defined the digital divide that 
exists between those that have broadband and those that do not as an 
``opportunity divide'' that manifests itself in a number of ways.\2\ 
For instance, more than 80 percent of Fortune 500 companies, including 
huge employers like Wal-Mart and Target, only accept job applications 
online.\3\ In the next decade, nearly 80 percent of jobs will require 
some digital literacy skills.\4\ And students with broadband at home 
graduate at a higher rate than students who lack such access.\5\ 
Consumers with broadband at home can save up to $7,000 per year on 
goods and services, and annual revenues of small businesses with 
broadband access are, on average, $200,000 higher than those without 
broadband.\6\
---------------------------------------------------------------------------
    \2\ FCC Broadband Adoption Taskforce, Broadband Adoption 
Presentation to FCC Open Meeting, at slide 4-5 (Nov. 30. 2011), 
available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-
311281A1.pdf (``Broadband Adoption Taskforce Presentation'').
    \3\ Id. at slide 10.
    \4\ Id. at slide 11.
    \5\ Id. at slide 14.
    \6\ Id. at slide 19.
---------------------------------------------------------------------------
    Yet, despite the breakneck pace to embrace the efficiencies and 
benefits of the Internet through all sectors of our economy and 
society, we, as a country, have not demonstrated a similar sense of 
urgency when it comes to ensuring that all Americans are able to access 
the Internet. Many of those that could benefit most from broadband 
remain unconnected. According to a 2013 Pew Research Center study, 30 
percent of Americans lack home broadband.\7\ These people are more 
likely to be poor, African American, Latino, Native American, rural 
and/or seniors.\8\ For people under 65, the primary reason cited for 
non-adoption is cost.\9\
---------------------------------------------------------------------------
    \7\ Aaron Smith and Kathryn Zickuhr, Home Broadband 2013: Trends 
and demographic differences in home broadband adoption, Pew Research 
Center (Aug. 26, 2013), available at http://www.pewinternet.org/2013/
08/26/home-broadband-2013/.
    \8\ Id.
    \9\ John B. Horrigan, PhD, Closing Online Access Gaps for Older 
Adults, Time Warner Cable Research Program on Digital Communications at 
11 (Fall 2014), available at http://www.twcresearchprogram.com/pdf/
TWC%20Horrigan%20Project%20GOAL%20Paper.pdf.
---------------------------------------------------------------------------
    Furthermore, in recent years, broadband adoption has remained 
stagnant.\10\ And, perhaps more troubling, the latest data indicates 
that broadband adoption actually posted a slight decline among lower-
income communities.\11\ Those who are unsubscribing from broadband cite 
cost as their number one reason for disconnecting.\12\ Fewer than half 
of households earning less than $25,000 have broadband at home.\13\
---------------------------------------------------------------------------
    \10\ Dep't of Commerce, Nat'l Telecomm. & Info. Admin., Exploring 
the Digital Nation: Embracing the Mobile Internet at 15 (Oct. 2014), 
available at http://www.ntia.doc.gov/files/ntia/publications/
exploring_the_digital_nation_embracing_the_mobile_internet_10162014.pdf.
 (``In 2012, 75 percent of households reported having Internet at home, 
representing a 3 percentage-point increase from 2011'') (``Digital 
Nation 2014'').
    \11\ Id. at 16 (reporting based on 2012 Census data that 48 percent 
of households earning less than $25,000 use broadband at home); 
Computer and Internet Use in the United States: 2013, American 
Community Survey Reports at 3 (Nov. 2014), available at http://
www.census.gov/history/pdf/2013computeruse.pdf (reporting based on 2013 
Census data that 47.2 percent of households earning less than $25,000 
have high speed Internet access at home, down from 48 percent in 2012).
    \12\ Digital Nation 2014 at 30.
    \13\ Id. at 16.
---------------------------------------------------------------------------
    Three instances where the broadband opportunity divide is 
particularly striking are education, rural life and healthcare.
    As a former public school teacher, I would be remiss not to 
underscore how the digital divide is creating strikingly unequal 
provision of public education across this great country. In recent 
years, FCC Commissioner Jessica Rosenworcel has raised serious concerns 
about what she calls the Homework Gap, which refers to the following 
phenomenon. Seven in ten teachers assign homework that requires 
broadband access yet, according FCC data, one in three households do 
not subscribe to broadband services.\14\ Five million households with 
school-aged children are falling into this gap.\15\ A recent survey by 
the Hispanic Heritage Foundation and the Family Online Safety Institute 
revealed that nearly 100 percent of high school students say they are 
required to access the Internet to complete homework assignments 
outside of school.\16\ Nearly 50 percent reported that they have been 
unable to complete a homework assignment because they did not have 
access to the Internet or a computer, and 42 percent say they received 
a lower grade on an assignment because of lack of Internet access.\17\ 
Pew research shows that half of teachers in low-income communities say 
their students' lack of home broadband access has been a barrier to 
integrating technology into their lessons.\18\
---------------------------------------------------------------------------
    \14\ Remarks of Commissioner Jessica Rosenworcel, Taking the Pulse 
of the High School Student Experience in America, Hispanic Heritage 
Foundation, Washington, DC (April 29, 2015), available at https://
apps.fcc.gov/edocs_public/attachmatch/DOC-333274A1.pdf (``Remarks of 
Comr. Rosenworcel'').
    \15\ Id.
    \16\ Hispanic Heritage Foundation and Family Online Safety 
Institute, Taking the Pulse of the High School Student Experience in 
America (April 28, 2015), available at http://www.his
panicheritage.org/hispanic-heritage-foundation-mycollegeoptions-family-
online-safety-institute-and-other-partners-announce-findings-of-new-
study-titled-taking-the-pulse-of-the-high-school-student-experience/.
    \17\ Id.
    \18\ Remarks of Comr. Rosenworcel.
---------------------------------------------------------------------------
    A very dear friend of mine teaches fourth grade in Inglewood, 
California, a Los Angeles suburb. Inglewood is a low-income 
neighborhood and the majority of residents are Latino or African 
American. My friend tells me how some her students have come to school 
with shoes three sizes too big, or jackets with holes in them, or 
worse, hungry. And they are expected to learn and succeed without 
having their basic needs met. With the new state Common Core standards, 
these children--nearly half of whom, she estimates, do not have home 
broadband access--will be taking standardized exams online. The state 
standards direct teachers to integrate technology into lesson plans and 
homework. The textbooks--often shared one to every two or three 
students--are teeming with digital learning opportunities. Yet, she 
cannot assign online homework or even integrate technology into her 
lessons because she knows that many of her students do not have 
adequate Internet access, and thus would be on unfair footing.
    Her students have access to the school computer lab for 30 minutes 
a week, and she has only two computer modules in her classroom, both of 
which are old and in disrepair. She tells me that simple research 
assignments that would take a day or two in classrooms where 100 
percent of students have home broadband access, carry on for weeks and 
sometimes months. But currently, she spends her time teaching basic 
computing and Internet navigation skills so her students can be 
minimally prepared for California's move to online exams.
    In the beginning of the school year, my friend invited me to speak 
with her students and tell them about my journey to becoming an 
attorney. I was met with a room full of bright, ambitious and 
enthusiastic kids. I asked them about their dreams, and they told me 
that they wanted to be veterinarians, fashion designers, teachers and 
police officers. These kids have so little in the way of material 
possessions, but they have big ambitions and big desires to give back 
to our society.
    It is our job to arm them with the tools to do so. To balk at this 
task is not just to throw aside the core American principle of 
educational equality, it is giving up on our own future as a country--
overlooking aspiring talent just because their parents do not have the 
resources to provide Internet access. Tomorrow is too late. We must act 
boldly, and we must act now!
    Simply put, it is past time that the Federal government took 
serious steps to address the affordability of broadband for low-income 
families. After all, affordability is the main barrier to broadband 
adoption for many segments of the population and it is, by a wide 
margin, the number one reason that families that have previously 
adopted broadband cancel their service and fall offline.\19\ This is a 
task for which Lifeline, the only government initiative that directly 
addresses the affordability barrier to adoption of communications 
services, is particularly well suited.
---------------------------------------------------------------------------
    \19\ Digital Nation 2014 at 30.
---------------------------------------------------------------------------
    For rural communities, the promise of broadband to lower geographic 
barriers and provide access to an incredible world of new services and 
resources cannot be overstated. We, as a country, continue to invest 
significant sums through other Universal Service Fund programs to 
ensure that every corner of our Nation has access to advanced 
telecommunications networks. While this important work continues, we 
would only be completing half the job if we deliver access to 
communities while failing to address the significant number of rural 
families who cannot afford to adopt the service once their home is 
connected. In fact, extensive research has shown broadband adoption, 
not access, is the primary driver of positive economic outcomes.\20\ 
Researchers analyzed county-level data to compare non-metro areas in 
terms of broadband availability, adoption and economic growth between 
2001 and 2010. They found that rural counties that reached or exceeded 
a broadband adoption rate of 60 percent or higher experienced higher 
income growth and less growth in unemployment.\21\ Those where 
household broadband adoption was less than 40 percent exhibited lower 
growth in number of businesses and total number of jobs. Broadband 
adoption is the key to prosperity for rural Americans.
---------------------------------------------------------------------------
    \20\ Econ. Research Serv./USDA, Broadband Internet's Value for 
Rural America, ERR-78 at 15 (Aug. 2009), available at http://
www.ers.usda.gov/media/155154/err78_1_.pdf.
    \21\ Rural economies benefit from broadband, Nat'l Agric. & Rural 
Dev. Policy Ctr. (Aug. 5, 2014), available at http://www.nardep.info/
BenefitsBroadband8.html.
---------------------------------------------------------------------------
    Data shows that, for lower-income rural households where broadband 
is available, affordability is the main barrier to adoption.\22\ 
Lifeline, which exists to directly address affordability of 
communications services, can help.
---------------------------------------------------------------------------
    \22\ Rural Broadband At A Glance, USDA (2013 ed.), available at 
http://www.ers.usda.gov/media/1133263/eb-23.pdf.
---------------------------------------------------------------------------
    Finally, for low-income communities, particularly in rural areas, 
broadband is becoming increasingly important to improving access to 
healthcare and driving down costs. The FCC recently told the story of 
the residents of Ruleville, Mississippi, a rural community with a 
population of just over 3,000 in which 58 percent of children live in 
poverty.\23\ The town, as the FCC recounted, has one doctor, one 
hospital, and skyrocketing levels of diabetes, obesity, and 
unemployment. Despite all of this, the town is at the forefront of the 
broadband medicine revolution.\24\ One of its greatest success stories 
is its ability to remotely monitor diabetes patients over broadband 
connections. Not only has this improved the quality of lives of 
patients, but hospital visits for diabetes-related issues have fallen 
significantly.\25\
---------------------------------------------------------------------------
    \23\ P. Michele Ellison, Just Around the Broadband Bend, Official 
FCC Blog (Feb. 23, 2015), available at https://www.fcc.gov/blog/just-
around-broadband-bend.
    \24\ Id.
    \25\ Id.
---------------------------------------------------------------------------
    This is just one example of how helping low-income people afford 
broadband could positively impact health outcomes by allowing more 
individuals to access quality healthcare while helping doctors be more 
effective and efficient.
    While I do not have time to elaborate on how important broadband 
has become to accessing job opportunities and trainings, providing 
independence and dignity to seniors living on fixed incomes, and 
maximizing the efficiency of other government agencies and programs, I 
will say that addressing the affordability barrier to broadband 
adoption is a key component of ensuring a whole host of positive 
outcomes for our country.
    Lifeline is not a silver bullet answer to the digital divide, but 
it has tremendous potential to dramatically change the landscape. We 
already have Lifeline infrastructure throughout the country that is 
helping families stay connected with telephone service. And according 
to comments that TracFone, one of the Nation's largest Lifeline 
providers, filed with the NTIA several years back, 90 percent of its 
SafeLink subscribers did not have home broadband access.\26\ In other 
words, we have mechanisms and agents in place to reach the unconnected. 
The question is whether we will activate them.
---------------------------------------------------------------------------
    \26\ Comments of TracFone Wireless, Inc., USDA, Rural Util. Serv., 
Broadband Initiatives Program, RIN: 0572-ZA01, Dep't of Commerce, Nat'l 
Telecomm. & Info. Admin., Broadband Technology Opportunities Program, 
RIN: 0660-ZA28, Dkt. No. 0907141137-05 at 5 (Nov. 30, 2009), available 
at http://www.ntia.doc.gov/files/ntia/broadbandgrants/comments/rfi2/
TracFone%20
-%20Comments%20to%20NTIA%20and%20RUS%20sent%2011-30-09.2.pdf.
---------------------------------------------------------------------------
    Lifeline already provides so many with a pathway out of poverty and 
a means to contribute to our economy and society. In fact, more than 
4.2 million households represented by members of this subcommittee 
alone currently rely on Lifeline telephone service. Most of them surely 
need home broadband as well.
    I will be forever grateful for the investments that this country 
made in my future, and I will fight for the rest of my life to give 
back and make this a better country for everyone in it. Modernizing 
Lifeline for the digital age is, I believe, one such fight. Thank you. 
I look forward to your questions.

    Senator Wicker. Thank you very much.
    Because our schedules are more flexible this morning, 
Senator Schatz and I will defer our questions. I will yield my 
5 minutes at this point to Senator Ayotte, and then Senator 
Schatz will yield his 5 minutes to Senator Nelson, and we will 
proceed from there.
    Let's stick to the 5-minute timeframe.
    Senator Ayotte?

                STATEMENT OF HON. KELLY AYOTTE, 
                U.S. SENATOR FROM NEW HAMPSHIRE

    Senator Ayotte. I want to thank the Chairman and Ranking 
Member and all of you for being here.
    Mr. Clements, I wanted to follow up on an issue that I have 
in my state that is a different issue, and that is that if you 
look at New Hampshire and some of the challenges we face in 
terms of universal access and even in more economically 
challenged areas of my state, they are in rural areas. And, in 
fact, New Hampshire citizens only receive 37 cents back on the 
dollar of what they put in overall in the Universal Service 
Fund.
    And yet, as we look at some of the providers that are 
trying to build out more broadband capacity, meaning on the 
infrastructure piece of that portion of the Connect America 
Fund, the Universal Service Fund, as I listen to this 
challenge, I think to myself, if we are going to extend 
Lifeline on broadband, what would help my constituents most is 
if--with a lack of capacity on infrastructure in more rural 
areas in my state, really the expansion of broadband isn't 
going to give the access to a big number of constituents that I 
have, who might be eligible for this program but otherwise the 
just basic infrastructure isn't there because they live in 
rural America.
    So, as we look at potentially the FCC considers expanding 
this into broadband, how do my constituents deal with that 
challenge? Because you can expand it all you want, but if you 
don't have the infrastructure in rural America, you are not 
going to have an ability to expand broadband or access to 
broadband whatsoever.
    Mr. Clements. Sure. In our report, we focused on the 
Lifeline program itself, and we do realize that the Connect 
America Fund is designed to try to get those more advanced 
services to the people that you are----
    Senator Ayotte. Or any service, in some areas.
    Mr. Clements. Any service, as you are mentioning.
    In terms of the Lifeline program itself, one could argue 
that, to the extent that the consumers now have additional 
resources, creates additional demand for broadband service in 
rural areas, because there is a higher probability that a 
consumer would subscribe, therefore, that might also encourage 
companies to provide the service.
    It could be another avenue to encourage companies, because 
the number of consumers that might subscribe will increase in 
those areas.
    Senator Ayotte. Mr. May, have you looked at this issue 
separately also, thinking about--you proposed a whole new 
formula. So for a state where I would argue my constituents 
aren't getting the value on what they are contributing on this, 
you know, what are your thoughts on areas like in rural New 
Hampshire, where we can expand Lifeline all we want, but if you 
don't have basic infrastructure of any broadband access, it is 
not going to help them?
    Mr. May. Senator Ayotte, you make an excellent point that 
if you don't have the infrastructure Lifeline is maybe nice in 
theory but meaningless in practice.
    And it just so happens I was driving from Keene, New 
Hampshire, to the Manchester airport this past weekend after 
visiting my son in Keene, and I can testify that there may be 
some places on that route that lack access----
    Senator Ayotte. Yes.
    Mr. May.--between those two points.
    Senator Ayotte. Yes.
    Mr. May. Look, the FCC has a program, Connect America Fund. 
I am supportive of targeting funds to unserved areas, and, you 
know, that is important. And, you know, beyond that, in terms 
of exactly what changes need to be made and whatever, I can't, 
I can't tell you. It is just important that the funds be 
targeted, I think, to unserved areas.
    I guess what I would say is, in the past, based on my 
observations and studies in terms of the way the programs have 
worked, as you know, subsidies have gone to areas, really, that 
don't need them----
    Senator Ayotte. Right.
    Mr. May.--because there are duplicate providers, and that 
is just a fact. So that really shouldn't happen.
    And so one of the points I will make over and over is just 
focus on the unserved areas. You should have some form of, 
ideally, competitive bidding so that you have people that come 
in and provide service on the least-cost basis. And that is 
what you need to do.
    Senator Ayotte. Thank you.
    I also wanted to follow up, Mr. Clements, on this pilot 
program. So, as the FCC considers the expansion of Lifeline 
into the broadband area, you seem to be quite critical of the 
basis upon which they are making this information on the pilot. 
And so do we have sufficient information based on this pilot 
to, you know, make this decision, in terms of expansion?
    Mr. Clements. The pilot had some weaknesses that I had 
mentioned, in terms of the needs assessment and implementation 
and evaluation plans.
    The pilot did provide some information, and FCC came out 
with a staff report recently. The one, I think, critical 
finding there was that the participation rate was relatively 
low. Of consumers that were offered service, about 10 to 12 
percent ultimately accepted service. Discount rates were in the 
$20 range.
    That raises questions in terms of the type of discount that 
you are going to need to offer to get people to actually 
subscribe to service.
    Senator Ayotte. Thank you.
    Senator Wicker. Thank you very much.
    And next, Senator Booker.

                STATEMENT OF HON. CORY BOOKER, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Booker. Thank you, Mr. Chairman.
    Just jumping in real quick, I want to highlight, Ms. 
Gonzalez, the urgency for the need of more penetration, more 
access. You spoke simply about applying for jobs, but obviously 
we have platforms now that provide access to life and 
opportunity well beyond just simply a job application. You have 
the sharing economy now, platforms, everything from--in fact, 
there are thousands of people in New Jersey who make their 
living or augment their income from things like eBay or other 
shared-economy platforms. We have people that, even beyond 
their homework, that use things like the Khan Academy to 
supplement their education. This has become a world where 
without the Internet you really do close off opportunities.
    And so I just would love for you to expand for a moment for 
me on, you know, your passion, which is obvious, about the 
digital divide and how it affects low-income communities and 
communities of--low-income communities in urban areas, as well 
as rural areas, and some of the impact that you see with the 
lack of broadband access that Lifeline could cover.
    Could you elaborate on that for me?
    Ms. Gonzalez. Sure. Thank you. Thank you, Senator Booker.
    You know, we have always said this is a good investment, 
not just in these individuals who are receiving the subsidy but 
also in our digital economy. Having more consumers online is 
good for everyone. There are more people to, you know, shop and 
spend and develop economy, but there are also a lot of people, 
as you mentioned, who have small businesses.
    I was here a couple months ago testifying with Etsy. And 
they were talking about this online marketplace where there are 
moms who are stay-at-home moms and picking up an extra $30,000, 
$40,000, $50,000 a year for their families, often making the 
difference between making ends meet and not, during children's 
naps.
    And so, when you think about the opportunities that are 
being missed out on right now by those who can't afford to 
connect, it is harming our economy and the well-being of 
individuals.
    I think there are a lot of other instances, too, as health 
care and telemedicine--I know this subcommittee has already 
looked at this recently, but the opportunity for remote health-
care monitoring is critical and could change the way that 
especially low-income people--as, you know, if you have to take 
a couple buses to get to the doctor, it is really hard to get 
there when you don't have reliable transportation.
    And so there are just so many different opportunities for 
civic participation, engaging in, you know, political processes 
and debates. The list goes on and on. I think education is the 
most glaring one, because as we wait to, you know, provide 
affordable access, students are already, already this year, in 
27 states, taking their exams online, and they don't have the 
skills.
    Senator Booker. Let me interrupt you because Senator Wicker 
is tough on time, and--thank you for somebody getting that 
joke.
    Mr. May, in past writings, you have described the dismissal 
of Lifeline programs as another social giveaway as 
shortsighted. And you have also discussed the overall 
importance of the Lifeline program to not just low-income users 
themselves but to the communication networks as a whole.
    In your testimony, you also note that universal service has 
been a principle of the American communications policy for 
decades, as it should be.
    So the simple question is, can you just elaborate for the 
Committee on what you see as the national benefits of having a 
low-income program such as Lifeline?
    Mr. May. Thank you, Senator Booker.
    I don't recall those first quotes. There may be another Mr. 
May.
    But I have been a longtime supporter of Lifeline, and in 
this sense: because, in my view, there is a role for a social 
safety net program. I think everyone should have the 
opportunity to have access to the network. Universal service--I 
think this is the point--universal service actually not only 
benefits those low-income people that are able then to have 
access, but it benefits those who can pay because of what we 
call ``network effects,'' that everyone benefits more, the more 
people that are on in a network.
    So I have been a supporter of Lifeline, but here is a part 
that some people don't like to hear as much as the other. One 
reason I support Lifeline is because if you implement it 
properly, it should be, as I said, the most targeted means of 
providing support to those in need.
    I will just say that some of the other USF programs aren't, 
even by design, as targeted. And, therefore, you know, we only 
have a limited amount of money, and so Lifeline can give 
subsidies to those that need them if it is implemented and if 
it is free from waste, fraud, and abuse and so forth.
    Senator Booker. And I will add in the 2 seconds I have left 
that the network idea, the engagement, is also important, not 
only for economic reasons, educational reasons, but also 
citizen participation----
    Mr. May. Sure.
    Senator Booker.--and the well-being of our society.
    Mr. May. Sure.
    Senator Booker. Thank you.
    Senator Wicker. Thank you, Senator Booker----
    Senator Booker. Thank you, Mr. Chairman.
    Senator Wicker.--for being so mindful of the time.
    Senator Booker. Mr. Chairman, would I be able to enter for 
the record just a list of many of the statements from industry, 
civil rights, advocacy groups' strong support for the Broadband 
Adoption Act of 2015, which is some legislation I introduced 
yesterday, and a series of over 60 civil rights and advocacy 
groups that are supporting this, including industry groups, 
and, finally, a letter from Multicultural Media, Telecom, and 
Internet Council, also expressing support for these goals? May 
I enter that into the record?
    Senator Wicker. Without objection----
    Senator Booker. Thank you.
    Senator Wicker.--that will be entered.
    [The information referred to follows:]

                                                       May 11, 2015
Hon. Tom Wheeler
Chairman
Hon. Mignon Clyburn
Hon. Ajit Pai
Hon. Jessica Rosenworcel
Hon. Michael O'Rielly
Commissioners
Federal Communications Commission
Washington, DC.

Dear Chairman Wheeler and Commissioners:

           RE: Lifeline Reform, WC Dockets 11-42 and 03-109

    The 36 organizations set out below write on behalf of 
telecommunications consumers across America to call for the rapid and 
comprehensive reform of the Commission's critically important Lifeline 
universal service program.
    A bi-partisan effort is required to modernize this program so that 
millions of Americans can realize the full potential of the digital 
broadband age, and obtain this benefit in an efficient and effective 
program. At Stanford University's Rebele Symposium on April 1, 2015, 
Commissioner Clyburn called the Internet the ``great equalizer of our 
time,'' accurately noting how society's increasing dependence on the 
rapid exchange of information makes broadband connectivity essential 
for the average American to access education, employment opportunities, 
improved health care, civic engagement, family communications and a 
host of other services.
    According to the Pew Research Center, today 70 percent of American 
adults have a broadband connection, and 90 percent with incomes of 
$100,000 or more have broadband at home. Yet disparities in broadband 
access by income still persist. Sixty-four percent of Americans with 
incomes of less than $30,000, 54 percent of citizens with incomes under 
$20,000, and 42 percent of those with incomes less than $10,000 have 
broadband service at home. Pew also reports that senior citizens 
typically have been the slowest adopters of home broadband; only 47 
percent of U.S. adults age 65 and older have broadband at home.
    A modernized Lifeline program aimed at making broadband more 
affordable and available for the Nation's low-income, older and less 
able consumers is a fundamental tool in the fight to break the cycle of 
poverty and connect the under-connected.
    In a February 2015 FCC blog article, Commissioner O'Rielly noted 
that common sense principles that help to protect the universal service 
fund and ratepayers against waste, fraud and abuse should also be part 
of the Commission's reforms of its Lifeline universal service program. 
We believe that a twenty-first century program with ``adequate controls 
and deterrents'' can be run far more efficiently and with better 
safeguards against fraud, waste and abuse than the existing program.
    Success in upgrading this 30 year-old program will require policy 
makers to embrace a new approach. Commissioner Clyburn outlined her 
thoughts on the subject in a 2012 speech at the American Enterprise 
Institute referencing immediate Lifeline reform where she stated that 
reform must occur in a manner that, ``. . . increases the value of 
other Federal investment, reduces administrative burdens, reduces 
incentives for waste, fraud and abuse, addresses privacy concerns of 
consumers, streamlines the program to encourage participation and 
leverages efficiencies from other programs.''
    On behalf of the constituents that entrust our organizations to 
ensuring parity in telecommunications services and other public 
benefits, we believe that the Commission has the tools necessary to 
create a new twenty-first century model for the Lifeline program that 
would serve the needs of low income consumers in an efficient, secure 
and respectful fashion. To do so, any future modernization effort 
should be guided by the following core principles:

   Empowering consumer choice.

     At bottom, the success of any new Lifeline program 
            will depend on its ability to treat Lifeline customers 
            similarly to other customers in the marketplace. The best 
            way to achieve this is to deliver benefits directly and, 
            when feasible, electronically to Lifeline consumers in a 
            way that allows them to choose the eligible voice and 
            broadband services available in the market that best meet 
            their needs. This will allow market forces to drive 
            increased value for Lifeline consumers as it does for all 
            other customers. It will also help preserve the dignity of 
            Lifeline consumers, putting them on equal footing with 
            other consumers on issues such as privacy.

   Leveraging the efficiencies of coordinated enrollment 
        through existing assistance programs.

     An intelligently designed program can achieve new 
            program efficiencies, improve Lifeline participation, and 
            reduce waste, fraud and abuse. We should further these 
            goals, simplify the consumer experience, and better protect 
            consumer privacy by allowing consumers to enroll in 
            Lifeline at the same time as they apply for other 
            government benefits. This process would also de-enroll 
            consumers from Lifeline only when they are no longer 
            covered by one of the qualifying low-income assistance 
            programs.

      Eliminating a service providers' role in eligibility, enrollment 
            and de-enrollment will increase overall program efficiency 
            and bolster the integrity of the program by eliminating 
            harmful incentives and opportunities for waste, fraud, and 
            abuse.

   Encouraging broader provider participation in Lifeline.

     The current Lifeline program was built for a 
            marketplace that looks very different today. As such, the 
            existing structure and program requirements contain 
            unnecessary barriers that currently discourage 
            participation across the broad spectrum of service 
            providers. Increased participation and competition will 
            offer consumers a greater range of service options.

     The program should also incentivize public private 
            partnerships and coordinated outreach. The challenge of 
            digital adoption is too large and too important to think 
            that it can be solved by an isolated effort of a few.

    This letter represents diverse and strong support for rapidly 
reforming and improving Lifeline. In light of this emerging consensus 
and the millions whose lives can be improved by a reformed program, we 
urge you to prioritize action on Lifeline reform in the days ahead, and 
we encourage you to be creative and realistic in budget needs and 
interagency coordination as you accommodate this program.
    We appreciate your interest in improving this vital program and 
look forward to working with the Commission as it moves forward to 
bring Lifeline service into the twenty-first century.
            Sincerely,

   1.  American Foundation for the Blind

   2.  Asian & Pacific Islander American Health Forum

   3.  Asian Americans Advancing Justice (AAJC)

   4.  Asian Pacific American Labor Alliance (APALA)

   5.  Asian Pacific Islander American Public Affairs Association 
        (APAPA)

   6.  Consumer Policy Solutions

   7.  Council for Native Hawaiian Advancement

   8.  Dialogue on Diversity

   9.  Filipina Women's Network

  10.  Hawaiian Community Assets

  11.  Hispanic Technology and Telecommunications Partnership (HTTP)

  12.  Hmong National Development

  13.  International Leadership Foundation

  14.  Japanese American Citizens League (JACL)

  15.  League of United Latin American Citizens (LULAC)

  16.  LGBT Technology Partnership & Institute

  17.  MANA--A National Latina Organization

  18.  Multicultural Media, Telecom and Internet Council (MMTC)

  19.  National Association of Neighborhoods

  20.  National Action Network

  21.  NAACP

  22.  National Black Caucus of State Legislators

  23.  National Coalition on Black Civic Participation and Black 
        Women's Roundtable

  24.  National Council of Asian Pacific Americans (NCAPA)

  25.  National Policy Alliance

  26.  National Puerto Rican Chamber of Commerce

  27.  National Urban League (NUL)

  28.  National Organization of Black County Officials (NOBCO)

  29.  NOBEL Women

  30.  OCA--Asian Pacific American Advocates

  31.  Rainbow PUSH Coalition

  32.  The Association of People with Disabilities (AAPD)

  33.  National Farmers Union

  34.  National Grange

  35.  Southeast Asia Resource Action Center (SEARAC)

  36.  U.S. Black Chambers, Inc.

    The contact person for this letter is Kim M. Keenan, President, 
Multicultural Media, Telecom and Internet Council, 3636 16th St. N.W., 
Suite B-366, Washington, DC 20010, [email protected].
                                 ______
                                 
                                                       May 28, 2015

        Modernizing the Lifeline Program: Statements of Support

    Below are statements from more than 50 national and regional civil 
rights organizations, policymakers, media rights advocates and other 
community groups in support of modernizing the Lifeline Program. These 
groups that represent diverse constituencies include the National 
Council of La Raza, American Civil Liberties Union, Center for Media 
Justice, NAACP, Benton Foundation, National Hispanic Media Coalition, 
Public Knowledge, the American Library Association and The Leadership 
Conference on Civil and Human Rights.
National
Michael Copps, Former FCC Commissioner and Common Cause Special 
        Advisor, Common Cause
    ``It's high time we bring Lifeline into the 21st century. Our lives 
are increasingly digital and communications for ALL Americans must be 
digital, too. A Lifeline program without broadband underlying it means 
second-class citizenship for millions of citizens. They can't afford 
that; our Nation can't, either.''
Eric Rodriguez, VP Office of Policy and Research, The National Council 
        of La Raza
    ``The National Council of La Raza (NCLR) strongly supports the 
prompt modernization of the Lifeline program to include broadband 
services. Of all demographic groups, Latinos have the least access to 
home Internet connections, with only 53 percent of Latino households 
connected to broadband. Internet usage is critical, as it increases 
employment and income, enhances educational opportunities, expands 
health care access, and improves overall social well-being. The 
expansion of Lifeline to support broadband services will give millions 
of Latinos opportunities for social and economic advancement.''
Gabe Rottman, Legislative Counsel/Policy Advisor, American Civil 
        Liberties Union (ACLU)
    ``A key free speech challenge of the modern age is providing equal, 
open, quality access to information services for all. A modernized 
Lifeline is essential to closing the digital divide that prevents us 
from meeting this challenge. Access to modern telecommunications 
infrastructure is a question of both civil rights and civil 
liberties.''
Jessica J. Gonzalez, Executive Vice President and General Counsel, 
        National 
        Hispanic Media Coalition
    ``I have long said, and I know from personal experience, that 
Lifeline is a vital pathway out of poverty for millions of Americans. 
It is the only Federal program that directly addresses the 
affordability of communications services for low-income consumers. I 
applaud the FCC for starting a process to modernize and refocus the 
program--a necessary step to ensuring the program can become an 
effective bridge across the digital divide. This is crucial to ensuring 
that our neighbors can access broadband and fully participate in our 
21st century society and economy.''
Hilary Shelton, Director, NAACP Washington Bureau and Sr. VP for Policy 
        and 
        Advocacy, NAACP
    ``The NAACP strongly supports the Lifeline program. Lifeline is a 
much-needed program. It is in our society's best interest to empower 
everyone, especially our most vulnerable citizens, with the ability to 
connect with emergency services, prospective and current employers, 
health, social, and educational services, civic engagement programs, 
and keep in touch with family and friends. There are currently as many 
as 16 million low-income households who, without the Lifeline benefits, 
would have to choose between feeding their children and going without 
the dial tone that could save their lives, connect with their 
children's schools, or put them on a better economic path through 
employment. It is because of Lifeline's essential role that the NAACP 
supports the next step, adopting it for broadband Internet access. This 
will further enhance the core mission of the program and ensure that 
those Americans who are currently without are still engaged, and 
provide them with the necessary communication tools to improve 
themselves.''
Wade Henderson, President and CEO, The Leadership Conference on Civil 
        and Human Rights
    ``In today's information age, the Internet is as vital to the lives 
of everyday Americans as electricity was in the last century, and can 
play a critical role in moving people out of poverty and into the new 
economy, by providing access to job opportunities, health care, social 
services, and education.
    And yet, there are still far too many disparities in Internet 
adoption, particularly among communities of color, low-income 
communities, people with limited English proficiency, and people with 
disabilities. The FCC has the power to address this disparity by 
modernizing the Lifeline program to include broadband.
    Modernizing the program will give broadband access to millions of 
low-income people. At a time when those most in need of the advantages 
of broadband do not or cannot use it because of cost, reducing the high 
cost of broadband service is a concrete step our Nation can take toward 
an inclusive economic recovery.''
Kristine DeBry, V.P., Policy Strategy Center, Public Knowledge
    ``People increasingly depend on the Internet for access to jobs, 
education, news, services, communications, and everything else under 
the sun. Low-income communities are no different. Public Knowledge 
supports modernization of America's low-income phone support program to 
allow consumers to choose broadband support. Updating the program 
recognizes the fundamental importance of connecting low-income 
communities to the jobs, education, and services they need.''
Arabella Martinez, CEO, Latino Community Foundation
    ``In California, only 52 percent of all Latino families are 
connected to the Internet at home. This means that almost half of all 
Latino children don't have access to the vital tools necessary for 
success. Latino families want to be connected, but the cost of service 
is still out of reach for many families in our state. We can do better. 
We can establish an affordable high-speed Internet service plan for all 
low-income households.
    We must join forces and fight to ensure that all families have 
access to the same opportunities. The dreams of our children and the 
resilience of our parents requires nothing less.''
Olivia Wein, Attorney, National Consumer Law Center
    ``The National Consumer Law Center, on behalf of its low-income 
clients, strongly supports the modernization of Lifeline to include 
broadband service. The lack of affordable broadband service hurts 
children whose educational opportunities are limited and hampers 
workers' ability to apply for jobs or establish entrepreneurial 
businesses. Internet access affects every facet of modern life, from 
access to healthcare to participation in commerce. In an information 
age, access to modern communication services enhances the 
competitiveness of individuals and communities. Three out of four 
Federal Universal Service programs have already shifted from supporting 
voice to supporting broadband. It is Lifeline's turn.''
Courtney Young, President, American Library Association
    ``Every day, America's libraries stand witness to the 
transformative power of broadband access and use--as well as to the 
gaps in broadband adoption that persist for many of our most vulnerable 
residents, from the most remote rural communities to urban centers and 
spanning families with school-age children to older adults. The 
Universal Service Fund's Lifeline program has failed to keep pace with 
this pressing reality and demands 21st Century updates. The American 
Library Association urges the Federal Communications Commission to move 
swiftly to modernize Lifeline and increase affordable broadband access 
for millions of low-income Americans. Further, we urge policymakers at 
all levels to support libraries and other community institutions in 
building the digital literacy skills essential for sustainable 
broadband adoption.''
Tracy Rosenberg, Executive Director, Media Alliance
    ``Lifeline telephone service has been crucially important in 
maintaining family and community support networks for people struggling 
with economic instability. In the 21st century, the Internet is the new 
telephone. Isolation and disenfranchisement weakens the country's 
fabric and creates more social divides. It's important for the FCC to 
open a new Lifeline rule-making and determine the best use of 
subsidized communication services to help increase connectivity and 
support challenged populations in surviving economic stress.''
Hannah Sassaman, Policy Director, Media Mobilizing Project
    ``Access to the Internet is a human right. In today's challenging 
economy, low-income community members can't apply for a family-
sustaining job, let alone for college, without reliable access to the 
Internet. Here in Philadelphia, we have the third worst broadband 
penetration of any big city in the country--because so many of us are 
poor. It is the responsibility of our elected officials and appointed 
leaders to protect and expand Lifeline service for the millions of us 
who struggle on the wrong side of the digital divide.''
Larry Gross, Executive Director, Coalition for Economic Survival (CES)
    ``Lifeline phone service is crucial to our low-income members. For 
many it is the only way they'd be able to access the Internet. This 
digital divide has especially far-reaching consequences when it comes 
to education. For children in low-income school districts, inadequate 
access to technology can hinder them from learning the tech skills that 
are crucial to success in today's economy. Smart phones have helped 
bridge the divide, as they provide Internet access to populations 
previously at a digital disadvantage. The Internet provides a diverse 
array of online resources for low-income disabled and homebound older 
adults to manage their health and mental health problems and maintain 
social connections. We must ensure that Lifeline rates continue.''
Debbie Goldman, Telecommunications Policy Director, Communications 
        Workers of America
    ``It's long past time to update the Lifeline program to support 
broadband. The Communications Workers of America applauds FCC action to 
bring this important program into the 21st century.''
Mark Erpelding, Executive Director, Open Access Connections
    ``Open Access Connections has worked hard to promote and increase 
usage of the Federal Lifeline program. We see first hand how access to 
a Lifeline supported phone can help a homeless and low-income person 
find housing, employment, and economic success.
    The need for affordable Internet is greatly increasing for the 
homeless and low-income communities we serve. Access to the Internet is 
increasingly becoming a necessity in participating in today's society. 
Because of the increased usage of the Internet in everyday life, it is 
absolutely critical that the Lifeline program be expanded to increase 
broadband access.''
Ana Montes, Organizing Director, The Utility Reform Network
    ``Communications and information services are essential tools for 
everyday living and is as important as access to energy and water. 
Without Universal Services Programs like Lifeline Telephone service, 
people who are low income and come from the most vulnerable populations 
would have lacked access to important services like public safety or 
emergency services, health information, education, access to employers, 
children's schools or the ability to communicate with families and 
friends.
    We now live in a world where the Internet has become increasingly 
important, yet the digital divide has grown. We need to close the gap 
by making broadband affordable, reliable and accessible to all so that 
everyone can participate in today's society. We need to expand 
Universal Services in order to promote digital inclusion and avoid 
digital exclusion for those who cannot afford it.''
Orson Aguilar, Executive Director, The Greenlining Institute
    ``For decades, Lifeline has served as just that--a lifeline helping 
low income families stay connected to family, friends, doctors, 
employers, and schools. Today, more of these daily essentials are 
moving online, yet too many of our families can't afford broadband, and 
are once again left behind. This disproportionate disconnection creates 
ripple effects in just about every aspect of life--but they can and 
must be reversed. Connected communities have better rates of 
employment, better rates of civic participation, and better 
educational, health, and wealth outcomes. It's time to modernize 
Lifeline and bring to all communities the wealth of opportunities 
offered by fast, reliable, open broadband.''
Joshua Stager, Policy Counsel, New America's Open Technology Institute
    ``From homeless veterans trying to secure jobs and housing to 
pediatricians providing care for low-income children, many of the most 
vulnerable Americans rely on Lifeline for critical services. Extending 
Lifeline benefits to broadband is a prudent step that reflects 
Americans' increasing reliance on Internet-based services. OTI strongly 
supports the Commission's efforts to modernize this vital program.''
Chuck Sherwood, Senior Associate, TeleDimensions, Inc.
    ``On behalf of Rita Stull and myself, we support the FCC's Lifeline 
service as a key connectivity resource to make Digital Inclusion 
available to all who live in the United States. Without Lifeline 
service available to all they will not be able to fully participate in 
the Community, Educational and Economic Development opportunities that 
are so important in our 21st Century Information and Innovation 
Economy.''
Thomas Kamber, Executive Director, Older Adults Technology Services 
        (OATS)
    ``Since 2004, Older Adults Technology Services (OATS) has been 
harnessing the power of technology to change the way we age. The 
modernization of the Lifeline Program would strengthen our programs 
empowering older adults to live successful, independent, more connected 
lives.''
Angela Siefer, Director, National Digital Inclusion Alliance
    ``To improve the daily lives of all community members, the National 
Digital Inclusion Alliance calls for public policies for digital 
inclusion that reflect what we've learned from experience. Broadband 
adoption is most effectively promoted by community-driven efforts that 
combine affordable home broadband service, public broadband access, and 
locally trusted technology training and support. The modernization of 
the Lifeline Program would provide a valuable resource, allowing local 
resources to be stretched further.''
Danielle Chynoweth, Organizing Director, Media Action Grassroots 
        Network 
        (MAG-Net)
    ``Affordable broadband is key to democracy in that it addresses 
deepening racial and economic disparities. Modernizing the Lifeline 
program and extending it to include broadband ensures that our 
communities--people of color, low-income families and rural 
communities--can access jobs, education and other essential needs.''
Malkia Cyril, Executive Director, Center for Media Justice
    ``The potential of the Internet is in decentralizing who can drive 
democratic governance in this country. The struggle for black lives is 
evidence of the social and political power of owning and controlling 
your own story. Yet there are still 100 million Americans who lack 
affordable access to the Internet and critical to addressing this 
growing divide and building a more participatory democracy is 
modernizing the Lifeline program.''
James P. Steyer, Founder and CEO, Common Sense Kids Action
    ``At a time when access to high-speed Internet is critical for 
education, healthcare, jobs, and civic engagement, we must bring high-
speed connectivity to the millions of low-income households with school 
age children that do not have high-speed Internet today. This will help 
to ensure all kids have equal opportunity to do their homework and that 
parents have the opportunity to look for and apply for jobs and engage 
in other important activities. We urge the FCC to act now to bridge the 
digital divide, and reform and improve the Lifeline program to make 
broadband more affordable and accessible for today's low-income 
consumers and their children.''
Cecilia Zamora, Executive Director, Latino Council
    ``The Latino Council is writing this letter in support of the 
Lifeline Telephone Program. We understand that the FCC will be 
evaluating the program and making recommendation for its 
``modernization''. According to the latest research by the Pew Research 
Center, 44 percent of low-income smartphone owners have had to cancel 
or suspend their service due to financial constraints. And for those 
whose only access to the Internet is their smartphone, 48 percent have 
had to cancel or shut off their cell phone for a period of time because 
the cost of maintaining the service was a financial hardship.
    The Latino Council is a community-based organization helping 
nonprofits, government agencies, community organizations, and 
businesses increase their capacity to create effective outcomes with 
the Latino community. We accomplish this through research, cultural 
assessment, strategic planning and leadership development. The Latino 
Council also advocates and supports improved services for the Latino 
community.
    We believe that the Lifeline Telephone Program increases access for 
phone service for the most vulnerable in our community, especially 
Latino seniors. We hope that the evaluation by the FCC and discussion 
by the Senate will recognize the significance of this program and make 
recommendations that will continue Lifeline for our poorest 
communities.''
David Jessup, Jr., Chief Executive Officer, Digi-Bridge
    ``Digi-Bridge aims to equip educational institutions and the 
communities they serve with the necessary resources and support to 
teach 21st century learners the fundamentals of technology and beyond. 
The educational achievement gap in our country will only continue to 
widen if we don't address the technological needs of the communities 
being served by our learning institutions. Reform of the Lifeline 
Program will support Digi-Bridge's efforts to eradicate the digital 
divide, as costs associated with connectivity have continued to serve 
as a real barrier to access.''
Alisson Walsh, Community Outreach Manager, Mobile Beacon
    ``Through our nationwide Education Broadband Service license Mobile 
Beacon is able to offer low income families affordable broadband 
service for $10. for unlimited data per month. However, our reach and 
coverage area does not nearly meet the ever-growing digital gaps 
throughout the Nation.
    The modernization of the Lifeline Program would help establish 
uniform broadband access and adoption--a much needed solution to the 
patchwork of offerings that can often confuse eligible families and 
individuals.''
Michael W. Kwan, National President, OCA--Asian Pacific American 
        Advocates
    ``OCA is ecstatic that the FCC is moving quickly in their attempts 
to modernize the Lifeline program and include broadband as an option. 
As our country further moves online, increased access to fast and 
affordable broadband is more necessary than ever before. Although 
studies have indicated that 81 percent of Asian Americans use 
broadband, we know that income, educational achievement, and cost are 
all indicators of how likely a household will adopt it.
    Asian Pacific American communities encompass some of the highest 
poverty and lowest educational attainment rates within our country. 
Even though aggregated Asian Pacific American (APA) data show high 
adoption rates, that 81 percent hides broadband adoption and access 
disparities similar to those found in education, healthcare, and 
employment. A modernized Lifeline program will allow low-income 
families to ensure that there is a constant line of communication 
between the parents and their children; allow children to supplement 
their schooling; and provide these families with the opportunity to 
better their livelihoods. Asian Pacific Americans need a modern 
Lifeline program, and we are hopeful that the FCC will make that a 
reality.''
Amina Fazlullah, Director of Policy, Benton Foundation
    ``The FCC's January 2012 reforms of its Lifeline program have saved 
U.S. ratepayers billions, strengthening oversight and eliminating 
waste, fraud and abuse. With these reforms now fully implemented, the 
Benton Foundation welcomes the FCC taking the next step to modernize 
Lifeline to reflect the reality of 2015: home broadband service is no 
longer a luxury, but an essential service for education, public health, 
public safety, jobs and the economy. In 1996, Congress decided that 
``universal service'' should be an evolving level of telecommunications 
services. Broadband services to the home are widely deployed and 
subscribed to by households that can afford them. Now is the time for 
the FCC to begin support for families that are not able to afford 
broadband service.''
John Windhausen, Executive Director, SHLB Coalition
    The SHLB Coalition welcomes the upcoming proceeding to reform the 
Lifeline program so that it increases the opportunities for low-income 
persons to benefit from broadband Internet service at home. Schools, 
libraries and other anchor institutions often provide digital literacy 
training and open, middle-mile connections that can help to foster 
residential broadband deployment and adoption. The SHLB Coalition 
Mission is to support open, affordable, high-speed broadband for anchor 
institutions and their communities, and we look forward to playing an 
active role in supporting this important initiative.''
Regional
Randall Chapman, Executive Director, Texas Legal Services Center
    ``TLSC is a statewide provider of Legal Aid and publishes legal 
self-help information through the website, www.TexasLawHelp.org. In 
2014 over 1 million unique visitors went to the site, but many seniors 
and vulnerable persons have been stymied due to the high costs 
associated with broadband access. We recommend much needed improvements 
by the FCC in the Lifeline program to facilitate broadband access.''
Ellis Jacobs, Senior Attorney, Advocates for Basic Legal Equality 
        (ABLE)
    ``I'm an attorney who represents low income people in Dayton, Ohio. 
Most of my clients have no access to the Internet at home or on their 
phones. As a result, it is difficult for them to access employment, 
training and other opportunities. Since they can't receive e-mail and 
frequently have lifeline phones with inadequate minutes, it is also 
difficult for me to stay in touch with them.''
Jim Jacob, President and CEO, New Jersey SHARES
    ``Communications Lifeline is a critically needed safety-net for 
low-income households, seniors and persons with disabilities in New 
Jersey. Affordable landline telephone service is needed to keep our 
most vulnerable neighbors connected to medical providers, caregivers 
and the community-at-large. Communication Lifeline helps to prevent 
households from being isolated and allows neighbors to help neighbors. 
Every year New Jersey SHARES assists thousands of applicants to receive 
communications lifeline service and stay connected. These families and 
individuals succeed because of access to this program.''
Arleen Novotney, Administrator, ACCES
    ``Our membership serves Low-income communities throughout CA 
including the designated disadvantaged communities with energy 
efficiency education and services. As with the lifeline cell service, 
broadband is now a vital service needed by all. We are supporting this 
proposed program.''
Peg Dierkers, Executive Director, Pennsylvania Coalition Against 
        Domestic Violence
    ``The importance of Lifeline programs cannot be understated. 
Lifeline, quite literally, save lives. Lifeline ensures that those most 
vulnerable in our communities, like victims of domestic violence, are 
able to access emergency assistance, supportive services, and friends 
and family within their supportive network.''
Julie Berlin, Manager of the Tenderloin Technology Lab, St. Anthony 
        Foundation
    ``St. Anthony's Tech Lab provides education and access to San 
Francisco's lowest income community members. 20 percent of recent 
survey respondents have no device and 50 percent have no Internet 
access on the device they own; thus 70 percent have no Internet access, 
unless they go to a computer center or the library. Without regular 
Internet access, homeless and extremely low-income individuals in San 
Francisco lack access to information, services and support in areas of 
housing, employment, medical care, hygiene and technology. Modern life 
requires Internet access for entire communities, especially for members 
of the community with limited access to essential resources.''
Michael Liimatta, President and CEO, Connecting for Good
    ``Connecting for Good is a nonprofit organization that has been 
bridging the Digital Divide since 2011 using wireless Internet, 
community technology centers, low cost refurbished PCs and free digital 
life skills classes.
    In the past two years we have helped over 3,000 low income people 
in Kansas City get online, the majority live in public housing. In the 
Kansas City Public Schools, which has a high low income and minority 
student population, 70 percent of children do not have Internet 
connections at home. This puts them at a serious academic disadvantage. 
Without the ability to get online these families also lack access to 
valuable resources that lead to better quality of life that contribute 
to better health, social services and upward mobility through increased 
employment and training opportunities.
    We believe that in our digital society, connectivity equals 
opportunity. For this reason we support LifeLine reform that leads to 
increasing broadband adoption for low income families.''
Roberta M. Rael, Executive Director, Generation Justice
    Generation Justice understands access to Internet service as 
foundational for building healthy and thriving communities of color in 
New Mexico. That is why we strongly support the Lifeline Program and 
urge the FCC to move forward with its modernization. Extending the 
Lifeline Program will allow New Mexicans--people of color, immigrants, 
youth and students, those living in rural areas of our state, and 
Native communities--to connect with family, their children's schools, 
civic information, and employment opportunities.
Cheryl Leanza, Policy Advisor, United Church of Christ, OC Inc.
    ``Broadband is essential for every aspect of modern life. Today, 
even connections to our religious communities often takes place via 
broadband. For all people to have equal opportunity, broadband must be 
affordable and Lifeline is the only way to make it happen. Without 
affordable access, digital literacy will not increase, broadband 
adoption will not occur. Affordable access is the linchpin.''
Cheptoo Kositany-Buckner, Deputy Director, Strategic Initiatives, 
        Kansas City Public Library
    ``70 percent of the kids who attend the Kansas City School District 
do not have Internet access at home. Children without Internet access 
in the evening will be increasingly disadvantaged in the classroom. 
Without home access to the Internet many pupils will struggle to 
complete their homework and miss out on online resources to support 
their learning. This digital divide will have a truly damaging impact 
on children's prospects and causing the most disadvantaged to fall 
further behind.''
Theodora Higginson, Co-Director, Tech Goes Home
    ``From our experience, two of the main reasons people lack home 
access are the prohibitively high costs and a lack of understanding 
about how the Internet can help them save money and improve their 
access to opportunities. In order to address these barriers, Tech Goes 
Home works with schools and community organizations to connect 
underserved populations with free digital literacy training, as well as 
low cost home Internet access and discounted computers. Digital 
citizenship to us is a three-legged stool, consisting of skills, 
Internet access, and hardware, and without any one of the legs, the 
stool would fall. A modernized Lifeline program is critical to bridging 
the opportunity gap.''
Lynda Goff, Executive Director, WinstonNet
    ``For the past 15 years WinstonNet's has been working with low 
income and disconnected residents in Winston-Salem/Forsyth County, NC 
by providing dozens of public computer centers, free WiFi hotspots, 
digital literacy training and affordable home computers. Upgrading the 
Lifeline Program into the 21st Century would strengthen and support our 
programs and positively affect the lives of thousands of children, 
adults and seniors in our community by providing an affordable solution 
to access important and necessary online services in the areas of 
education, healthcare, jobs, banking and much more.''
Dan McLaughlin, Program Officer, Seeds of Literacy
    ``Seeds of Literacy is an adult literacy program providing basic 
education and GED preparation free of charge to people in greater 
Cleveland. Because the GED examination is now offered only by computer, 
our students must be comfortable with online operations to take it 
successfully. Since the majority of our students are low-income--in a 
city where more than half of low-income households have no home 
Internet access--digital illiteracy and the cost of broadband are often 
significant barriers to their success. An opportunity for truly 
affordable high-speed Internet access through the Lifeline program 
could go a long way toward removing those barriers.''
Brian J. Cummins, Councilman Ward 14, Cleveland City Council
    ``As an elected Member of Cleveland City Council, I represent some 
25,000 residents in the City of Cleveland, the majority of whom live in 
households with incomes well below the national median. Recent Census 
and FCC data suggest that up to half of my constituents still lack home 
Internet access. This is a serious barrier to our community's economic 
and educational progress and it isolates many of our poorer citizens 
from day-to-day civic and community activities, which increasingly 
depend on online communication. For the last two years I've supported a 
community technology training center and other digital inclusion 
initiatives, but the cost of home broadband remains a major problem for 
participants. A truly affordable broadband option added to the Lifeline 
program could make a very big difference for the people I represent.''
Debbie Fisher, Director of HOPE Village Initiative, Focus: HOPE
    ``According to 2013 Census data, more than a third of all 
households in Cleveland and Detroit still have no home Internet access 
of any kind--not even mobile or dialup. Most are low-income; for 
households with incomes below $20,000 the ``disconnected'' percentage 
is above 50 percent. This is a huge obstacle not just for the 
households themselves, but for our government, healthcare, education, 
banking, human services and civic-sector institutions who need to 
engage online with all our neighbors.
    So we strongly support Lifeline and Lifeline reform to provide 
meaningful broadband access for all low-income households. By 
``meaningful'' we mean:

  (a)  truly affordable cost, e.g., no more than $10-15 a month

  (b)  mainstream home broadband data speeds and (for mobile users) 
        real smart devices

  (c)  the widest possible range of providers as well as support for 
        innovative community partnerships

  (d)  support for community-based marketing, including digital 
        literacy training.''
Bill Callahan, Director, Connect Your Community
    ``Connect Your Community is a collaborative of organizations in 
Greater Cleveland and Detroit working to close the large, persistent 
digital divide in our cities through grassroots training, affordable 
access and support initiatives. (http://connect
yourcommunity.org)
    According to 2013 Census data, more than a third of all households 
in Cleveland and Detroit still have no home Internet access of any 
kind--not even mobile or dialup. Most are low-income; for households 
with incomes below $20,000 the ``disconnected'' percentage is above 50 
percent. This is a huge obstacle not just for the households 
themselves, but for our government, healthcare, education, banking, 
human services and civic-sector institutions who need to engage online 
with all our neighbors.
    So we strongly support Lifeline reform to provide meaningful 
broadband access for all low-income households. By ``meaningful'' we 
mean:

  (a)  truly affordable cost, e.g., no more than $10-15 a month

  (b)  mainstream home broadband data speeds and (for mobile users) 
        real smart devices

  (c)  the widest possible range of providers as well as support for 
        innovative community partnerships

  (d)  support for community-based marketing, including digital 
        literacy training.''
Patrick J. Gossman, Ph.D., Executive Director, Community 
        Telecommunications 
        Network
    ``The Community Telecommunications Network is a non-profit 
organization representing K-12, Higher Education and Public Television 
in Southeast Michigan. Our mission is to improve the quality of life 
and much of our focus is on education. Our largest project has worked 
to get broadband into the homes of low-income households for which 
numerous barricades exist. One of those hurdles is the cost of home 
broadband access.
    According to Pew Research, low-income homes with children are four 
times more likely to be without broadband than their middle or upper-
income counterparts. This is the ``homework gap'' which needs to be 
resolved to give these children a better chance to learn and compete in 
the modern world. Reducing the cost of access is one important step 
necessary to address this problem.''
Charlaine Mazzei, Executive Director, Del Norte Senior Center
    ``As a local non-profit agency providing CSBG and LIHEAP services, 
the Del Norte Senior Center comes in contact with hundreds of low-
income individuals and families every year. Increasingly, we see these 
families rely on cellular services as not only their only telephone 
service, but their only access to Internet services as well. In a rural 
community such as ours, broadband Internet access is both expensive and 
limited. The Internet is no longer a luxury, and those without access 
will be left behind. We must continue to view Lifeline services as 
essential to poverty reduction and full participation in society.''
Arturo Trejo, Environmental Justice Organizer, Southwest Workers' Union
    ``As a multi-cutural, and multi-lingual social justice group, 
Southwest Workers' Union recognizes the hardships of socio-economic 
injustice for people of color, and workers. We continue to organize 
with our community on towards a living wage, and other basic needs 
capitalism imposes on folks of color in both urban, and rural parts in 
the south. As an organization we know the purposes of communications, 
and the importance of it to connect families, social media, and allies 
in different communities. We stand in solidarity for justice for the 
communities who are placed under the risk of losing access to Internet 
services due to modernity, and other capitalistic politics.''
Tim Hawkins, Director of Operations, Community Action of Ventura 
        County, Inc.
    ``Support services for low-income families are not easy to access 
in Ventura County if a family has transportation issues (which many do) 
or no Internet access (which many don't). Having access to broadband 
would make the already hectic lives of low-income families less so by 
making program applications, bill paying and information gathering both 
easier and cheaper. The high price of broadband is a huge obstacle for 
low-income families. In this day and age, broadband access is a 
prerequisite for social and economic inclusion and those who go without 
fall farther behind the ever-widening gap of inequality.''
Elizabeth Marx, Staff Attorney, Pennsylvania Utility Law Project (PULP)
    ``Access to affordable and reliable telecommunication service 
critical to the safety, welfare, and economic stability of all 
households, as it enables individuals to contact emergency services, 
seek employment, contact a place of work, school, or childcare center, 
reach out to supportive government and social service agencies, 
friends, and/or family, engage in civil or criminal court proceedings, 
and attend to other sensitive matters. Today, with the ever-increasing 
reliance on the web for communication and information needs, access to 
the broadband Internet has become just as important to the health, 
safety, and welfare of our citizenry, especially to our children whose 
studies and coursework are increasingly dependent on having ready 
access to the Internet. We therefore urge the continuation of Lifeline 
telecommunication service, and encourage expansion of programming to 
provide low or no-cost access to broadband Internet services.''
Patty Bailey, Director, Healthy Homes & Health Services, MAAC
    ``MAAC has previously contracted with Richard Health & Associates 
in educating and enrolling low to moderate income households into the 
Lifeline Program. Through these contracts we have enrolled over 10,000 
households. MAAC supports Lifeline and the FCC moving forward to extend 
it to broadband.
Henry Martin, Executive Director and Attorney, Watsonville Law Center
    ``Public services, employment information, financial services, 
health care and wellness information, and consumer information is 
increasing available primarily on mobile devices. Affordable access to 
high-speed data on a mobile telephone improves quality of life, 
improves access to essential information and services, and is a means 
of accessing the digital world when access to a stand-alone device is 
not an affordable option.
    For information providers, mobile devices are often the most 
convenient and cost-effective means of distributing information to 
individuals and communities. Improving access to high-speed data on 
mobile telephones is a means of ensuring low-income communities benefit 
from rapidly increasing information technology. If low-income families 
are not seen as part of the mobile digital information community, they 
will be left behind by information producers. As a nonprofit service 
provider serving low-income, limited-English proficient families in a 
rural area, we urge you to ensure equal access to high-speed data on 
mobile telephones for low-income and rural communities.''
Malcolm Yeung, Deputy Director, Chinatown Community Development Center
    ``Chinatown Community Development Center is committed to building 
community and enhancing the quality of life for San Francisco's 
residents. We support the modernization of the Lifeline Telephone 
Program and making broadband access a reality for low income 
communities we serve including the elderly, the disabled, and families 
with children. The modernization of the program will bridge the 
technological and affordability gap for our constituents as many cannot 
afford a computer, face financial hardships with paying for broadband 
services, yet they rely on their phones to connect for their medical 
needs, social services, access to jobs, and school.''
Danna MacKenzie, Executive Director, Office of Broadband Development, 
        State of Minnesota
    ``In Minnesota, our survey results show that low income and senior 
residents adopt broadband at a rate 20 percent below the state adoption 
rate (59 percent v. 79 percent). The top two reasons provided for not 
adopting are relevance and cost. Updating Lifeline rules will provide a 
critical tool for shrinking this gap.''
Wanda Davis, Executive Director, Ashbury Senior Computer Community 
        Center
    ``Ashbury Senior Computer Community Center (ASC \3\), a 501c-3 non-
profit grassroots organization, established in October of 2002, is 
proud to be an empowering technology resource center in greater 
Cleveland. Our mission is to bridge the gap in the ``Digital Divide'' 
thus fostering a movement of ``Digital Inclusion'' in our inner-city 
communities by providing high quality, accessible, and free technology 
classes in a supportive, appropriately-paced, and nurturing 
environment. The modernization of the Lifeline Program is essential to 
our community's growth and will enhance the quality of life for all our 
community members.''
Sean McLaughlin, Executive Director, Access Humboldt
    ``Access Humboldt seeks universal access to open networks for local 
communities in Humboldt County on the Redwood Coast of California, 
working to inform public policy deliberations, convening local 
discussions of regulatory policies, and articulating principles for 
Localism and Diversity.
    We support timely reform of the Lifeline program to secure 
connectivity for those who cannot afford service in a manner that 
supports digital inclusion, training and community empowerment to meet 
our human potentials, securing independence for all.''
Juanita Budd, Executive Director, Austin Free--Net
    ``Austin Free-Net (AFN) focuses on digital literacy and broadband 
adoption through partnering with 3 types of organizations: 1. An 
equipment provider; 2. An Internet provider; and 3. A training 
provider. AFN provides the training component; we offer a customized 
training program for each client. This methodology has generated much 
success and amazing outcomes. A national broadband subsidy through the 
Lifeline Program would support local efforts working toward broadband 
adoption for all Americans.''
Sunne McPeak, President and CEO, California Emerging Technology Fund
    ``The CETF Board of Directors supports an Internet Lifeline Program 
that addresses the 3 primary barriers to broadband adoption: (1) Cost; 
(2) Relevance; and (3) Digital Literacy. This includes the:

   Establishment of an affordable high-speed Internet service 
        plan for all low-income households offered by and through all 
        broadband providers in the $10/month range.

   Capitalization of an independent fund to support community-
        based organizations (CBOs), schools and libraries (as ``trusted 
        messengers'') to assist in enrolling eligible low-income 
        households and participate in true public-private partnerships.

   Establishment of an oversight advisory body to ensure 
        transparency and accountability with a broad base of 
        stakeholders and community leaders knowledgeable about 
        broadband adoption.''
Olga Talamante, Executive Director, Chicana Latina Foundation
    ``Chicana Latina Foundation and CETF support an Internet Lifeline 
Inclusion Program that addresses the 3 primary barriers to broadband 
adoption: (1) Cost; (2) Relevance; and (3) Digital Literacy. This 
includes the:

   Establishment of an affordable high-speed Internet service 
        plan for all low-income households offered by and through all 
        broadband providers in the $10/month range.

   Capitalization of an independent fund to support community-
        based organizations (CBOs), schools and libraries (as ``trusted 
        messengers'') to assist in enrolling eligible low-income 
        households and participate in true public-private partnerships.

   Establishment of an oversight advisory body to ensure 
        transparency and accountability with a broad base of 
        stakeholders and community leaders knowledgeable about 
        broadband adoption.

    We are very concerned about the large number of Americans that are 
not able to enjoy the benefits of Internet connectivity. This affects 
their ability to do well in school, find jobs, enhance their education 
and skill set, get better prices that are available only on the 
Internet and be part of the growing civic engagement via the Internet. 
We are particularly concerned about the impact on people who live in 
rural areas.''
Barrie Hathaway, Executive Director, The Stride Center
    ``The Stride Center and CETF support an Internet Lifeline Inclusion 
Program that addresses the 3 primary barriers to broadband adoption: 
(1) Cost; (2) Relevance; and (3) Digital Literacy. This includes the:

   Establishment of an affordable high-speed Internet service 
        plan for all low-income households offered by and through all 
        broadband providers in the $10/month range.

   Capitalization of an independent fund to support community-
        based organizations (CBOs), schools and libraries (as ``trusted 
        messengers'') to assist in enrolling eligible low-income 
        households and participate in true public-private partnerships.

   Establishment of an oversight advisory body to ensure 
        transparency and accountability with a broad base of 
        stakeholders and community leaders knowledgeable about 
        broadband adoption.''
Teresa Favuzzi, Executive Director, California Foundation for 
        Independent Living Centers
    ``The California Foundation for Independent Living Centers (CFILC) 
respectfully urges the Federal Communication Commission (FCC) to 
support the establishment of a Lifeline for Broadband Program to meet 
the Internet service plan needs of people with disabilities. The 
following comments are submitted as part of a coordinated effort to 
demonstrate broad-based support by various communities of interest 
throughout the Nation for the creation of a new ``Lifeline'' program 
that would ensure that advanced communication services are affordable, 
provide genuine consumer choice, and offer competitive options to meet 
today's communications needs.
    CFILC is a statewide non-profit membership organization of 21 
Independent Living Centers located throughout the State of California. 
Our centers provide programs and services to over 100,000 people with 
disabilities annually. We also advocate on Federal and California state 
legislation, regulations, and budget issues to support and promote 
independent living and the community integration of people with 
disabilities.
    In addition, CFILC is a member organization that has partnered with 
the California Emerging Technology Fund (CETF) on a number of issues 
that have been considered by the FCC. Our most recent collaboration 
with CETF strongly supports the establishment of an Internet Lifeline 
Inclusion Program that addresses the three major barriers affecting 
broadband adoption by people with disabilities. They include: (1) Cost; 
(2) Relevance, (3) Digital Literacy, and (4) Access.
    Accordingly, we urge the FCC to establish an Internet Lifeline 
Inclusion Program that offers affordable high-speed Internet Service 
Plans for all low-income households offered by and through all 
broadband providers within a $10 per month range that is also available 
to the Deaf and Hard of Hearing Communities that require video rely 
services in order to communicate with the hearing world. Concurrently, 
there is also a need to ensure the capitalization of an independent 
fund to support community-based organizations (CBOs), schools, and 
libraries as trusted messengers to assist in the enrollment of eligible 
low-income households and to participate in genuine public/private 
partnerships. Finally, CFILC supports the creation of an oversight 
advisory body to ensure transparency and accountability among a broad 
base of stakeholders and community leaders knowledgeable about 
broadband adoption.
    The creation of such an Internet Lifeline Inclusion Program is 
critical because closing the existing Digital Divide is one of the most 
important issues affecting people with disabilities as a community that 
is disproportionately affected by the divide. According to the American 
Association of People with Disabilities (AAPD), 54 percent of adults 
with disabilities use the Internet, compared to 81 percent of non-
disabled adults. In addition, only 41 percent of disabled adults have 
access to broadband services at home, while 69 percent of those without 
a disability have such access.
    The failure to close this divide for people with disabilities would 
result in significant, negative consequences. More so than ever before, 
people with disabilities are increasingly dependent upon having access 
to affordable Internet service plans and broadband technology.
    Improvements in Assistive Technology have enabled people with 
disabilities to live independently in their homes and communities as a 
viable alternative to more costly and dehumanizing institutionalization 
in nursing homes and other institutions. Access to affordable Internet 
services is a vital part of acquiring the advanced technology that 
supports in Assistive Technology devices, software, and hardware 
because they require sufficient, minimum, broadband capacity to operate 
and maintain those applications.
    Enabling people to live independently is an issue that warrants bi-
partisan support. Advanced technology and adequate broadband services 
allow people with disabilities to pursue and compete for educational 
and job training opportunities and avoid institutionalization that is 
often up to eight times more expensive than living at home with 
appropriate supportive services.
    For all of these reasons, CFILC urges the commission to adopt 
initiatives that will bridge the affordability gap and create links to 
technology that connects, empowers, and supports independent living for 
people with disabilities.
    Today, advanced technology has the promise of becoming the greatest 
equalizer for genuine independence and educational and job 
opportunities. The Lifeline Program that was originally established 
over 30 years is outdated and no longer meets the growing demand for 
access to advanced technology. If the FCC takes decisive action in this 
regard it can help lead our Nation in new directions that will reshape 
access to affordable Internet services that will reap dividends for all 
Americans.''

                                                 Press Contacts
----------------------------------------------------------------------------------------------------------------
         Organization                 Press Contact                   E-mail Address              Phone Number
----------------------------------------------------------------------------------------------------------------
ACCES                          ACCES                       [email protected]                 310-480-3922
----------------------------------------------------------------------------------------------------------------
Access Humboldt                Sean McLaughlin             [email protected]                  707-616-2381
----------------------------------------------------------------------------------------------------------------
ACLU                           Nathaniel Turner            [email protected]                         202-715-0831
----------------------------------------------------------------------------------------------------------------
Advocates for Basic Legal      Ellis Jacobs                [email protected]                      937-305-6735
 Equality
----------------------------------------------------------------------------------------------------------------
American Library Association   Jazzy Wright                [email protected]                      202-628-8410
----------------------------------------------------------------------------------------------------------------
Ashbury Senior Computer        James Wade                  [email protected]
 Community Center
----------------------------------------------------------------------------------------------------------------
Austin Free--Net               Juanita Budd                [email protected]              512-236-8225
----------------------------------------------------------------------------------------------------------------
Benton Foundation              Kevin Taglang               [email protected]                       8478949977
----------------------------------------------------------------------------------------------------------------
California Emerging            Susan Walters               [email protected]                415 730 1718
 Technology Fund
----------------------------------------------------------------------------------------------------------------
California Foundation for      Teresa Favuzzi              [email protected]                       (916) 325-1690
 Independent Living Centers
----------------------------------------------------------------------------------------------------------------
Center for Media Justice       Chinyere Tutashinda         chinyere
----------------------------------------------------------------------------------------------------------------
Chicana Latina Foundation      Olga Talamante              [email protected]                   650-373-1083
----------------------------------------------------------------------------------------------------------------
Chinatown Community            Tina Cheung                 [email protected]                 415-984-2730
 Development Center
----------------------------------------------------------------------------------------------------------------
Cleveland City Council         Joan Mazzolini              [email protected]    (216) 664-4466
----------------------------------------------------------------------------------------------------------------
Coalition for Economic         Larry Gross                 [email protected]                 213-252-4411
 Survival (CES)
----------------------------------------------------------------------------------------------------------------
Common Cause                   Todd O'Boyle                [email protected]                  302-709-1781
----------------------------------------------------------------------------------------------------------------
Common Sense Kids Action       Lisa Cohen                  [email protected]
----------------------------------------------------------------------------------------------------------------
Communications Workers of      Debbie Goldman              [email protected]                   202-434-1194
 America
----------------------------------------------------------------------------------------------------------------
Community Action of Ventura    Tim Hockett                 [email protected]                       805-436-4028
 County, Inc.
----------------------------------------------------------------------------------------------------------------
Community Telecommunications   same as above               [email protected]                       313 577-2085
 Network
----------------------------------------------------------------------------------------------------------------
Connect Your Community         Bill Callahan               [email protected]            216-870-4736
----------------------------------------------------------------------------------------------------------------
Connecting for Good            Michael Liimatta            [email protected]            816-217-9637
----------------------------------------------------------------------------------------------------------------
Del Norte Senior Center        Charlaine Mazzei            [email protected]                      (707) 464-3812
----------------------------------------------------------------------------------------------------------------
Digi-Bridge                    David Jessup, Jr.           [email protected]                      7049109086
----------------------------------------------------------------------------------------------------------------
Focus: HOPE                    Carrie Budzinski            [email protected]             3134944367
----------------------------------------------------------------------------------------------------------------
Generation Justice             George Luna-Pena            [email protected]              505-277-1831
----------------------------------------------------------------------------------------------------------------
Kansas City Public Library     Steve Woolfolk              [email protected]              816-701-3400
----------------------------------------------------------------------------------------------------------------
Latino Community Foundation    Masha Chernyak              [email protected]                        415-533-9697
----------------------------------------------------------------------------------------------------------------
Latino Council                 Cecilia Zamora              [email protected]
----------------------------------------------------------------------------------------------------------------
Lighthouse Learning Resource   Lighthouse Learning         [email protected]           951-536-1794
 Center                         Resource Center
----------------------------------------------------------------------------------------------------------------
MAAC                           Lisette Islas               [email protected]                 (619) 426-3595
----------------------------------------------------------------------------------------------------------------
Media Action Grassroots        Chinyere Tutashinda         [email protected]                510-698-3800
 Network (MAG-Net)
----------------------------------------------------------------------------------------------------------------
Media Alliance                 Tracy Rosenberg             [email protected]                 510-684-6853
----------------------------------------------------------------------------------------------------------------
Media Mobilizing Project       Hannah Sassaman             [email protected]        267-970-4007
----------------------------------------------------------------------------------------------------------------
Minnesota Office of Broadband  Madeline Koch               [email protected]                651-259-7236
 Development
----------------------------------------------------------------------------------------------------------------
Mobile Beacon                  Alisson Walsh               [email protected]
----------------------------------------------------------------------------------------------------------------
NAACP                          Hilary Shelton              [email protected]                 (202) 463-2940
----------------------------------------------------------------------------------------------------------------
National Consumer Law Center,  Jan Kruse                   [email protected]                          617-542-8010
 on behalf of its low-income
 clients
----------------------------------------------------------------------------------------------------------------
National Digital Inclusion     Angela Siefer               [email protected]        6145373057
 Alliance
----------------------------------------------------------------------------------------------------------------
National Hispanic Media        Jessica Gonzalez            [email protected]                     (626) 792-6462
 Coalition
----------------------------------------------------------------------------------------------------------------
New America's Open Technology  Alison Yost                 [email protected]             202-596-3345
 Institute
----------------------------------------------------------------------------------------------------------------
New Jersey SHARES              Jim Jacob                   [email protected]                      609-883-1478
----------------------------------------------------------------------------------------------------------------
OCA--Asian Pacific American    Kham S. Moua                [email protected]                      2028308952
 Advocates
----------------------------------------------------------------------------------------------------------------
Office of Broadband            Danna MacKenzie             [email protected]              651.259.7611
 Development, State of
 Minnesota
----------------------------------------------------------------------------------------------------------------
Older Adults Technology        Thomas Kamber               [email protected]                         718 360 1707
 Services (OATS)
----------------------------------------------------------------------------------------------------------------
Open Access Connections        Mark Erpelding              [email protected]           612-432-0900
----------------------------------------------------------------------------------------------------------------
Pennsylvania Coalition         Steve Halvonik              [email protected]                      717-545-6400
 Against Domestic Violence
----------------------------------------------------------------------------------------------------------------
Pennsylvania Utility Law       n/a                         [email protected]                   7172369486
 Project (PULP)
----------------------------------------------------------------------------------------------------------------
Public Knowledge               Shiva Stella                [email protected]                202-861-0020
----------------------------------------------------------------------------------------------------------------
Seeds of Literacy              Jo Steigerwald              [email protected]                   216-661-7950
----------------------------------------------------------------------------------------------------------------
SHLB Coalition                 John Windhausen             [email protected]                     202-256-9616
----------------------------------------------------------------------------------------------------------------
Southwest Workers' Union       Southwest Workers' Union    [email protected]                       210-299-2666
----------------------------------------------------------------------------------------------------------------
St. Anthony Foundation Tech    Karl Robillard              [email protected]               415-592-2736
 Lab
----------------------------------------------------------------------------------------------------------------
TeleDimensions, Inc.           Chuck Sherwood              [email protected]               508-385-3808
----------------------------------------------------------------------------------------------------------------
Texas Legal Services Center    Randall Chapman             [email protected]                        512-637-5416
----------------------------------------------------------------------------------------------------------------
The Greenlining Institute      Bruce Mirken                [email protected]                   510-926-4022
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The Leadership Conference on   Scott Simpson               [email protected]                  202.466.2061
 Civil and Human Rights
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The National Council of La     Julian Teixeira             [email protected]
 Raza
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The Stride Center              Barrie Hathaway             [email protected]                  510-629-6966
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The Utility Reform Network     Mindy Spatt                 [email protected]                          415-929-8876
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United Church of Christ, OC    Cheryl Leanza               [email protected]                      202-904-2168
 Inc.
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Watsonville Law Center         Henry Martin                [email protected]        (831) 722-2845
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WinstonNet                     Lynda Goff                  [email protected]                         336-757-2800
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                                 ______
                                 
                   The Broadband Adoption Act of 2015
Catalog of Public Endorsements

National Hispanic Media Coalition (NHMC)

National Cable & Telecommunications Association (NCTA)

Verizon

United Church of Christ (UCC)

The Leadership Conference on Civil and Human Rights

Common Sense Media

Lifeline Connects--members include: Blue Jay Wireless, Global 
Connection Inc. of America, i-wireless, LLC and Telrite Corporation

CTIA--The Wireless Association: represents U.S. wireless communications 
industry

National Consumer Law Center

The Common Cause

Public Knowledge
                                 ______
                                 
National Hispanic Media Coalition
http://www.nhmc.org/?utm_source=NHMC+Supports+Introduction+of+the+Broad
band+Adoption+Act&utm_campaign=NHMC+Supports+Introduction+of+the+Broad
band+Adoption+Act&utm_medium=e-mail
NHMC Supports Introduction of the Broadband Adoption Act
Commends Representative Matsui, Senator Murphy, Senator Booker, and 
        others
    WASHINGTON--Today, a pair of bills were introduced in the U.S. 
House of Representatives and the U.S. Senate, which instruct the 
Federal Communications Commission (FCC) to modernize Lifeline to fully 
support broadband services and take additional steps to ensure the 
health of the program. The legislation aligns closely with proposals 
circulated by FCC Chairman Tom Wheeler last week and the bills' authors 
applauded the FCC's initiative and recognized the agency's existing 
authority to modernize Lifeline.
    Currently, Lifeline defrays the high cost of telephone service and, 
in some instances, bundled voice telephone and broadband service, for 
poor families. Lifeline has evolved since its inception during 
President Ronald Reagan's Administration. It was updated to include 
access to wireless phone services during President George W. Bush's 
Administration in 2005, and it was also significantly reformed to 
eliminate waste, fraud, and abuse in 2012.
    For nearly a decade, NHMC has advocated for Lifeline to further 
evolve to include access to meaningful broadband services to help close 
the digital divide. Currently, 30 percent of Americans lack home 
broadband. Those without home broadband are disproportionately poor, 
Latino, African American, Native Americans, rural, and/or seniors. Cost 
is the main barrier to adoption for people under sixty five years of 
age. At the same time, broadband is critical to nearly every facet of 
modern American life, including education, jobs, healthcare, civic 
participation, and more.
    The following statement can be attributed to Jessica J. Gonzalez, 
NHMC's Executive Vice President and General Counsel:

        ``I applaud our champions in Congress--Representative Matsui, 
        Senator Murphy, Senator Booker, and all of their co-sponsors--
        who understand the tremendous, untapped potential of Lifeline. 
        Lifeline could offer a bridge across the digital divide and 
        represents a crucial investment in the people of this country. 
        This legislation and current FCC efforts to modernize Lifeline 
        are about the core American values of creating access to 
        opportunity and a pathway out of poverty for millions of 
        Americans.''

    The bills, referred to as the Broadband Adoption Act of 2015, were 
introduced by Congresswoman Doris Matsui (D-CA) in the House and 
Senator Chris Murphy (D-CT) and Senator Cory Booker (D-NJ) in the 
Senate. The bills were supported by an impressive list of co-sponsors 
including: Congressman Frank Pallone (D-NJ), Congresswoman Anna Eshoo 
(D-CA), Congressman Michael Doyle (D-PA), Congressman Ben Ray Lujan (D-
NM), Congressman Peter Welch (D-VT), Senator Edward Markey (D-MA), 
Senator Ron Wyden (D-OR), and Senator Richard Blumenthal (D-CT).
    More than 70 national and regional civil rights organizations, 
policymakers, media rights advocates and other community groups have 
recently gone on the record in support of modernizing the Lifeline.
    Gonzalez will testify in support of Lifeline modernization before 
the U.S. Senate Commerce Subcommittee on Communications, Technology, 
Innovation, and the Internet on Tuesday, June 2 at 9:30 a.m. A live 
stream of the hearing will be available at this link. You can follow 
the conversation on Twitter by following @NHMC, @JGonzalezNHMC, and 
@michaelscurato. To access the written testimony, click here.
About NHMC
    The National Hispanic Media Coalition (NHMC) is a media advocacy 
and civil rights organization for the advancement of Latinos, working 
towards a media that is fair and inclusive of Latinos, and towards 
universal, affordable, and open access to communications. Learn more at 
www.nhmc.org. Receive real-time updates on Facebook and Twitter @NHMC.
                                 ______
                                 
National Cable & Telecommunications Association

https://www.ncta.com/news-and-events/media-room/content/statement-ncta-
regar
ding-reintroduction-broadband-adoption-act

FOR IMMEDIATE RELEASE                                                                                          CONTACT: Brian Dietz/Joy Sims
June 1, 2015                                                                                       202-222-2350
 

Statement of NCTA Regarding the Reintroduction of the Broadband 
        Adoption Act
    ``We welcome the reintroduction of the Broadband Adoption Act by 
Rep. Doris Matsui and Senators Chris Murphy and Cory Booker, and the 
renewed focus it shines on the important issue of broadband adoption. 
While broadband is the fastest growing consumer technology in history, 
a small but significant percentage of U.S. consumers do not yet 
subscribe or see the relevance of the Internet in their daily lives. 
The cable industry has invested hundreds of billions of dollars to 
build networks that reach 93 percent of homes and we have worked 
closely with local, state and Federal government agencies and non-
profits to educate consumers about the benefits of broadband. We look 
forward to working with all interested stakeholders in developing new, 
cost-effective strategies that will encourage all Americans to realize 
the benefits of fast broadband networks.''
    NCTA is the principal trade association for the U.S. cable 
industry, representing cable operators serving more than 80 percent of 
the Nation's cable television households and more than 200 cable 
program networks. The cable industry is the Nation's largest broadband 
provider of high-speed Internet access, serving more than 54 million 
customers, after investing $230 billion since 1996 to build two-way 
interactive networks with fiber optic technology. Cable companies also 
provide state-of-the-art digital telephone service to more than 28 
million American consumers.
                                 ______
                                 
Verizon
http://publicpolicy.verizon.com/blog/entry/statement-verizon-supports-
efforts-to-modernize-lifeline
Verizon Supports Efforts to Modernize Lifeline
    Today, Representative Doris Matsui (D-CA), Senator Chris Murphy (D-
CT) and Senator Cory Booker (D-NJ) introduced the Broadband Adoption 
Act of 2015. The followong statement should be attributed to Peter 
Davidson, Verizon senior vice president, Federal Government relations:

        ``Verizon supports efforts to reform, modernize and add 
        accountability to the Lifeline program, and the bill introduced 
        by Representative Matsui and Senators Murphy and Booker is an 
        important contribution to those efforts. Among other things, 
        the bill includes several accountability provisions that will 
        help protect consumers who pay for the fund. We look forward to 
        working with the sponsors and other interested stakeholders on 
        ways to modernize the program.''
                                 ______
                                 
United Church of Christ
http://uccmediajustice.org/p/salsa/web/blog/public/?blog_entry_KEY=7551

    In response to the introduction of the Broadband Adoption Act 
today, the following can be attributed to Cheryl Leanza, policy advisor 
to UCC OC Inc.:

        I welcome today's introduction of the Broadband Adoption Act. 
        Congresswoman Matsui, Senator Murphy and Senator Booker, along 
        with all the Act's co-sponsors, deserve praise. This proposed 
        legislation is timely in light of the Federal Communications 
        Commission's upcoming proceeding considering modernization of 
        the Lifeline program.

    Universalizing broadband adoption is critical--broadband is 
essential for every aspect of modern life. As I said last week, 
affordable access is the linchpin to digital literacy and relevance and 
hence it is the key to adoption. Universal Adoption is the key to 
individual and national economic security.
                                 ______
                                 
The Leadership Conference on Civil and Human Rights
http://www.civilrights.org/press/2015/lifeline-modernization-bill.html

    Nancy Zirkin, executive vice president and director of policy of 
The Leadership Conference on Civil and Human Rights, issued the 
following statement after the bicameral introduction of the Broadband 
Adoption Act, which would incorporate broadband within the Lifeline 
program:

        ``For Americans trying to move out of poverty and succeed in 
        our modern economy, broadband access is absolutely crucial. 
        This bill will help put modern communication services within 
        reach for some of our Nation's most vulnerable communities, 
        helping low-income households afford the broadband access they 
        need to thrive in today's information age.

        High-speed Internet today is vital to accessing job 
        opportunities, health care, social services, and education. But 
        for millions of low-income and minority Americans--the people 
        who are in most need of the advantages of broadband--such 
        service is simply out of reach. By helping reduce the high cost 
        of broadband services, this bill will help narrow the digital 
        divide and move our Nation toward an inclusive economic 
        recovery.

        We thank Representative Matsui and Senators Murphy and Booker 
        for introducing this important legislation, and urge their 
        colleagues to support its passage.''

    Nancy Zirkin is executive vice president and director of policy of 
The Leadership Conference on Civil and Human Rights, a coalition 
charged by its diverse membership of more than 200 national 
organizations to promote and protect the rights of all persons in the 
United States. The Leadership Conference works toward an America as 
good as its ideals. For more information on The Leadership Conference, 
visit www.civilrights.org.
                                 ______
                                 
Common Sense Media
    ``Common Sense applauds Sens. Booker and Murphy and Rep. Matsui for 
their important bicameral efforts to bring high-speed Internet access 
to all American homes. High-speed broadband at home is considered 
essential for the vast majority of Americans, and for good reason. 
Unfortunately, millions of low-income Americans--including millions of 
low-income kids--do not have broadband at home, and are being left 
behind. The Broadband Adoption Act of 2015 will make broadband more 
affordable and accessible for low-income Americans, enabling more 
children and their families to connect to 21st century education, jobs, 
and other critical opportunities that benefit our overall economy.''

--Jim Steyer, Common Sense Media CEO and Founder
                                 ______
                                 
Lifeline Connects

 LIFELINE CONNECTS COALITION LAUDS INTRODUCTION OF BROADBAND ADOPTION 
                              ACT OF 2015

Broadband Affordability is Key to Alleviating Poverty and Promoting 
        Opportunity
    Washington, D.C.--Lifeline Connects, a coalition of Lifeline 
providers committed to advancing the Federal Communication Commission's 
goal of protecting and preserving the integrity of the Lifeline Low-
Income communications program, today released the following statement 
in support of the Broadband Adoption Act of 2015, introduced by 
Representative Doris Matsui (D-CA) in the House and by Senators Chris 
Murphy (D-CT) and Cory Booker (D-NJ) in the Senate. The legislation 
seeks to modernize the Lifeline program to include broadband access for 
qualifying low-income Americans for whom the cost of service remains a 
barrier to adoption.
    According to John Heitmann on behalf of Lifeline Connects, 
``Broadband access has become a fundamental requirement of social and 
economic inclusion and ensures that every segment of our population can 
fully participate in the information age. Access to the Internet and 
the availability of information drive economic development and job 
growth, as well as advancements in healthcare and education.''
    ``The nation needs a new paradigm for alleviating poverty and 
promoting opportunity for poor families and communities across America. 
We strongly commend the bill sponsors' efforts to make broadband 
affordable for the most vulnerable members of our society. This 
legislation is an important step in ensuring access for low-income 
households that in many cases have been excluded from the digital 
revolution.''
About Lifeline Connects
    Lifeline Connects is a coalition of telecommunications service 
providers who believe that all Americans deserve access to affordable 
telephone and broadband service.
    Its members are Blue Jay Wireless, Global Connection Inc. of 
America, i-wireless, LLC and Telrite Corporation. Lifeline Connects is 
committed to educating and separating myths from facts about the 
Lifeline program, sharing best practices on compliance and industry 
self-regulation and proposing additional reforms to preserve the 
integrity of the program.
                                 ______
                                 
CTIA--The Wireless Association
http://www.ctia.org/resource-library/press-releases/archive/ctia-the-
wireless-association-statement-on-the-matsui-booker-lifeline-
legislation
CTIA--The Wireless Association Statement on the Matsui-Booker Lifeline 
        Legislation
    WASHINGTON, June 1, 2015--The following statement should be 
attributed to CTIA--The Wireless Association Vice President of 
Government Affairs Jot Carpenter:

        ``We appreciate Congresswoman Matsui and Senator Booker for 
        releasing their Lifeline modernization legislation. As we will 
        say in our testimony [PDF] tomorrow at the Senate Subcommittee 
        on Communications' hearing, we support efforts to expand mobile 
        broadband use while carefully and efficiently administering the 
        Lifeline program to prevent waste, fraud and abuse and 
        safeguarding the interests of the consumers who support all 
        universal service programs.''

    CTIA--The Wireless Association (www.ctia.org) represents the U.S. 
wireless communications industry. With members from wireless carriers 
and their suppliers to providers and manufacturers of wireless data 
services and products, the association brings together a dynamic group 
of companies that enable consumers to lead a 21st century connected 
life. CTIA members benefit from its vigorous advocacy at all levels of 
government for policies that foster the continued innovation, 
investment and economic impact of America's competitive and world-
leading mobile ecosystem. The association also coordinates the 
industry's voluntary best practices and initiatives and convenes the 
industry's leading wireless tradeshow. CTIA was founded in 1984 and is 
based in Washington, D.C.

Twitter: @ctia Blog: http://ctia.it/Na6erv Facebook: http://ctia.it/
LCm4Nn

LinkedIn Group: http://ctia.it/Na6cA2 Google+: http://ctia.it/12PfCrO

Press Contact: Amy Storey, [email protected], 202-736-3207
                                 ______
                                 
National Consumer Law Center
http://www.nclc.org/images/pdf/energy_utility_telecom/
telecommunications/pr_broadband_adoption_act6115.pdf

                          Olivia Wein--contact

         NCLC Advocates Support Broadband Adoption Act of 2015

    Today, U.S. Congresswoman Doris Matsui (D-CA), U.S. Senator Chris 
Murphy (D-CT), and U.S. Senator Cory Booker (D-NJ) introduced 
legislation to modernize the Federal Lifeline Assistance Program to 
include broadband service to eligible low-income households.
    National Consumer Law Center Attorney Olivia Wein praised today's 
action on behalf of NCLC's low income clients:

        ``The Broadband Adoption Act of 2015 addresses a critical need 
        in our nation--closing the digital divide by bringing 
        affordable broadband within the reach of struggling households. 
        The lack of affordable broadband service hurts children whose 
        educational opportunities are limited and hampers workers' 
        ability to apply for jobs or establish entrepreneurial 
        businesses. Internet access affects every facet of modern life, 
        from access to healthcare to participation in commerce. In an 
        information age, access to modern communication services 
        enhances the competitiveness of individuals and communities. 
        Representative Matsui and Senators Murphy and Booker have 
        demonstrated great leadership on this issue by introducing this 
        legislation.''

    Since 1969, the nonprofit National Consumer Law Center (NCLC) has 
used its expertise in consumer law and energy policy to work for 
consumer justice and economic security for low-income and other 
disadvantaged people, including older adults, in the United States. 
NCLC's expertise includes policy analysis and advocacy; consumer law 
and energy publications; litigation; expert witness services, and 
training and advice for advocates. NCLC works with nonprofit and legal 
services organizations, private attorneys, policymakers, and Federal 
and state government and courts across the Nation to stop exploitative 
practices, help financially stressed families build and retain wealth, 
and advance economic fairness. www.nclc.org
                                 ______
                                 
Common Cause
http://www.commoncause.org/democracy-wire/closing-the-digital-
divide.html

                       Closing the Digital Divide

                            By Todd O'Boyle

    The fight to close the digital divide just got a major boost.
    Rep. Doris Matsui, D-CA, and Sens. Cory Booker, D-NJ, and Chris 
Murphy, D-CT, introduced the Broadband Adoption Act of 2015 today to 
modernize Lifeline, a program which helps connect low-income households 
to telecommunications.
    For decades, qualifying households have received a federally-
subsidized discount on their monthly bills for a wired or wireless 
telephone connection. The original program helped build out the 
American telephone network, and make it a global model of universal 
service. This bill would give beneficiaries a third choice: a basic 
broadband connection.
    Broadband is key to citizenship and opportunity in the 21st 
century; yet America trails other nations in terms of quality, 
affordable, and ubiquitous broadband service--we rank 30th by some 
measures! Affordability is among the largest barriers to broadband 
adoption.
    With news breaking that the Federal Communications Commission (FCC) 
is moving forward with Lifeline reforms, this bill couldn't come at a 
better time.
    This is great news--and brings us one step closer to the goal of 
universal broadband service.
    ``This strong public interest leadership shows the way forward for 
the FCC. It's time to modernize Lifeline so more American families can 
benefit from the democracy and opportunity engine of the 21st century. 
It's everyone's need and everyone's right,'' said former FCC 
Commissioner and Common Cause Special Adviser Michael Copps.
    Office: Common Cause National
    Issues: Media and Democracy
                                 ______
                                 
Public Knowledge
https://www.publicknowledge.org/press-release/public-knowledge-
applauds-introduction-of-broadband-adoption-act

    Public Knowledge Applauds Introduction of Broadband Adoption Act

                            By Shiva Stella

    Today, Congresswoman Doris Matsui (D-Calif.), Senator Chris Murphy 
(D-Conn.), and Senator Cory Booker (D-N.J.) introduced the Broadband 
Adoption Act to modernize the Lifeline Assistance Program. The bill 
would instruct the Federal Communications Commission to establish a 
Lifeline broadband assistance program, allowing broadband Internet 
services to be available as an option for eligible Lifeline households 
for the first time. Public Knowledge supports the bill and applauds 
Congresswoman Matsui for her continued efforts in championing Lifeline.
    The following can be attributed to Kristine DeBry, Vice President 
of the Policy Strategy Center at Public Knowledge:

        ``This legislation acknowledges the critical role broadband 
        plays in providing access to jobs, education, news, services, 
        healthcare, and essential communication to low-income 
        individuals. When the Lifeline program was created in the 
        1980s, voice calls were the critical connection people needed, 
        and now that connection should include broadband.

        ``Low-income Americans face multiple challenges to accessing 
        broadband service. Without confronting these challenges, the 
        digital divide persists--separating Americans from their own 
        jobs, schools, libraries and healthcare facilities. Lifeline 
        helps address the cost obstacle that too many Americans face in 
        connecting to opportunity. It is a critical program in the 
        FCC's commitment to making broadband service available for 
        everyone.

    ``We commend Congresswoman Matsui for her long history of 
leadership in this issue. We're also pleased to see Sen. Murphy and 
Sen. Booker supporting Lifeline modernization in the Senate. Americans 
need broadband Internet to connect with and provide for their families, 
and we believe this bill is a great step forward for struggling 
communities.''

    If you would like more information about broadband as an essential 
service, please view our latest white paper, Universal Service in an 
All-IP World.

    Senator Wicker. Thank you.
    Senator Fischer?

                STATEMENT OF HON. DEB FISCHER, 
                   U.S. SENATOR FROM NEBRASKA

    Senator Fischer. Thank you, Mr. Chairman.
    Given the waste, fraud, and abuse that has already been 
identified and the rest that I believe still exists, I think we 
need to take a look at considering a cap and a co-pay for this 
program. After all, the other three USF programs are capped, 
but this one is not.
    There is a range of issues that deserve attention. They are 
reconsidering whether the ETC should be mandated to 
participate, requiring a budget and improved enforcement, 
clarifying the states' role, better defining what kind of 
Lifeline marketing is permissible, determining eligibility and 
benefits, and ultimately evaluating the FCC's proposal to 
transition to a broadband subsidy.
    My first question is about transparency for rate payers and 
the families who subsidize the Lifeline services.
    What I hear in Nebraska from rate payers is they are 
already appalled by the charges that they have on their phone 
bills. This is a regressive tax; let's not forget that. And 
everyone pays the same rate no matter their income.
    The USF fees on our bills, I think, are either going to 
increase or potentially we are going to see a crowding out of 
the other programs that Universal Service Fund already has, and 
that is, like, the High Cost fund for rural communications or 
the E-Rate or telehealth.
    I would ask Mr. Clements, do you think that Chairman 
Wheeler, his latest Lifeline proposal should be made public 
before the Commission votes on it on June 18th so that the 
public, the rate payers, can know whether their phone bills are 
going to go up in order to have other people have their 
Internet service subsidized?
    Mr. Clements. That is not an issue that we looked at. I 
think what he is proposing is a notice of proposed rulemaking, 
so I don't believe the final order, in terms of any changes in 
the rates, would take place until after that process is 
complete.
    Senator Fischer. Mr. May, would you like to address that? 
Do you think that we should be seeing the proposal be made 
public before there is a vote on it?
    Mr. May. Thank you, Senator.
    You know, I just testified over in the House; they had a 
hearing on reforming the process of the FCC. And I testified 
that draft orders should be made public before the Commission 
votes. You know, because they have Sunshine meetings; that is 
what they are called. So it seems to me, consistent with that, 
the public could have the item in front of them and know more--
they could actually have the item in front of them. I think 
that could be a good thing. It is more important, I think, on 
the final orders, as Mr. Brise said.
    The one thing I would say is, you know, Chairman Wheeler 
now is beginning to release a lot of details--and this is 
different from past practice--about what is in these proposed 
orders.
    And one thing that I believe, really going to the substance 
of your point, is that it is pretty clear that if the program 
is expanded to broadband, I think we have to be pretty clear-
eyed about it and understand that it is probably going to 
increase the cost of Lifeline, and then people have to figure 
out how you want to pay for that, if you do.
    Because, you know, let's be frank, the cost of broadband 
service is much more expensive than providing ordinary basic 
service. And that is not even taking into account the equipment 
that you need, which is more expensive. You know, a laptop or a 
smartphone is more expensive than a dumb-phone.
    And you have the literacy programs. You know, someone 
mentioned the Comcast Internet Essentials program. I think that 
type of thing is a good thing because that is helpful for 
adoption and providing equipment. But there is a cost.
    Senator Fischer. But I think, sir, exactly, there is a 
cost, and we need to make sure that our citizens in our states 
and across this country realize that. The Universal Service 
Fund right now has revenue that is limited, and it is divided 
up between programs. And when we are looking at a huge increase 
in cost on this one program, either rate payers are going to 
pay for it or other programs will be cut back. That is a 
reality that we need to make clear here.
    Mr. May. Well, you said, I think, that many of your 
constituents know that they are paying the 17 percent tax----
    Senator Fischer. In Nebraska, we are very open about 
listing it.
    Mr. May.--in Nebraska, but, you know, in a lot of places, 
unfortunately, a lot of consumers aren't as aware of it. I 
think if more were aware of it, there would actually be more 
pressure on the----
    Senator Fischer. Or if other states followed the 1996 law 
and set up their program----
    Mr. May. Yes. You know, then there would be pressure to 
really grapple with, you know, the waste, fraud, and abuse and 
inefficiency.
    Senator Fischer. Correct.
    Thank you, Mr. Chairman.
    Senator Wicker. And thank you very much.
    Senator Markey, followed by Senator Daines.

               STATEMENT OF HON. EDWARD MARKEY, 
                U.S. SENATOR FROM MASSACHUSETTS

    Senator Markey. Thank you, Mr. Chairman, very much.
    The Federal Communications Commission Act of 1934, it has 
at its core this principle of universal service. It was kind of 
a brilliant insight that that society had in our country. Here 
is what it said; it said capitalism can't work if we don't have 
everybody as part of this new, modern telecommunications system 
with a black rotary-dial phone, so we are going to have to find 
a way of ensuring that everyone has access to it.
    And so, yes, there was a system set up that said that, kind 
of, my father and mother in urban America who were doing OK 
would be subsidizing people in rural America or subsidizing 
poor people so they would have a phone too.
    And how did capitalism work? Well, of course, now that 
everyone had a phone, everyone could plug into this incredible 
capitalist system that we had in America, and we got the return 
on investment 2, 3, 4, 5, 10 times over because everyone was 
now part of this capitalist system with a telephone.
    So that is what we are talking about here today, the same 
system. Now, there is no question that my mother and father 
subsidized rural America for probably 50 years, making sure 
they had phones, making sure poor people had phones, no 
question about it. But it was part of a capitalistic plan.
    And so now we are talking about modernizing that system, 
because broadband is to the 21st century what a black rotary-
dial phone was to the 20th century, no question about it.
    So, Ms. Gonzalez, do you think that in the 21st century 
that the system should be technology-neutral and it should 
remain open to ongoing reinterpretation so that we are ensuring 
that the lowest income people in our country or the most rural 
societies in our country should have access to the most modern 
technology?
    Ms. Gonzalez. Yes, sir, Senator Markey. I do think it needs 
to evolve and needs to build in choice.
    Senator Markey. And why is that?
    Ms. Gonzalez. Because, I mean, I think just every facet of 
modern American life can be--we can better people's lives with 
broadband. We can advance the economy, we can give people 
access to health care. You know, back 50 years ago, you could 
start a small business without the Internet; today you cannot. 
And it is just as simple as that. There are economic reasons, 
there are moral reasons. It just makes good sense.
    Senator Markey. I agree with you. I think that in the same 
way that a black, rotary-dial phone played that huge role in 
the 20th century, for better or worse, broadband, the Internet, 
is now economic oxygen for every family in America. You have to 
be connected to it, you have to be able to fully participate in 
it, or else you are going to get left behind economically in 
our country. And we need the same kind of modern plan for this 
century as was brilliantly put together in the 20th century. We 
became the model for the rest of the world.
    How would you go about determining, Ms. Gonzalez, what the 
standard should be for the 21st century with regard to access 
to broadband?
    Ms. Gonzalez. I think we need to look at how we provide 
sufficient capacity to perform the basic functions that we 
expect one can perform with broadband. So, for instance, one 
should be able to access digital education, should access 
health care, social services, job opportunities, closing the 
homework gap, emergency communications, civic discourse and 
participation.
    We need to develop some sort of mechanism to ensure 
outreach is sufficient and that the service is available 
throughout the month, it doesn't cutoff halfway through the 
month. And the standards need to evolve over time as the way we 
communicate evolves.
    Senator Markey. Yes. So, obviously, we don't want to have a 
digital divide in the country. We don't want digital haves and 
digital have-nots. Because that is the key word, ``digital.'' 
Who has it, and who doesn't? And if you don't have it, you are 
out of the system, you are out of capitalism. You can't pretend 
that that family is going to be able to fully participate in 
what the modern America, the modern world has become.
    And so I praise the FCC for their beginning this process, 
and I praise Senator Booker and Senator Murphy, Senator 
Blumenthal. I have joined with them in introducing a Lifeline 
piece of legislation into this committee. I think it is a very 
important discussion for us. Without modern telecommunications 
technologies, we are going to leave behind too many people in 
our country.
    Thank you, Mr. Chairman.
    Senator Wicker. Thank you, Senator Markey.
    Senator Daines?

                STATEMENT OF HON. STEVE DAINES, 
                   U.S. SENATOR FROM MONTANA

    Senator Daines. Thank you, Mr. Chairman.
    I am going to pick up where Senator Fischer left off about 
the Lifeline program. I am curious--and this is probably a 
question for Mr. Clements--I am curious to understand why the 
Lifeline program is the only Universal Service Fund program 
that has been funded without a cap. The other three USF 
programs--the High Cost, which serves rural areas; schools and 
libraries; the rural health care--all have program caps.
    In fact, the GAO has specifically noted, and I quote, ``The 
Low-Income Program has no funding cap, and the addition of 
broadband and other future telecommunications technology 
without key management information and evaluation tools has the 
potential to further increase the cost to consumers, who pay 
for the program through their telecommunication bills.''
    So my question, Mr. Clements: What are the reasons the FCC 
has not put a cap on the Lifeline program?
    Mr. Clements. I can't speak for why FCC has not done that.
    Senator Daines. What are your thoughts?
    Mr. Clements. We haven't done enough work to say whether a 
cap would be effective or not.
    Senator Daines. Do you think they should consider 
implementing a cap? And why would the other three programs have 
a cap and this one doesn't?
    Mr. Clements. They have recently added caps, for example, 
to the High Cost program. Before, that was not capped, as well. 
So, in part of the reform of the High Cost program, they have 
implemented that.
    To the extent that a cap would help control program growth 
and control waste, fraud, and abuse, we would generally be in 
support of that.
    Senator Daines. And, I guess, I mean, it is the GAO, after 
all. Are you concerned the Lifeline fund could continue to 
increase without sufficient oversight, thus increasing all 
consumer phone bills?
    Mr. Clements. I think this is why we recommended the 
program evaluation, to get a better sense of--you have two 
moving parts. You have the subsidy amount, and so if we are 
talking about moving to broadband, that subsidy amount may need 
to go up. And then you have the eligible base, the population 
that could benefit from the program. You can move the two parts 
and still keep the total disbursements about the same if you 
wanted to.
    Senator Daines. But it is just back to what--there is the 
old Sesame Street saying, ``One of these things is not like the 
other.'' Why is this one program singled out without a cap and 
every other program has a cap?
    Mr. Clements. Again, I can't speak for why.
    Senator Daines. I am going to ask Mr. Bergmann, perhaps, a 
similar question. Why shouldn't the Lifeline program be subject 
to a cap in the way that other portions of the USF program are?
    Mr. Bergmann. Thank you, Senator.
    And, you know, just to share a little bit about the 
perspective of the wireless industry, we share your concerns in 
making sure that the burdens on consumers are kept to a 
minimum, because 44 percent of the universal service 
contribution fund comes from wireless carriers and their 
customers. And the way technology is evolving, that is going to 
be 50 percent soon. So we certainly share that interest.
    I think part of the reason that the Commission and the 
wireless industry has been concerned about a hard cap is that 
the low-income Lifeline program is structured a little bit 
differently than those other USF programs. So, first, it is 
directed to individuals, as opposed to carriers. And the second 
is that it is means-tested, so directly looking at the 
eligibility of those customers, as opposed to the other 
programs, which are based on, sort of, other proxies.
    So, you know, as we look at the typical customer profile, 
you know, we see that the average Lifeline customer has an 
income of $12,000. About half of them are middle-aged. About a 
third of them have disabilities. So the challenge for us is how 
would you implement it so that you get that fiscal discipline 
without forcing the next eligible customer to miss out on that 
opportunity.
    Senator Daines. But would a cap perhaps be an important 
step forward to help drive this desire to eliminate the waste, 
fraud, and abuse in the system?
    Mr. Bergmann. So I think, from our perspective, the best 
thing that the Commission could do to address those issues is 
by addressing this issue of determining eligibility.
    They have taken important steps with the development of the 
duplicates database, but the Commission said in 2012 that it 
would adopt an automated way to determine who is eligible. It 
hasn't moved forward with that yet. So we are hopeful that that 
will be part of the FCC's proceeding coming up.
    Senator Daines. Mr. Bergmann, let me shift gears here and 
move to tribal access for a moment. As of the first quarter of 
2015, there were 6,546 Lifeline subscribers in Montana; 3,800-
plus were listed as tribal, and about 2,700 were listed as non-
tribal.
    Mr. Bergmann, since almost 60 percent of Montanans 
receiving Lifeline services are from tribal lands in my state, 
what are some of the challenges the wireless industry faces in 
bringing service to our tribal lands?
    Mr. Bergmann. So thank you, Senator.
    Tribal areas present some of the most difficult challenges 
to serve in the country. They tend to be in rural areas; those 
tend to be high-cost areas. And, you know, for anyone who has 
had a chance to visit tribal areas, there can often be, sort 
of, eye-popping economic challenges.
    So, you know, one element of that, I think, is that the FCC 
has set up special rules for Lifeline for tribal areas so that 
there are higher support amounts. Link Up continues.
    But looking outside of Lifeline, I would also say that 
there is probably more that could be done to facilitate the 
build-out of networks, to Senator Ayotte's question, trying to 
make sure that we have the networks there to support those 
services. So tower siting on tribal lands has traditionally 
been a challenging issue, and it is something that we would 
love to work on to try to promote.
    Senator Daines. Thank you.
    Senator Wicker. Thank you, Senator Daines.
    Senator Blumenthal?

             STATEMENT OF HON. RICHARD BLUMENTHAL, 
                 U.S. SENATOR FROM CONNECTICUT

    Senator Blumenthal. Thanks, Mr. Chairman. And appreciate 
your having this hearing on a really important topic and the 
testimony that we have heard. Excellent testimony from the 
panel so far.
    The so-called digital divide really threatens to become a 
digital chasm or canyon, as access to this really critical 
service diminishes as people become faced with the inability to 
pay for it. And access to broadband is every bit as important 
today as the availability of phone service was 30 years ago. So 
defending this vital lifeline--it really is a lifeline--I think 
ought to attract unanimity from this panel and from the U.S. 
Senate.
    But there still are the myths and the bogeymen about waste, 
fraud, and abuse. There is no question that some of it exists, 
and the FCC is focusing on it, and it should, with even greater 
vigor and vigilance. But it has taken some steps.
    And I would like to ask members of the panel, for example, 
Mr. Clements and Ms. Gonzalez, about the steps that have been 
taken already--for example, the cross-checks on databases, so 
that double or triple subsidies for the same household can be 
eliminated. The number of households has diminished, from 18 
million to 12 million, I believe, as a result.
    And what are the steps that you think are most important 
remaining to be taken to eliminate waste, fraud, and abuse? And 
I assume a cap is not one of them.
    Ms. Gonzalez. Thank you, Senator Blumenthal. I will begin.
    When I looked through the GAO report, on page 9 there is a 
table of all the reforms that the FCC proposed in 2012, and 
seven of them have been fully implemented.
    They have adopted a one-per-household rule. They have 
eliminated Link Up on non-tribal lands. Develop uniform 
eligibility criteria. Establish non-usage requirements, so if 
someone isn't using their service, it is terminated. The 
payments to the eligible telecommunications carriers are based 
on actual support claims. They have conducted independent and 
first-year audits. And they have developed the National 
Accountability Data base in 46 states and the District of 
Columbia. That has eliminated 1.28 million duplicates.
    The GAO--I am stealing your thunder, I am afraid.
    [Laughter.]
    Ms. Gonzalez.--also identified four that were in progress. 
The FCC has developed a $9.25 flat rate, and they are still 
evaluating what a permanent reimbursement rate is. I am not 
sure if it is appropriate to develop a permanent rate. I think 
it is something that might need to be reviewed periodically.
    Senator Blumenthal. So these steps really represent 
profoundly significant progress toward eliminating waste, 
fraud, and abuse; would you agree?
    Ms. Gonzalez. I agree. I think it demonstrates serious 
efforts to curb those problems.
    Senator Blumenthal. Does anyone on the panel disagree? I 
mean, these steps strike me as a serious, sustained effort to 
combat waste and fraud in this program, and we should credit 
the FCC and suggest additional steps, if there are any, that 
would go in that direction.
    But it should not be an impediment to broadband access 
under this program. The fact that there are defects in what has 
been done before shouldn't prevent the FCC from extending 
Lifeline to broadband. And we will do it by legislation, if 
necessary.
    Do you have a comment, Mr. Clements?
    And does anyone on the panel disagree?
    Mr. May?
    Mr. May. I mean, I don't disagree in a broad sense, but I 
will just say they have taken steps and they have had a 
positive impact, but GAO and others have identified some other 
steps that they could take. It is not clear to me why they 
haven't taken some of these steps.
    One example is--and the proposals were made several years 
ago--just to require document retention when you sign up 
someone so you can later check. I think you identified that. 
They haven't done that.
    So, in the way that I would think about some of these 
things is, why not have them take the remaining steps and 
implement them before you then move on to think about expanding 
the program?
    Senator Blumenthal. Well, you know, even government 
agencies can do two things at once.
    Mr. May. But they haven't.
    Senator Blumenthal. They are capable of doing two things at 
once, and they have, by the way, Mr. May. They have done many, 
many things at once. The FCC is moving forward on some very 
visionary and courageous steps even as we speak in other areas.
    So maybe they haven't to your satisfaction, but may I just 
suggest--and I welcome your comment; I think it is a very 
constructive and important comment--that they should do steps 
to eliminate waste, fraud, and abuse even as they expand 
broadband.
    Thank you, Mr. Chairman.
    Senator Wicker. Thank you, Senator Blumenthal.
    Senator Manchin?

                STATEMENT OF HON. JOE MANCHIN, 
                U.S. SENATOR FROM WEST VIRGINIA

    Senator Manchin. First of all, thank you all, and I 
appreciate very much your being here.
    You know, when you look at the program in my little state 
of West Virginia, you know, there are a lot of people that 
depend on it. But I have to be honest. And, Ms. Gonzalez, your 
testimony was so compelling, but unfortunately we don't hear 
that in West Virginia.
    I hear more people complaining about people using these 
funds for illicit purposes versus legitimate purposes. And they 
are upset about it. And that is the state's, really, challenge. 
My little state, and they see all the money being thrown at it. 
And if you look at it, 2005 was an $800 million program. It has 
gone to over $2.2 billion.
    And they are just sick and tired of it, and there is no 
confidence. So I don't know how you restore confidence back 
into the system to where people think that their tax--and, 
really, they think it is their tax dollars, first of all. If 
they knew it was their long-distance, they would be more 
outraged than what they are now. They just think it is overall 
tax dollars going to the program.
    So there is no support. I hear no support. In a state that 
is really challenged and needs it. I have probably half a 
million people who don't have broadband high-speed available. 
And yet you are expanding your program to people who don't have 
the basic infrastructure in a lot of rural states. I think 
Kelly spoke about--I know that Senator Sullivan will have the 
same in Alaska. And there is going to be a lot of abuse in 
that.
    So what we didn't understand is when Senator Daines was 
asking you, just cap it. You will be more--if it is capped and 
you only have a certain amount of money to work with, you are 
going to be much more efficient and effective with it.
    You know, people have just lost confidence that we have any 
common sense here, any common sense to really control the out-
of-control spending. And that is coming from a Democrat in a 
state that depends on an awful lot of government programs that 
help them.
    So, sooner or later, we are going to have to get real about 
this. You know, I can't go back and look at them with all 
good--just with good intentions. But, you know, I am 
compassionate about helping people, and they need help. But 
when a majority of the people that are receiving it use it for 
illicit purposes and not for legitimate purposes----
    You know, they still believe that Lifeline is when your 
grandmother falls down and she pushes a button and someone 
comes and helps her. That is what we are dealing with. I mean, 
people just don't know. So we have done a very poor job of 
doing it. And there is an old saying, they have told their 
story before we have told our story.
    So, Ms. Gonzalez, how do we have more people like yourself 
that has really been benefited by this program? And then how 
all of you can control the program, it would be good to hear 
any of your inputs on that.
    So anybody here that would want to speak, we can just go 
right down the line.
    Mr. Brise. Sure. I will go ahead and start, Senator.
    The first thing, I will say that coming from a state that 
is a donor state and having a state that has about 47 percent 
of the people who would today be eligible actually participate, 
there is an issue that exists in terms of people actually 
knowing that the program exists and how it operates.
    Now, there are a couple things that I think that the FCC 
has done that has worked to assure that there is less waste, 
fraud, and abuse, but there is a lot more that can be done.
    Senator Manchin. Sure.
    Mr. Brise. One is the national eligibility database. That 
needs to continually be worked on, or that needs to be worked 
on, so it can be implemented. Now, that is a challenge because 
that is going to require the state input so that there is input 
into the state databases for some of those services that are 
provided.
    The other thing that I believe is also important in this 
space is recognizing the overall goal, as NARUC has supported, 
that we have to be firm and express what the values of the 
program are and identifying the bad actors. States have played 
a very important role in identifying many of the bad actors.
    Senator Manchin. Is there any quid pro quo on a state that 
doesn't monitor, oversee, and basically run a program more 
efficiently? Do you have any ability to pull back from the 
Federal Government, pull back the services, the amount of 
people they can help?
    I mean, I am advocate of the program. I think it does, 
hearing Ms. Gonzalez--and I am sure there are many more like 
you that have really benefited from legitimate uses. But with 
that being said, sometimes we throw the baby out with the 
bathwater.
    But if a state doesn't get its act together and turn in 
this information, is there any quid pro quo back on that state?
    Mr. Brise. Not that I am aware of.
    Senator Manchin. Does anybody know that?
    So nothing. So, basically, as we usually do in America, we 
reward you for bad behavior. That is an awful question, isn't 
it? You know, because it is just so true. I mean, we hold 
nobody accountable or responsible for their actions.
    How do we----
    Senator Wicker. Well, perhaps, Senator Manchin, the other 
four panelists could supplement their testimony with an answer, 
because----
    Senator Manchin. If anybody----
    Senator Wicker.--you asked the question to all of them, and 
we do have a vote on.
    Senator Manchin. Yes, I know.
    Senator Wicker. So if panelists could submit written 
answers to Senator Manchin.
    Senator Manchin. If you could tell us this: Basically, do 
you believe that the reforms that are going into place are 
tough enough? Do you believe we should put caps and we should 
put benchmarks to make sure they are meeting them before we 
just continue on with a program that a lot of people don't have 
confidence in? I think that would be my question.
    Senator Wicker. Thank you. And we will proceed in that 
fashion.
    Senator Sullivan?

                STATEMENT OF HON. DAN SULLIVAN, 
                    U.S. SENATOR FROM ALASKA

    Senator Sullivan. Thank you, Mr. Chairman.
    And I do want to mention that I think Senator Manchin is 
raising a lot of important points, and I would agree with a lot 
of those. I think it is important that you are able to kind of 
address some of the issues he has raised in a lot of detail, 
because there are issues of confidence with regard to the 
program.
    You know, like a lot of rural states, big rural states in 
particular, the issue of expanding broadband, certainly in my 
state of Alaska, is a really important goal. And many of our 
carriers in the state are using the USF as a way to expand 
broadband infrastructure.
    Maybe, Mr. May, you can answer this question, but I will 
open it up to all the panelists.
    There is a concern that if the Lifeline support is expanded 
to include broadband service that it would diminish the overall 
funding, USF program funding, to build out broadband 
infrastructure.
    Can you address that, and is that a concern? Is there a 
zero-sum element to the funding in what we are trying to do? I 
know that it was asked earlier, but I would just be very 
interested because this is a critical question for my state.
    Mr. May. Thank you, Senator.
    You know, in theory, the USF fund and the Lifeline fund are 
two separate programs, and the money----
    Senator Sullivan. When you say that, ``in theory,'' what 
about in practice?
    Mr. May. Well, no, in practice they are, as well. I just--
what I started to say is that, to the extent that public 
confidence has eroded along the lines that Senator Manchin was 
inferring in the Lifeline program because of some of the 
problems that he has had, I think ultimately if that public 
confidence erodes it might affect how people view potentially 
all of these programs. And that is what I meant.
    But the USF fund is different. I don't think you were here, 
but when I was responding to Senator Ayotte I said I support 
the USF High Cost fund program as long as those funds are 
really targeted to unserved areas. Sometimes in the past they 
have been targeted in a way that duplicative carriers are 
supported.
    So, you know, one thing that I would say about----
    Senator Sullivan. So, I mean, just to be clear, so you are 
saying that you look at the High Cost, the E-Rate, the Rural 
Health programs, Lifeline program, there is not a--if you are 
expanding one, you are not necessarily diminishing from----
    Mr. May. No.
    Senator Sullivan.--others?
    Mr. May. No. Because they are not--I mean, you have caps on 
the High Cost fund, for example, but there isn't a cap on the 
Lifeline fund. If the Lifeline fund expands, it is not because, 
you know, more eligibles are receiving funds. It is per se 
diminishing the High Cost fund. At least that is my 
understanding of the way it works.
    Senator Sullivan. I would be interested in other panelists' 
views on that.
    Mr. Clements. I think what would happen in that case is the 
contribution factor simply increases. So the other three 
programs are fixed. If Lifeline were to double in 
disbursements, then the contribution burden would go up.
    Senator Sullivan. OK.
    Let me ask another question relating to the program. You 
know, I think that there have been some concerns about how 
carriers are being asked to determine and verify individual 
eligibility within the Lifeline program.
    Can you comment on that, how that works, Mr. Clements, just 
to give us a sense of how that operates? And does it impact 
some of the issues that Senator Manchin was talking about?
    Mr. Clements. Sure.
    The current process requires at enrollment the carrier to 
verify an applicant's eligibility. We found the most common 
approach to doing that is the carrier will look at some type of 
documentation. For example, an applicant will arrive at the 
location and show a SNAP card. And it is at that point that the 
applicant, if the document is valid, would be enrolled. The 
carrier is doing that.
    FCC had considered an approach where there would be a 
database that the carrier could simply query, but it has not 
implemented that database yet.
    Senator Sullivan. And do you think that is an effective way 
to look at eligibility? Are the carriers concerned about 
liability or just the burden of that, particularly given some 
of the concerns Senator Manchin mentioned?
    Mr. Clements. Some carriers have expressed concerns to us 
about the burden. I think it depends upon which carrier it is. 
Some of the wireline carriers are more hesitant, where they 
view that as a burden, that--it would be better to have the 
government do it. Some of the wireless carriers would prefer 
that the carrier themselves would do that.
    Senator Wicker. Thank you, Senator Sullivan.
    Senator Sullivan. Thank you, Mr. Chairman.
    Senator Wicker. Senator Schatz and I are going to try to 
wrap this hearing up before voting. We appreciate the members' 
and witnesses' being mindful of the time.
    Let me just ask you, Mr. Clements, the FCC has not 
implemented a Lifeline eligibility database, and you report 
this. We were told that it would be done by the end of 2013. 
The FCC is now planning to move forward with the Lifeline 
program to fund broadband before it has implemented the 
database to verify that all consumers who sign up are actually 
eligible.
    I think there has been broad support in this hearing, as we 
have all heard, for the concept of the program. We want 
eligible people to participate, and we want to be able to 
prevent ineligible people.
    So how many folks are out there that are participating? Can 
you enlighten us? How big is this problem? And does it concern 
you that we would be moving forward as a government without 
having the eligibility database?
    Mr. Clements. I believe the total number of participants is 
around 12 million households.
    The problem the FCC has encountered with the database----
    Senator Wicker. No, but of that number, how many are 
ineligible?
    Mr. Clements. We don't know how many are ineligible. We do 
have additional work for Senator McCaskill looking at sort of 
specifically looking at the Internet controls.
    Senator Wicker. So that is part of the problem that Senator 
Manchin was talking about, as I understand it. There are 12 
participants, and we have no idea how many are ineligible? Is 
that right?
    Mr. Clements. We don't know that, no.
    Senator Wicker. Does anyone on the panel care to take a 
stab at that?
    Mr. May?
    Mr. May. Well, you know, I think the answer is, until you 
implement some of the further reforms like the national 
database, that might lead to a reduction in the number of 
persons receiving the benefit by virtue of doing that. Then you 
would have an idea at that point how many--some idea, order of 
magnitude, how many people might have been ineligible or were, 
after you have implemented the reforms. But you don't know 
until you do that, I don't think.
    Senator Wicker. So, as a free market advocate, you have no 
idea, and you don't even have a hunch.
    Mr. May. I don't have a hunch, no, sir.
    Senator Wicker. OK. Well, I think that is helpful 
information to the Subcommittee, Senator Schatz.
    Mr. Bergmann, tell us about how automatic disenrollment 
would work and be helpful.
    Mr. Bergmann. So thank you, Senator. And I think that 
really sort of tees off your last question, which is having an 
automated means of determining eligibility. That is something 
that the Commission talked about doing in 2012 and we certainly 
hope will be part of the reforms going forward.
    But one of the benefits, I think, of an automated means of 
determining eligibility is that you will have more real-time 
information about when subscribers are actually eligible and 
when they are not eligible, right? So, right now, a carrier 
makes an initial determination, and then you wait a year. There 
is an annual recertification process.
    But an automated system would allow you to figure out when 
someone is no longer eligible--right? I think we all view 
Lifeline as a hand up, not a handout. So when they are no 
longer eligible for Lifeline, then you would be able to 
automatically de-enroll a subscriber, saving the program money.
    Senator Wicker. Thank you very much.
    Senator Schatz?
    Senator Schatz. How long is it going to take to develop the 
national eligibility database, Mr. Clements?
    Mr. Clements. We don't know that. And I think FCC has 
encountered a number of problems in developing a database. One 
of the problems is there----
    Senator Schatz. Is it possible?
    I mean, I understand the principle here, that you have the 
eligibility determination made by the carriers, and so there is 
a conflict and there is a sort of disincentive to find people 
to be ineligible, and so the rational solution becomes, well, 
let's develop a national database. But that sounds enormously 
difficult and time-consuming and maybe not possible at all.
    Would you care to comment on that?
    Mr. Clements. There are challenges with it. And one of the 
challenges is that you have seven programs that an eligible 
household could apply for and qualify for the program. In 
addition to the income, a lot of those data are housed at the 
state level. And so that has been a problem of creating the 
nationwide database, because data are housed at the state 
level.
    There are also privacy concerns----
    Senator Schatz. You have the responsibility for the data 
housed at the state level. In some instances, you actually 
don't have the data at the state level at all. It is not just a 
matter of integrating systems and matching up statutory 
requirements. In some instances, the states just actually don't 
have the information. Isn't that correct?
    Mr. Clements. I would have to get back with you. I am not 
sure.
    Senator Schatz. Commissioner Brise?
    Mr. Brise. Thank you very much. Thank you for the 
opportunity to address that particular issue.
    There are 15 states that have these eligibility databases 
currently. And so my state is one of them. So what happens in 
that case, someone who wants to participate in the Lifeline 
program, they interact with the Department of Children and 
Families. That sort of creates information that the carrier can 
have access to, and they know that that individual is eligible 
to receive the program.
    Now, part of the challenge, as you have correctly 
identified, is ensuring that these databases talk to a national 
database for that to happen. We believe at NARUC that this 
issue is ripe for a joint board referral, because that way you 
can have the states around the table or at the table to discuss 
ways for us to do this effectively in a way that all of the 
states can get around and have a process that makes sense and 
get it moving much quicker than the FCC moving at it alone.
    Senator Schatz. I will just finish with this. It just seems 
to me that, as we grapple with the eligibility determination 
question and the mechanics of that, which are enormously 
difficult, there is just no way that any of that is going to 
get settled, as a practical matter, before the FCC moves 
forward on broadband.
    And my concern is no objection to moving forward on 
broadband, but that at a minimum we take the lessons we have 
learned from Lifeline for voice and we encourage the FCC to use 
those lessons and not repeat those mistakes and find ourselves 
8 years from now trying to clean up another mess that I think 
we this time could have seen coming.
    Thank you, Mr. Chairman.
    Senator Wicker. And thank you, Senator Schatz.
    We are going to make a dash to the floor to make this 
cloture vote.
    The hearing record will remain open for 2 weeks. During 
this time, Senators are asked to submit any questions for the 
record. Upon receipt, the witnesses are requested to submit 
their written answers to the Committee as soon as possible.
    Thank you very much.
    And this concludes the hearing.
    [Whereupon, at 10:59 a.m., the hearing was adjourned.]

                            A P P E N D I X

  Response to Written Questions Submitted by Hon. Hon. John Thune to 
                 Commissioner Ronald A. Brise
    Question 1. Based on studies submitted by the FCC, the GAO Report 
concluded that many low-income households would choose to subscribe to 
telephone service even without the subsidy. To reduce waste, fraud, and 
abuse in the program and ensure it is working efficiently, would you be 
in favor of a rule that limits Lifeline benefits only to consumers who 
do not already subscribe to phone service, broadband service, or a pay 
TV service?
    Answer. NARUC has not taken a position on this issue. Lifeline was 
established to help those in need connect to and stay connected to the 
phone network. Limiting Lifeline to those who do not already have phone 
service or broadband will reduce the number of enrollments but it could 
also have other impacts. This issue has both empirical and policy 
dimensions. In the end, Federal policy makers, either in Congress or at 
the FCC, must balance the anticipated costs and benefits of this 
approach and set specific program goals. In Florida, we do collect 
information on whether a Lifeline applicant currently has phone 
service. On the Florida application for consumers applying for 
Medicaid, SNAP, or TANF through Department of Children and Families 
(DCF), we ask whether the applicant wants to receive a $9.25 per month 
discount on their phone service from the Lifeline Assistance Program if 
approved by DCF to receive one of its Lifeline-qualifying programs. If 
the applicants answer yes, they are asked if they presently have phone 
service and if so, what their phone number is and whose name is on the 
bill. They are then asked to choose the name of their telephone 
provider from a drop-down menu which appears with the names of all the 
Florida ETCs. If an applicant checks that they do not presently have 
phone service but want to receive Lifeline Assistance, they are advised 
to contact their local provider and sign up for service.

    Question 2. Several carriers that entered the Lifeline market in 
recent years have chosen to offer free monthly service and handsets to 
low-income consumers. This practice raises questions about whether the 
program should fully subsidize Lifeline services, particularly when the 
size of the Universal Service Fund continues to grow. Should Lifeline 
subscribers be required to pay some amount of money in order to be 
eligible for the program?
    Answer. Historically the Lifeline program was a discount over 
residential retail service. Until recently, there was never an 
opportunity for free service--only an opportunity for discounted 
services.
    NARUC has not taken a position on the issue of imposing a minimum 
monthly charge and, personally, I have not formed an opinion either. I 
was not a member of the Joint Board when the Lifeline Recommended 
Decision was released on November 4, 2010. However, in paragraph 79 of 
that Recommended Decision, that Federal State Joint Board on Universal 
Service noted, in a discussion of prepaid wireless lifeline services, 
the following:

        In particular, the Joint Board supports the further examination 
        of those Lifeline offerings that are offered at no cost to the 
        subscriber. The relevant decisions to expand USF Lifeline 
        funding to include prepaid wireless Lifeline-only carriers were 
        made largely by the FCC in the context of various forbearance 
        and waiver petitions and without advice or consultation from 
        the Joint Board . . . Our concerns include the implications of 
        demand for a service or product that is essentially free. When 
        the Commission last considered the issue of free service for 
        Lifeline customers, it was determined that the local 
        residential rate charged to Lifeline-eligible Tribal members 
        should not fall below a monthly minimum of $1.00, even if the 
        Lifeline credit exceeded the amount of their bill for local 
        service. The Commission should develop a record, and determine 
        whether this requirement for a minimum monthly rate should be 
        made applicable to all Lifeline subscribers and not just to 
        eligible Tribal members.'' \1\
---------------------------------------------------------------------------
    \1\ In the Matter of Federal State Joint Board on Universal 
Service, CC Docket No. 96-45, Lifeline and Linkup, WC Docket No. 03-
109, Recommended Decision (FCC10J-3), rel. November 4, 2010, at 
paragraph 79, available online at http://hraunfoss.fcc.gov/
edocs_public/attachmatch/FCC-10J-3A1.doc.

    For wireline service, customers also pay what is effectively a 
minimum fee--their regular phone bill less the Lifeline discount. 
Georgia considered a minimum $5 monthly lifeline charge but ultimately 
decided against it. Oklahoma is the only state, to my knowledge, that 
requires a monthly minimum charge. Oklahoma established a $1 monthly 
minimum charge for Lifeline subscribers as a method to deter duplicate 
service. However, now that the national duplicates database is up and 
running the monthly minimum charge will be eliminated later this year.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Joe Manchin to 
                 Commissioner Ronald A. Brise
    Question 1. The Lifeline Program, originally created in 1985, can 
and should be a targeted means of providing subsidies to those who are 
truly in need of assistance, but, first, we must address the rampant 
waste, fraud and abuse that made the program a household name.
    Question 1a: Do you believe that the enacted reforms to the 
Lifeline program are tough enough?
    Answer. The reforms instituted by the FCC have reduced waste, fraud 
and abuse. Most of those reforms were specifically recommended by the 
Federal State USF Joint Board.\1\ In particular, the National Lifeline 
Accountability Database (NLAD) has unquestionably had an impact. 
However, as both Congress and the FCC consider whether to expand the 
program to include broadband service, it certainly would be prudent to 
conduct an in-depth evaluation of the impact of the existing safeguards 
and consider possible improvements.
---------------------------------------------------------------------------
    \1\ In the Matter of Federal State Joint Board on Universal 
Service, CC Docket No. 96-45, Lifeline and Linkup, WC Docket No. 03-
109, Recommended Decision (FCC10J-3), rel. November 4, 2010, available 
online at: http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-10J-
3A1.doc.
---------------------------------------------------------------------------
    In July 2013, after the first round of Lifeline recertifications 
following the FCC's reforms, NARUC passed a resolution commending the 
FCC for the reforms. However, that resolution also urged the FCC to: 
(1) closely examine the recertification process, (2) ``promptly 
initiate a collaborative process with the States to develop and 
implement a mechanism for States and/or the Universal Service 
Administrative Company to efficiently administer determination of 
eligibility and recertification for consumers to participate in the 
Lifeline program . . . to minimize waste, fraud and abuse, and to learn 
from State Lifeline enrollment and recertification processes, databases 
and systems,'' \2\ and (3) ensure the NLAD and eligibility databases 
are operational by December 2013. While the NLAD is operational, the 
national eligibility database is not. The FCC should continue to 
utilize the Congressionally-mandated federal-state partnership to 
promote efficiency in Federal universal service programs.
---------------------------------------------------------------------------
    \2\ NARUC Resolution to Improve Lifeline Annual Recertification 
Process, adopted July 24, 2013, online at: http://www.naruc.org/
Resolutions/Resolution%20to%20Improve%20Lifeline%20Ann
ual%20Recertification%20Process.pdf.
---------------------------------------------------------------------------
    As pointed out in my testimony, States play a crucial role in 
policing the Lifeline program. Several states have indicated that they 
use State social service databases to confirm consumer eligibility for 
participation in the Lifeline program. Indeed, coordinated action 
between NARUC and the States have removed more than 2 million duplicate 
subsidies. I commend FCC Commissioner Clyburn for her role in tackling 
this issue and seeking vital State input throughout the process. While 
it is hard to quantify program savings that are a direct result of 
State action, it is safe to say it is in the millions of dollars.
    While, other than in our 2013 resolution, NARUC has not taken a 
specific position on whether other reforms are needed, Appendix A to my 
testimony includes a list of ideas offered by individual NARUC members 
and staff that work on Lifeline on a regular basis. The suggestions 
have not been considered or endorsed by NARUC or any specific State 
commission.\3\ Furthermore, the FCC could refer to the Federal State 
Joint Board questions on further reforms to address waste, fraud and 
abuse.
---------------------------------------------------------------------------
    \3\ In gathering information for this hearing, NARUC asked for 
suggestions on reforming the program. NARUC specified that we would not 
attribute particular responses to any State or individual. This 
anonymity encouraged a broader range of recommendations.

    Question 1b. Do you believe that we should cap the program and 
establish specific benchmarks to measure programmatic success before we 
expand this program that, quite frankly, a lot of people do not have 
confidence in?
    Answer. NARUC and the States are sensitive to growth in the fund 
and the associated contribution factor, but we have not taken a 
specific position on whether the program should be capped or be given a 
budget. Neither have I personally. On the question of whether specific 
benchmarks to measure programmatic success should be established prior 
to the program being expanded, NARUC, once again, doesn't have a 
specific position. NARUC supports expanding the program to cover 
broadband services and we have called for improved oversight and 
eligibility verification procedures for the program overall. Measuring 
programmatic success seems prudent for any publicly funded program.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Amy Klobuchar to 
                 Commissioner Ronald A. Brise
    Question 1. Commissioner Brise, you mentioned that Florida has a 
real-time verification procedure for Lifeline eligibility. Can you 
explain how this system works and if this is something that can be 
scaled on a national level?
    Answer. The Florida Public Service Commission (FPSC) has worked 
diligently to streamline the Lifeline enrollment process and to 
eliminate the possibility of fraud, waste, and abuse. The Florida 
Lifeline Coordinated Enrollment Process is a streamlined, efficient, 
and verifiable process consistent with the vision of the FCC. The FCC 
has used the Florida Coordinated Enrollment Process as an example in 
both the 2012 Lifeline Reform Order (FCC 12-11, Sec. 175), and 2015 
Lifeline Second Further Notice of Proposed Rulemaking, Order on 
Reconsideration, Second Report and Order, and Memorandum Opinion and 
Order (FCC 15-71, Footnote 215). It is the type of process which could 
be adapted for national use provided confidentiality requirements are 
adhered to. Florida Statutes provide that personal identifying 
information of a Lifeline participant must be kept confidential.
    Applicants in Florida can enroll in Lifeline by using the FPSC/
Florida Department of Children and Families (DCF) Lifeline Coordinated 
Enrollment Process, or the FPSC On-Line Lifeline Coordinated Enrollment 
Process for Applicants already Participating in Medicaid, Supplemental 
Nutrition Assistance Program (SNAP), or Temporary Assistance to Needy 
Families (TANF). Eligible Telecommunications Carriers (ETCs) can 
receive real-time verification of applicants participating in the 
Medicaid, SNAP, or TANF programs by logging in to the DCF computer 
portal.
Florida Public Service Commission (FPSC)/Florida Department of Children 
        and Families (DCF) Lifeline Coordinated Enrollment Process
    A Florida consumer applying for Medicaid, SNAP, or TANF must apply 
for the assistance through DCF which is the administrator of those 
programs in Florida. Included within DCF's application is a question 
asking whether the applicant wants to receive a $9.25 per month 
discount on their phone service from the Lifeline Assistance program if 
approved by DCF to receive one of its Lifeline-qualifying programs.
    If the applicants answer in the affirmative, they are asked if they 
presently have phone service and if so, what their phone number is and 
whose name is on the bill. They are then asked to choose the name of 
their telephone provider from a drop-down menu which appears with the 
names of all the Florida ETCs. If an applicant checks that they do not 
presently have phone service but want to receive Lifeline Assistance, 
they are advised to contact their local provider and sign up for 
service.
    The application then lists all the attestations and certifications 
required in the Lifeline Reform Order, and asks if the residential 
address listed on the application is permanent or temporary. The 
applicants have to check whether they have read and understand each of 
the certifications.
    The DCF holds this information until a determination is made as to 
whether the applicant gets approved for Medicaid, SNAP, or TANF. Once 
an applicant has been approved for one of these programs, and has 
indicated they want to participate in the Lifeline program, the DCF 
computer automatically sends a message to the FPSC computer indicating 
this person has been approved for a Lifeline qualifying program and has 
requested Lifeline Assistance.
    The FPSC computer automatically queries the DCF message to retrieve 
the name of the applicant's ETC provider. The FPSC computer then 
generates an automatic message to the appropriate ETC advising them 
that it has a Lifeline applicant's information available for retrieval 
on the FPSC's confidential website. The only time an ETC receives the 
message from the FPSC is when an applicant has been certified that they 
participate in Medicaid, SNAP, or TANF. The ETC can only view the 
Lifeline applications of applicants who have applied to that specific 
ETC through the coordinated enrollment process.
    The ETC retrieves the Lifeline applicant's information by logging 
in to the confidential FPSC website to download the spreadsheet with 
the names, addresses and other information of the applicants. The 
spreadsheet indicates whether the application was originated on the DCF 
website or the FPSC (see below) website.
    By Florida Statute, ETCs have 60 days to place the applicant on 
Lifeline. By FPSC rule, the ETC has to apply the Lifeline credit back 
to the date of the FPSC e-mail message sent to them advising that an 
applicant has been approved for Lifeline.
Florida PSC On-Line Lifeline Coordinated Enrollment Process for 
        Applicants 
        Already Participating in Medicaid, SNAP, or TANF
    Consumers already participating in Medicaid, SNAP, or TANF can 
apply for Lifeline at: https://secure.floridapsc.com/
(S(ui5byg45jksr2efy0c0x0k45))/public/lifeline
/lifelineapplication2.aspx
    Lifeline applications on the FPSC website are available in English, 
Spanish, and Creole. The applicants provide their name, address, 
telephone number, date of birth, and last four digits of their social 
security number. They indicate whether their address is permanent or 
temporary, and whether they have a different billing address. They 
select the name of their provider from a drop-down box listing all 
Florida ETCs, and then indicate whether they are participating in 
Medicaid, SNAP, or TANF. The application includes all the attestations 
and certifications required in the Lifeline Reform Order.
    Once the applicant agrees to the terms and conditions at the bottom 
of the application and hits the submit button, the FPSC computer 
automatically conducts a query in the DCF computer to verify the 
applicant is actually participating in the program(s) checked by the 
applicant. If the DCF computer response message confirms participation 
in a qualifying Lifeline program, the FPSC computer automatically 
generates an e-mail to the appropriate ETC that it has a Lifeline 
applicant's information available for retrieval on the FPSC 
confidential website.
    If the DCF computer cannot verify participation in the Lifeline 
qualifying program, FPSC staff generates a letter to the applicant 
notifying them we could not confirm participation in the Lifeline 
qualifying program they checked. We include a hard-copy Lifeline 
application with the letter along with a listing of all Florida ETCs 
and FPSC staff telephone numbers if assistance is needed.
    If the applicant desires to qualify using a Lifeline qualifying 
program other than Medicaid, SNAP, or TANF, they are directed to use a 
hard-copy Lifeline application which can be downloaded from the FPSC 
website. Applicants wishing to qualify using Supplemental Security 
Income, Federal Public Housing Assistance, Low-Income Home Energy 
Assistance Program, National School Lunch Free Lunch Program, or Bureau 
of Indian Affairs Programs can complete this form, and submit it to 
their telephone provider along with verification that they are 
currently participating in one of these programs. A list of acceptable 
documentation is included on the application and can be viewed at: 
http://www.floridapsc.com/utilities/telecomm/lifeline/LifelinePDFs/
ApplicationEnglish.pdf.
Real-Time Computer Portal Verification
    In 2008, the FPSC and the Florida DCF began working on the concept 
of a computer portal which would allow ETCs to verify in real-time 
whether Lifeline applicants are enrolled in a DCF qualifying eligible 
program (SNAP, TANF, or Medicaid). The ETC enters the first and last 
names of the person, the last four digits of their social security 
number, and their date of birth.
    DCF's computer automatically replies in real-time with information 
as to whether that person is or is not participating in a DCF 
qualifying Lifeline program (without identifying the program). 
Certification and verification can be accomplished using this process 
if the applicant, in the case of certification, or an existing Lifeline 
customer in the case of verification, participates in the SNAP, TANF, 
or Medicaid programs which are administered by the DCF. If a program 
other than Food Stamps, TANF, or Medicaid is used for certification, 
the provider would have to turn to the agency administering that 
program, which could be the Department of Education (free school lunch 
program), the Social Security Administration (Supplemental Security 
Income), or a county-level agency (Low-Income Home Energy Assistance 
Plan). However, FPSC data shows that over ninety percent of applicants 
apply using the Lifeline automatic enrollment process since they 
qualify for Lifeline via participation in SNAP, TANF, or Medicaid.
    As the GAO witness, Michael Clements, stated at the hearing the 
data needed to confirm eligibility resides at the State level. About 
seventeen States currently utilize their social service databases to 
confirm eligibility and about another seven are considering making the 
jump. The FCC has realized the difficulty in creating a national 
eligibility verification database. Congress and the FCC should be 
collaborating with the States to incentivize the use of State 
databases. The Federal government can learn much from the States that 
utilize their databases, such as Florida. Working with States to 
utilize their social service databases to verify eligibility is most 
likely the quickest, easiest and least costly way to reach a nearly 
universal eligibility verification system. This would be a perfect 
issue to refer to the Federal State Joint Board on Universal Service.

    Question 2. Commissioner Brise, Mr. Bergman and Ms. Gonzalez, how 
would you propose verification for Lifeline eligibility if the program 
was expanded to broadband?
    Answer. NARUC supports expanding the program to cover broadband 
services and we have called for improved eligibility verification 
procedures for the program overall. We have not taken a position on 
whether the eligibility criteria should be modified when the program is 
expanded to include broadband. On eligibility, NARUC adopted a 
resolution in 2013 that specifically urged the FCC to ``promptly 
initiate a collaborative process with the States to develop and 
implement a mechanism for States and/or the Universal Service 
Administrative Company to efficiently administer determination of 
eligibility and recertification for consumers to participate in the 
Lifeline program in an effort to minimize waste, fraud and abuse, and 
to learn from State Lifeline enrollment and recertification processes, 
databases and systems.'' \4\ The resolution also encouraged the FCC to 
ensure the national lifeline accountability database (NLAD or 
duplicates data base) and eligibility databases are up and running by 
the end of 2013. While the NLAD is up and running the national 
eligibility database is still a work in progress. As previously stated, 
Congress and the FCC should be incentivizing States to use their 
databases to confirm eligibility. NARUC will be considering a policy 
resolution at our upcoming Summer Meeting in New York City on ``ETC 
Designation for Lifeline Broadband Services.'' The draft resolution 
notes that the FCC's Second FNPRM on Lifeline seeks comment on whether 
the national designation of ETCs for Broadband Lifeline Service would 
be preferable to the state-by-state ETC designation process currently 
used for Lifeline Service (see para. 140, pg. 51). Specifically, the 
draft resolution would urge the FCC to refrain from disrupting the 
existing Federal-State partnership in the provision of Lifeline 
Services by preempting the authority of States to designate ETCs for 
the provision of advanced telecommunications services. Rather or not 
the resolution is adopted, as noted in my testimony at the hearing, 
States play an integral role in combating waste, fraud and abuse in the 
program. While it is difficult to measure the amount of savings as a 
result of collective State policing of the program it is fair to say it 
is in the millions. Therefore, it makes little sense to remove States 
from their role in administering and policing the program.
---------------------------------------------------------------------------
    \4\ NARUC Resolution to Improve Lifeline Annual Recertification 
Process, adopted July 24, 2013, online at: http://www.naruc.org/
Resolutions/Resolution%20to%20Improve%20Lifeline%20Ann
ual%20Recertification%20Process.pdf.
---------------------------------------------------------------------------
                                 ______
                                 
     Response to Written Question Submitted by Hon. John Thune to 
                            Michael Clements
    Question. Based on studies submitted by the FCC, the GAO Report 
concluded that many low-income households would choose to subscribe to 
telephone service even without the subsidy. To reduce waste, fraud, and 
abuse in the program and ensure it is working efficiently, would you be 
in favor of a rule that limits Lifeline benefits only to consumers who 
do not already subscribe to phone service, broadband service, or a pay 
TV service?
    Answer. We did not examine alternative approaches to determine 
eligibility, and therefore we have not conducted the work necessary to 
recommend a particular approach. The studies we reviewed suggest that 
many low-income households would choose to subscribe to telephone 
service in the absence of the Lifeline subsidy; this is because 
household demand for telephone service--even among low-income 
households--is relatively insensitive to changes in the price of the 
service and household income. Therefore, we recommended that FCC 
conduct a program evaluation to determine the extent to which the 
Lifeline program is efficiently and effectively reaching its 
performance goals (GAO-15-335). Such an evaluation might reveal that 
FCC could reduce the eligible population, while better meeting its dual 
goals to increase subscribership and reducing the contribution burden. 
Reducing the eligible population might allow FCC to reduce the 
contribution burden, increase the reimbursement rate to facilitate 
inclusion of broadband, or both, while ensuring that the Lifeline 
program meets its performance goals. In June 2015, FCC sought comment 
on modifying the way low-income households qualify for Lifeline to, as 
it noted, target the program to low-income consumers most in need of 
the support.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Joe Manchin to 
                            Michael Clements
    Question 1. The Lifeline Program, originally created in 1985, can 
and should be a targeted means of providing subsidies to those who are 
truly in need of assistance, but, first, we must address the rampant 
waste, fraud and abuse that made the program a household name.
    Question 1a. Do you believe that the enacted reforms to the 
Lifeline program are tough enough?
    Answer. In 2012, FCC adopted a Reform Order that sought to improve 
the Lifeline program's internal controls, addressing problems we 
identified in 2010 (GAO-11-11). Among the key reforms, FCC implemented 
the National Lifeline Accountability Database, which companies query to 
verify the applicant is not already receiving Lifeline services, and 
initial eligibility verification and annual recertification procedures, 
which require companies to verify eligibility at enrollment and 
annually through recertification. As we noted, these reform efforts 
contributed to declines in enrollment and disbursements (GAO-15-335). 
In particular, enrollment declined from 18.1 million in 2012 to 12.4 
million in 2014. Thus, FCC's reform efforts appear to have resolved 
some problems with duplicate and ineligible enrollment. However, at 
this time, we cannot say whether the reforms have eliminated all waste, 
fraud, and abuse. We have ongoing work, which we anticipate completing 
in fall 2015, assessing the internal controls of the Lifeline program 
that could better address this question.

    Question 1b. Do you believe that we should cap the program and 
establish specific benchmarks to measure programmatic success before we 
expand this program that, quite frankly, a lot of people do not have 
confidence in?
    Answer. We did not examine a program cap, and therefore we have not 
conducted the work necessary to answer this question. However, in our 
March 2015 report, we noted that many low-income households would 
choose to subscribe to telephone service in the absence of the Lifeline 
subsidy (GAO-15-335). Thus, we reported that FCC might reduce the 
eligible population, while better meeting its dual goals to increase 
subscribership and reduce the contribution burden. Regarding benchmarks 
for success, on two occasions we have recommended that FCC take action 
in this direction. In 2010, we recommended that FCC define performance 
goals and develop quantifiable measures for the Lifeline program (GAO-
11-11). FCC subsequently established three outcome-based performance 
goals; FCC is working on defining performance measures that it will use 
to evaluate progress towards the performance goals. In our March 2015 
report, we recommended that FCC conduct a program evaluation to 
determine the extent to which the Lifeline program is efficiently and 
effectively reaching its performance goals. Such an evaluation could 
assist FCC in making changes to improve the design or management of the 
program.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. John Thune to 
                             Scott Bergmann
    Question 1. Based on studies submitted by the FCC, the GAO Report 
concluded that many low-income households would choose to subscribe to 
telephone service even without the subsidy. To reduce waste, fraud, and 
abuse in the program and ensure it is working efficiently, would you be 
in favor of a rule that limits Lifeline benefits only to consumers who 
do not already subscribe to phone service, broadband service, or a pay 
TV service?
    Answer. CTIA supports an efficient and effective Lifeline program 
that recognizes all Americans' preference for wireless, including low-
income consumers. For this reason, the FCC's reforms and modifications 
to the Lifeline program should ensure wireless remains a choice for low 
income consumers.
    The wireless industry has a strong incentive to ensure an efficient 
Lifeline program because wireless consumers and providers bear 44 
percent of the total Federal universal service contribution burden to 
support high-cost, E-Rate, rural health and Lifeline programs. Thus, 
CTIA continues to encourage the FCC to adopt tools to evaluate the 
effectiveness of Lifeline and other Federal USF programs.
    CTIA agrees with GAO that better tools to monitor the effectiveness 
of the program, including the efficacy of the current eligibility 
requirements, would assist in improving program administration. Data 
available today show that, in the time since wireless carriers began 
providing Lifeline, the gap in telephone penetration between low-income 
households and other households has been cut nearly in half, from about 
6 percent to about 3 percent. Thus, we believe that the program has 
helped consumers without service to obtain much-needed connections.
    Consideration of eligibility proposals should also take into 
account the challenging economic situation faced by typical Lifeline 
consumers. For example, data from a representative wireless ETC found 
that the average Lifeline consumer has an annual income of $14,000 and 
is about 50 years old, while about a third have some form of 
disability. CTIA looks forward to working with Congress and the FCC to 
adopt meaningful tools to evaluate the effectiveness of Lifeline, 
modify the program as appropriate to maximize its ability to achieve 
its goals, and recognize low-income consumer preference for wireless.

    Question 2. The FCC recently changed its definition of 
``broadband'' to increase it from 10 Mbps to 25 Mbps. I am concerned 
about the unintended consequences that the new definition may have for 
low-income citizens who benefit from Lifeline. If the FCC moves to 
expand Lifeline to broadband, what challenges could the new definition 
of broadband pose to Lifeline providers and consumers who participate 
in the program?
    Answer. CTIA shares your concerns about the unintended consequences 
of defining broadband services in ways that may not reflect the 
preferences of all Americans, including low-income consumers. For this 
reason, the FCC's reforms and modifications to the Lifeline program 
should ensure low income consumers can choose wireless to meet their 
evolving communications needs.
    In its recent Section 706 report, the FCC concluded that it would 
treat ``advanced communications capability'' as service providing at 
least 25 Mbps down and 3 Mbps up. CTIA believes that this definition 
fails to fully capture the significant consumer adoption of mobile 
broadband services. Indeed, considering low income consumers alone, 
recent data from the Pew Research Center show that low-income 
households are twice-as likely to rely on wireless for occupational or 
medical communications as higher-income households.
    In the universal service context, the FCC defines and support 
broadband services at other thresholds. In its recent Lifeline Further 
Notice of Proposed Rulemaking, the FCC has asked a number of questions 
about how Lifeline broadband services should be defined, including by 
looking at the services that are typically offered and subscribed to in 
urban areas. CTIA will continue to support universal service broadband 
standards that correspond to the offerings that consumers are 
purchasing in the marketplace, and are set based on competitively and 
technologically neutral standards consistent with the direction 
established by Congress in Sec. 254(b).

    Question 3. Several carriers that entered the Lifeline market in 
recent years have chosen to offer free monthly service and handsets to 
low-income consumers. This practice raises questions about whether the 
program should fully subsidize Lifeline services, particularly when the 
size of the Universal Service Fund continues to grow. Should Lifeline 
subscribers be required to pay some amount of money in order to be 
eligible for the program?
    Answer. CTIA supports an efficient and effective Lifeline program 
that recognizes low-income consumer preferences for wireless. Wireless 
participation in the Lifeline program has brought competition and 
innovative service offerings to low income consumers. Wireless has 
continuously added services, including increasing voice and text, while 
operating under a consistent subsidy level. For this reason, the FCC's 
reforms and modifications to the Lifeline program should ensure 
wireless remains a choice for low income consumers.
    CTIA also supports an efficient and effective Lifeline program that 
deters waste, fraud and abuse. The wireless industry has a strong 
incentive to ensure an efficient Lifeline program because wireless 
consumers and providers bear 44 percent of the total Federal universal 
service contribution burden to support high-cost, E-Rate, rural health 
and Lifeline programs. CTIA believes that the best way to ensure that 
only eligible consumers participate in the program is for the 
Commission to act on its 2012 commitment to provide an automated 
mechanism for determining customer eligibility. CTIA is pleased that 
the Commission has sought comment on this issue in its June 2015 
Lifeline Notice of Proposed Rulemaking.
    With respect to a minimum charge or co-payment, we remain concerned 
about the consequences of limiting eligibility in Lifeline to low-
income consumers who can pay a minimum charge. Minimum payments present 
unique logistical issues for low-income consumers who are less likely 
to have credit cards or even bank accounts to facilitate a payment. 
CTIA will continue to work with the Commission and other stakeholders 
to adopt meaningful tools to evaluate the effectiveness of Lifeline, 
modify the program as appropriate to maximize its ability to achieve 
its goals, and recognize low-income consumer preference for wireless.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Roger F. Wicker to 
                             Scott Bergmann
    Question 1. Mr. Bergmann, would expanding the Lifeline program to 
include broadband be likely to increase the size of the funding 
requirements associated with Lifeline? Commissioner O'Rielly has 
suggested that it is time to consider a cap on the size of the Lifeline 
program. Why shouldn't the Lifeline program be subject to a cap in the 
way that other portions of the USF program are?
    Answer. To evaluate the impact of the FCC's proposed changes to the 
program, it will be important to consider the services supported, the 
scope of eligible consumers, and the subsidy amount proposed. We 
appreciate your question because the wireless industry has a strong 
incentive to ensure an efficient and effective Lifeline program that 
minimizes the contribution burden on consumers. Wireless consumers and 
providers bear 44 percent of the total Federal universal service 
contribution burden to support high-cost, E-Rate, rural health and 
Lifeline program. CTIA looks forward to working with Congress and the 
FCC to carefully evaluate the impact of the proposed expansion of the 
program, and to continue recognize low-income consumer preference for 
mobile wireless services.
    While CTIA supports an efficient and effective Lifeline program, we 
remain concerned about establishing a cap on Lifeline that may 
inadvertently limit low-income consumer participation. Lifeline is 
different from other universal service programs that the FCC 
administers, such as high-cost, because it is means-tested and directed 
to the individual consumer. In the recent Further Notice of Proposed 
Rulemaking on Lifeline reform, the FCC seeks comment on issues that 
could arise if the program were to be capped. For example, the FCC asks 
how it would determine which consumers would be kept out of the program 
if a cap was reached or whether the FCC should reduce the support 
amount if more eligible consumers entered the program, and if so, how 
low-income consumers could budget from month to month. Particularly 
given the profile of the typical Lifeline consumer--data from a 
representative wireless ETC found that the average Lifeline consumer 
has an annual income of $14,000 and is about 50 years old, while about 
a third have some form of disability--implementation of a cap presents 
a difficult challenge.
    CTIA looks forward to working with Congress and the FCC to adopt 
meaningful tools to evaluate the effectiveness of Lifeline, modify the 
program as appropriate to maximize its ability to achieve its goals, 
and recognize low-income consumer preference for wireless.

    Question 2. Mr. Bergmann, What impact does the FCC's recent move to 
classify mobile broadband as Title II have on wireless ability to meet 
consumer demand?
    Answer. CTIA is concerned that the FCC's Open Internet Order will 
add regulatory burdens and uncertainty that will harm low income 
consumers and create barriers to low income adoption. The FCC's Open 
Internet decision was unnecessary because mobile consumers already have 
access to an open mobile Internet and a world-leading mobile broadband 
ecosystem. The Commission's decision to apply burdensome rules and 
monopoly-era Title II common carrier regulation to mobile broadband 
will only chill investment and innovation and increase costs for 
consumers.
    As an example, consumers today can choose from over 700 different 
service offerings with varying levels of usage and price which is why 
no one is surprised that more than 44 percent of households are 
``cutting the cord'' for wireless, including an even greater percentage 
of low-income households. However, the FCC's unwillingness to recognize 
the benefits of pro-consumer offerings based on a set allowance of data 
or new innovative offerings like zero rating may inhibit the 
development of services that would enable more consumers, including 
low-income Americans, to adopt mobile broadband services. Mobile 
wireless data allowances appropriately distribute the cost of service 
among consumers by limiting subsidies to heavy mobile data users. Zero 
rating enables service providers and application developers to incubate 
competitive services by offering innovative content (e.g., music, 
games, or video) at little or no charge to consumers. Experimentation 
and differentiation with service offerings to reach low-income 
consumers is what we need to address the Lifeline challenge. 
Unfortunately, the FCC's approach to net neutrality runs directly 
counter to this principle and may lead to a one-size-fits-all Internet 
that will fail to meet the needs of low-income consumers.
    Instead of promoting greater industry investment and innovation, 
the FCC opted to resuscitate a command-and-control regulatory regime, 
including a process where innovators may be forced to first seek 
permission from the FCC before rolling out new services. The FCC's 
decision ignores substantial evidence demonstrating that the 
competitive, constantly innovating mobile broadband industry provides 
Americans with faster networks, a wide variety of devices, and an array 
of service plans designed to meet the needs of high and low income 
consumers. CTIA is hopeful that the courts will recognize the error in 
the Commission's order. In the meantime, CTIA looks forward to working 
with Congress to preserve an open Internet, end the substantial 
uncertainty around the FCC's order, and ensure America's wireless 
industry has the flexibility to develop and offer innovative service 
offerings that will incent low income consumers to adopt broadband.

    Question 3. Mr. Bergmann, are wireless companies concerned about 
the overall Universal Service Fund burden on your consumers? Do you 
favor shifting funds from other USF programs to fund Lifeline?
    Answer. As noted in our response to Question 1, wireless consumers 
and providers bear 44 percent of the total Federal universal service 
contribution burden to support high-cost, E-Rate, rural health and 
Lifeline program. To reduce the overall universal service burden, CTIA 
has advocated for tools to evaluate the effectiveness and efficiency of 
all of the universal service programs.
    CTIA recognizes that Congress established multiple universal 
service programs to meet specific objectives. As each of these programs 
evolves to meet new communications needs, we encourage Congress to take 
an active role in making sure that these programs work efficiently, 
individually and collectively, to achieve the broad goals of increasing 
connectivity. For example, the FCC currently provides the largest 
single share of universal service support, which is nearly four times 
the amount of support for Lifeline, to wireline companies serving rural 
areas. As the FCC and Congress evaluate the overlap and relationship 
between these programs, CTIA urges policymakers to continue to 
recognize consumer preference for mobile wireless services.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Joe Manchin to 
                             Scott Bergmann
    Question 1. The Lifeline Program, originally created in 1985, can 
and should be a targeted means of providing subsidies to those who are 
truly in need of assistance, but, first, we must address the rampant 
waste, fraud and abuse that made the program a household name.

    Question 1a. Do you believe that the enacted reforms to the 
Lifeline program are tough enough?
    Answer. CTIA supports an efficient and effective Lifeline program 
that recognizes low-income consumer preferences for wireless. The 
wireless industry has a strong incentive to ensure an efficient 
Lifeline program because wireless consumers and providers bear 44 
percent of the total Federal universal service contribution burden to 
support high-cost, E-Rate, rural health and Lifeline programs. The 
contribution burden on wireless consumers and providers has increased 
as almost half of all U.S. households have ``cut the cord'' for 
wireless which will continue to grow as consumers take advantage of the 
value that competitive wireless services offer.
    The Commission made significant strides in reducing waste, fraud, 
and abuse through its 2012 Lifeline Reform Order and subsequent 
implementation efforts. CTIA supports those efforts, though there is 
more to be done. CTIA continues to support the Commission's 2012 
commitment to provide an automated mechanism for determining customer 
eligibility. This key reform, which would better align eligibility 
decisions with the government agencies that administer underlying 
benefit programs, is particularly important as the Commission 
contemplates expanding the Lifeline program. CTIA is pleased that the 
Commission has sought comment on this issue in its June 2015 Lifeline 
Notice of Proposed Rulemaking, and CTIA will continue to work with the 
Commission and other stakeholders towards a solution that ensures that 
only eligible consumers receive Lifeline benefits. In addition, CTIA 
continues to encourage the FCC to adopt tools to evaluate the 
effectiveness of Lifeline and other Federal USF programs.

    Question 1b. Do you believe that we should cap the program and 
establish specific benchmarks to measure programmatic success before we 
expand this program that, quite frankly, a lot of people do not have 
confidence in?
    Answer. CTIA and our member companies support an efficient and 
effective Lifeline program. We agree that specific benchmarks to 
measure programmatic success should be developed. CTIA looks forward to 
working with Congress and the FCC to adopt meaningful tools to evaluate 
the effectiveness of Lifeline, strengthen program administration, and 
recognize low-income consumer preference for mobile wireless services.
    In the recent Further Notice of Proposed Rulemaking on Lifeline 
reform, the FCC seeks comment on issues that could arise if the program 
were to be capped. We should carefully consider whether a cap is 
appropriate for the Lifeline program. Lifeline is different from other 
universal service programs that the FCC administers, such as high-cost, 
because it is means-tested and the benefits flow directly to individual 
consumers. In addition, The FCC asks how it would determine which 
consumers would be kept out of the program if a cap was reached or 
whether the FCC should reduce the support amount if more eligible 
consumers entered the program, and if so, how low-income consumers 
could budget from month to month. Particularly given the profile of the 
typical Lifeline consumer--data from a representative wireless ETC show 
that the average Lifeline consumer has an annual income of $14,000 and 
is about 50 years old, while about a third have some form of 
disability--implementation of a cap presents a difficult challenge. For 
these reasons, CTIA is concerned that establishing a cap on Lifeline 
may limit low-income consumer participation and we believe that other 
reforms can ensure an efficient and effective Lifeline program.
                                 ______
                                 
    Response to Written Question Submitted by Hon. Amy Klobuchar to 
                             Scott Bergmann
    Question. Commissioner Brise, Mr. Bergmann and Ms. Gonzalez, how 
would you propose verification for Lifeline eligibility if the program 
was expanded to broadband?
    Answer. CTIA continues to support the Commission's 2012 commitment 
to provide an automated mechanism for determining customer eligibility. 
This key reform, which would better align eligibility decisions with 
the government agencies that administer underlying benefit programs, is 
particularly important as the Commission contemplates expanding the 
Lifeline program. CTIA is pleased that the Commission has sought 
comment on this issue in its June 2015 Lifeline Notice of Proposed 
Rulemaking, and CTIA will continue to work with the Commission and 
other stakeholders towards a solution that ensures that only eligible 
consumers receive Lifeline benefits.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. John Thune to 
                            Randolph J. May
    Question 1. Based on studies submitted by the FCC, the GAO Report 
concluded that many low-income households would choose to subscribe to 
telephone service even without the subsidy. To reduce waste, fraud, and 
abuse in the program and ensure it is working efficiently, would you be 
in favor of a rule that limits Lifeline benefits only to consumers who 
do not already subscribe to phone service, broadband service, or a pay 
TV service?
    Answer. While such a restriction has some appeal as a matter of 
policy, consistent with the idea that Lifeline service should be a 
``safety net,'' implementation of such a rule may be problematical in 
certain respects. For example, although it may be easy to require a 
subscriber certification to the effect that phone, broadband, or pay TV 
subscriptions do not already exist, in today's environment, with 
multiple providers for each of these services, and variations on the 
level and quality of the services, actual verification would not 
necessarily be easy absent a specific delineation of the services. It 
would be necessary for this purpose to define with some specificity the 
level of service already subscribed to that would be disqualifying for 
subsidy eligibility.

    Question 2. The FCC recently changed its definition of 
``broadband'' to increase it from 10 Mbps to 25 Mbps. I am concerned 
about the unintended consequences that the new definition may have for 
low-income citizens who benefit from Lifeline. If the FCC moves to 
expand Lifeline to broadband, what challenges could the new definition 
of broadband pose to Lifeline providers and consumers who participate 
in the program?
    Answer. In my prepared written testimony at footnote 12, I noted 
the FCC's recent ratcheting up of the definition of broadband to 25 
Mbps from 10 Mbps. I stated that, ``[o]bviously, providing `broadband' 
service at higher speeds is more costly.'' And, I said: ``[I]t is 
unlikely the proponents of expansion of Lifeline to include broadband 
will be receptive to providing a level of service the Commission has 
deemed not to be `broadband.' '' Indeed, Gigi Sohn, counselor to FCC 
Chairman TomWheeler, recently stated at a fiber-to-the-home conference 
that 25 Mbps represented a ``snail's pace'' for broadband. So, if the 
Commission were to expand the program to include broadband, the 
challenge posed by the FCC's recent definitional change is that the 
Lifeline program necessarily would become even more costly than it 
otherwise would be absent such definitional change. Many broadband 
providers offer tiered levels of service so that the price increases as 
bandwidth availability increases, demonstrating that the cost of 
providing service increases with bandwidth speed. It is almost certain 
there will be ongoing efforts, at least with the current composition of 
the FCC, to continue to ratchet up the definition of broadband service 
so that it encompasses speeds far beyond 25 Mbps, thereby increasing 
the amount of the subsidy.

    Question 3. Several carriers that entered the Lifeline market in 
recent years have chosen to offer free monthly service and handsets to 
low-income consumers. This practice raises questions about whether the 
program should fully subsidize Lifeline services, particularly when the 
size of the Universal Service Fund continues to grow. Should Lifeline 
subscribers be required to pay some amount of money in order to be 
eligible for the program?
    Answer. In light of the expansion of the Lifeline fund in recent 
years, I understand why some call for initiation of some form of ``co-
pay'' requirement on the theory that recipients should have ``some skin 
in the game.'' But I would prefer avoiding imposition of such 
requirement, at least for now, as long as other reforms aimed at 
curbing fraud or abuse are implemented and given a chance to work. 
While, as GAO has reported, there undoubtedly are many (perhaps even 
most) recipients of Lifeline subsidies who would subscribe to phone 
service absent receiving ``free'' service, there surely are other 
eligible low-income persons who may decide not to do so after taking 
into account various other needs, such as for food, transportation, 
clothing, or the like. For those low-income persons who are truly in 
need of a ``safety net,'' and who prove their eligibility, it is 
preferable that they not be forced to choose among basic needs. This 
assumes that the benefit remains at a level consistent with the notion 
of a ``safety net.''
                                 ______
                                 
   Response to Written Question Submitted by Hon. Roger F. Wicker to 
                            Randolph J. May
    Question. Mr. May, you state in your testimony that you do not 
``favor Lifeline eligibility criteria that provide subsidies to those 
persons whose income places them above the federally-defined poverty 
level, or at least much above the poverty level.'' Do you favor 
tightening the eligibility criteria for Lifeline in some way to ensure 
that the program serves those people who need it the most? For example, 
eliminating categorical eligibility based on enrollment in programs 
such as Food Stamps or SSI, or changing the income eligibility criteria 
to make Lifeline available to only those persons who are at the 
federally-defined poverty level?
    Answer. Yes, I do have a concern about tying eligibility for the 
Lifeline program to other Federal programs whose eligibility 
requirements are above the federally-defined poverty level. The reason 
is that if the eligibility level increases much above the defined 
poverty level, the program becomes more than a ``safety net'' program. 
While I would not object per se to tying the Lifeline benefit to some 
other benefit program, I would prefer that such program to be 
administered to benefit those at, or at least close to, the federally-
defined poverty level. That way Lifeline remains a true ``safety net,'' 
not a program that benefits those further up the income scale.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Hon. Joe Manchin to 
                            Randolph J. May
    Question 1. The Lifeline Program, originally created in 1985, can 
and should be a targeted means of providing subsidies to those who are 
truly in need of assistance, but, first, we must address the rampant 
waste, fraud and abuse that made the program a household name.

    Question 1a. Do you believe that the enacted reforms to the 
Lifeline program are tough enough?
    Answer. No, the reforms adopted thus far are not sufficient. In my 
prepared testimony, I suggested additional reforms that should be 
considered and implemented, such as a record retention requirement 
applicable to the service providers and a possible prohibition on in-
person distribution of ``free'' phones at other than established retail 
outlets.

    Question 1b. Do you believe that we should cap the program and 
establish specific benchmarks to measure programmatic success before we 
expand this program that, quite frankly, a lot of people do not have 
confidence in?
    Answer. I am concerned about expansion of the Lifeline program to 
include broadband before additional reforms to curb fraud and abuse are 
implemented and shown to be effective. If the reforms are adopted and 
prove to be effective, in considering whether to expand the program to 
include broadband subscription subsidies, I would favor adoption of a 
projected budget for the program, as distinct from a inviolable hard 
cap with an automatic shut-off. The budget will be dependent on 
variables, such as defining the level of broadband services that 
qualify for support, defining the level of support per eligible 
recipient, projecting demand based on eligibility, and so forth. So, 
while a budget could be adopted for a specified period to aid in 
formulating the parameters of the program so it that remains fiscally 
responsible, I would prefer avoiding imposition of a hard cap that, per 
se, would require cutting off subsidies to those that otherwise meet 
eligibility requirements. For example, in the event of a severe 
economic downturn, which is not necessarily predictable, there may be 
more persons who qualify to receive subsidies than projected when 
formulating the budget. In my view, these persons should not be denied 
Lifeline service because a hard ``cap'' has been reached. This does not 
mean, of course, that the parameters of the program should not be 
constantly evaluated and adjusted to ensure that it is operated in a 
fiscally responsible manner. After all, all USF subsidies, whether for 
Lifeline or otherwise, are paid for by consumers--presently all users 
of interstate telecommunications services.
                                 ______
                                 
     Response to Written Question Submitted by Hon. John Thune to 
                          Jessica J. Gonzalez
    Question. Based on studies submitted by the FCC, the GAO Report 
concluded that many low-income households would choose to subscribe to 
telephone service even without the subsidy. To reduce waste, fraud, and 
abuse in the program and ensure it is working efficiently, would you be 
in favor of a rule that limits Lifeline benefits only to consumers who 
do not already subscribe to phone service, broadband service, or a pay 
TV service?
    Answer. I would not be in favor of the contemplated rule because I 
do not believe that such a rigid economic analysis fully captures the 
impact of the subsidy on low-income families. Many feel that access to 
communications services is a necessity and acquiring such services 
should be highly prioritized. For families that would otherwise qualify 
for Lifeline, taking on a bill for a communications services 
necessarily comes at the expense of other important needs, such as 
food, healthcare costs, clothing, school supplies, and any number of 
other things that so many take for granted. It does not suggest that 
providing these households with a modest subsidy is a poor use of 
funds.
    To demonstrate the plight of many low-income families, the Economic 
Policy Institute (EPI) provides a useful tool to calculate estimated 
family budgets in a variety of geographic regions.\1\ EPI's estimated 
budgets measure community-specific costs to determine how much income a 
family needs to attain ``a secure yet modest'' standard of living.
---------------------------------------------------------------------------
    \1\ Family Budget Calculator, Economic Policy Institute, http://
www.epi.org/resources/budget/.
---------------------------------------------------------------------------
    In Rapid City, South Dakota, just 2 hours west of the Chairman's 
hometown of Murdo, EPI estimates that a family of 3 (2 parents, 1 
child) needs to earn nearly $54,000 per year in order to cover housing, 
food, child care, transportation, healthcare, taxes, and other 
necessities. However, a family of 3 living at 135 percent of the 
Federal poverty guideline, and therefore eligible to receive Lifeline 
support, would earn slightly more than $27,000 per year--about half of 
what it actually needs to cover expenses.\2\ While a family living in 
these circumstances may prioritize access to communications in its 
budget, perhaps due to a desire to be able to contact 911 in an 
emergency, remain in touch with a child's school, or communicate with 
healthcare professionals, it is clear that such prioritization would 
have to come at the expense of other needs.
---------------------------------------------------------------------------
    \2\ 2015 Federal Poverty Guidelines--135 percent, Universal Service 
Administrative Company, http://www.usac.org/_res/documents/li/pdf/
handouts/Income_Requirements.pdf.
---------------------------------------------------------------------------
    For some families, this difficult balancing act can ultimately 
prove unsustainable, particularly when it comes to being able to afford 
a high-speed Internet access connection. Households that have had to 
cancel Internet access service overwhelmingly cite cost as the main 
reason why (43 percent cite cost vs. 21 percent citing loss of need or 
relevance).\3\ Smartphone users tell a similar story, with 44 percent 
of people making less than $30,000 per year reporting that they have 
had to cancel or suspend service due to the financial burden.\4\ It is 
important to note that these are precisely the people that the 
contemplated rule would exclude from Lifeline, even though they are 
ultimately unable to afford service. Perhaps it should not be a 
surprise that the adoption rate for people making less than $25,000 
dropped slightly between 2012 and 2013, from 48 percent to 47.2 
percent.\5\
---------------------------------------------------------------------------
    \3\ Dep't of Commerce, Nat'l Telecomm. & Info. Admin., Exploring 
the Digital Nation: Embracing the Mobile Internet (Oct. 2014), 
available at http://www.ntia.doc.gov/files/ntia/publications/
exploring_the_digital_nation_embracing_the_mobile_internet_10162014.pdf.

    \4\ Aaron Smith, ``U.S. Smartphone Use in 2015,'' Pew Research 
Center (April 1, 2015), available at http://www.pewinternet.org/2015/
04/01/us-smartphone-use-in-2015/.
    \5\ Computer and Internet Use in the United States: 2013, American 
Community Survey Reports at 3 (Nov. 2014), available at http://
www.census.gov/history/pdf/2013computeruse.pdf (reporting based on 2013 
Census data that 47.2 percent of households earning less than $25,000 
have high speed Internet access at home, down from 48 percent in 2012).
---------------------------------------------------------------------------
    In light of the information shared above, it is my contention that 
Lifeline is helping to meet our statutory Universal Service goals 
regardless of whether or not a struggling family would choose to 
subscribe to a communications service without the subsidy.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Joe Manchin to 
                          Jessica J. Gonzalez
    Question 1. The Lifeline Program, originally created in 1985, can 
and should be a targeted means of providing subsidies to those who are 
truly in need of assistance, but, first, we must address the rampant 
waste, fraud and abuse that made the program a household name.

    Question 1a. Do you believe that the enacted reforms to the 
Lifeline program are tough enough?
    Answer. I believe that the FCC's enacted reforms, along with 
aggressive enforcement actions, have gone a long way towards ridding 
Lifeline of instances of waste, fraud, and abuse. In fact, there is 
some evidence to suggest that the FCC's recent reforms may have placed 
too great a burden on some subscribers who would otherwise be eligible 
to receive the benefit.
    According to the testimony offered by Michael Clements of the 
Government Accountability Office at this hearing, of the eleven reforms 
contained in the FCC's 2012 reform order, eight have already been 
implemented.\1\ These tough reforms included a clarification of the 
one-per-household rule, audit requirements for a number of providers, 
ensuring that payments are based on actual support, establishing a 
uniform floor of eligibility criteria, automatic de-enrollment for 
subscribers not using the service, elimination of Link-Up support on 
non-tribal lands, an annual recertification procedure for all 
subscribers, and the creation of the National Lifeline Accountability 
Database. Of the three reforms that the FCC is still considering, only 
one directly addresses program integrity--the creation of an automatic 
eligibility verification procedure.
---------------------------------------------------------------------------
    \1\ Testimony of Michael Clements, Acting Director, Physical 
Infrastructure Issues, Government Accountability Office (June 2, 2015), 
available at http://www.gao.gov/assets/680/670687.pdf.
---------------------------------------------------------------------------
    The FCC's reforms, along with our improving economy, have greatly 
reduced the size of Lifeline in recent years. According to Commissioner 
Clyburn, the reforms ``have saved the fund over $2.75 billion, put the 
program on a sounder footing, eliminated duplicates and, according to 
reports since our reform, Lifeline has better efficiency indices when 
it comes to waste and fraud prevention, than most of our other 
universal service or Telecommunications Relay Service programs.'' \2\ 
Indeed, the overall size of the program has declined by about 25 
percent since 2012, and continues to shrink.\3\
---------------------------------------------------------------------------
    \2\ Statement of Commissioner Mignon Clyburn, Federal 
Communications Commission, Lifeline Modernization Notice of Proposed 
Rulemaking (rel. June 22, 2015), available at http://
transition.fcc.gov/Daily_Releases/Daily_Business/2015/db0622/FCC-15-
71A3.pdf.
    \3\ 2014 Annual Report, Universal Service Administrative Company, 
http://www.usac.org/_res/documents/about/pdf/annual-reports/usac-
annual-report-2014.pdf.
---------------------------------------------------------------------------
    However, I must point out that not all of these savings are 
indicative of waste, fraud, and abuse. Evidence suggests that a number 
of subscribers who no longer utilize Lifeline may have simply failed to 
comply with new and unfamiliar annual requirements to submit 
eligibility paperwork. As Commissioner Clyburn noted in a response to 
an inquiry from Senator Jeff Sessions shortly after many of the 2012 
reforms were implemented:

        ``Based on the results of the 2012 Lifeline recertification 
        process, approximately one-third of all subscribers that were 
        enrolled in the program in June 2012 were de-enrolled for 
        failure to recertify their eligibility. Approximately 0.5 
        percent of all subscribers subject to recertification responded 
        that they were no longer eligible. Just under 4 percent of the 
        total subscribers subject to recertification were determined to 
        be ineligible via a state administrator or an ETC accessing a 
        state eligibility database. The remaining consumers were de-
        enrolled for failure to respond to the recertification 
        attempts. Subscribers in this last group are not necessarily 
        ineligible for service; some may have simply failed to 
        recertify or decided they no longer wanted the benefit.'' \4\ 
        (emphasis added)
---------------------------------------------------------------------------
    \4\ Letter from Acting Chairwoman Mignon Clyburn to Senator Jeff 
Sessions (Sept. 27, 2013), available at http://www.budget.senate.gov/
republican/public/index.cfm/files/serve?File_id=10
178adb-99c4-4866-9265-a05870eff559.

    Moreover, since the 2012 reforms, FCC Chairman Wheeler has 
developed a USF strike force to stop fraud and abuse. The FCC, through 
enforcement actions, has proposed more than $90 million in fines 
against companies for violating rules. Additionally, FCC consent 
decrees have recovered $600,000 in payments to the U.S. Treasury and 
more than $400,000 in repayments to the Universal Service Fund (USF). 
Further, the FCC has issued citations to more than 300 Lifeline 
customers with duplicative subscriptions.\5\
---------------------------------------------------------------------------
    \5\ See Press Release, Federal Communications Commission, ``FCC 
Proposes Nearly $44 Million In Fines Against 3 Lifeline Providers, 
Brings Total Proposed Lifeline Fines to $90 Million in Past Three 
Months'' (Dec. 11, 2013), available at https://apps.fcc.gov/
edocs_public/attach
match/DOC-9324620A1.pdf.
---------------------------------------------------------------------------
    While I believe that a many government initiatives, including 
Lifeline, can be continually improved, and NHMC intends to fully 
participate in upcoming efforts to modernize Lifeline, the reforms that 
have been enacted have gone a very long way towards making sure that 
Lifeline is free of excessive waste, fraud, and abuse and ready to meet 
the needs of the 21st century.

    Question 1b. Do you believe that we should cap the program and 
establish specific benchmarks to measure programmatic success before we 
expand this program that, quite frankly, a lot of people do not have 
confidence in?
    Answer. I do not believe that it would be appropriate to cap 
Lifeline at a level that would require service to be denied to 
households that would otherwise be eligible.
    Lifeline was developed in furtherance of the FCC's statutorily 
defined goals to achieve ``universal'' service in this country and 
ensure that all Americans, including the poor, have access to 
affordable communications services. I believe that any cap on Lifeline 
that prevents an eligible household that requests the benefit from 
receiving it would frustrate our country's universal service goals.
    At the FCC, proponents of a cap on Lifeline have suggested capping 
it its current size--$1.6 billion.\6\ I think that would be a 
disastrous mistake. By all accounts, Lifeline is a severely 
underutilized program. Some estimates indicate that only a quarter to a 
third of eligible households currently subscribe to Lifeline. Capping 
the program at a level that would exclude so many potentially eligible 
households would be unwise.
---------------------------------------------------------------------------
    \6\ See Statement of Commissioner Michael O'Rielly, Federal 
Communications Commission, Lifeline Modernization Notice of Proposed 
Rulemaking (rel. June 22, 2015), available at http://
transition.fcc.gov/Daily_Releases/Daily_Business/2015/db0622/FCC-15-
71A6.pdf.
---------------------------------------------------------------------------
    I continue to believe that the best way to constrain the size of 
this program is to redouble our efforts at reducing the number of 
families living in poverty in this country. Given that the program's 
eligibility is tied to income or participation in other government 
benefit programs, the program will naturally decrease in size as people 
get back on their feet. If we are able to help families get out of 
poverty, they will no longer be eligible for Lifeline.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Amy Klobuchar to 
                          Jessica J. Gonzalez
    Question 1. Access to the Internet through reliable broadband 
connections is critical for our students to achieve success. FCC 
Commissioner Rosenworcel has talked about the need to address the 
``homework gap,'' which occurs when kids are not able to complete 
homework assignments because they do not have Internet access.

    Question 1a. Ms. Gonzalez, do you think that expanding the Lifeline 
program to broadband will help bridge this gap?
    Answer. I agree with Commissioner Rosenworcel that the ``homework 
gap'' is one of the cruelest parts of the digital divide. Simply put, 
students who find themselves on the wrong side of the ``homework gap'' 
are being denied access to an education. Completing basic tasks that we 
expect from our students, like completing a homework assignment or 
researching a term paper, are rendered extraordinarily difficult, if 
not impossible, for students who lack access to the Internet at home. 
Taking advantage of next-generation educational tools like online 
tutoring or accessing any number of supplemental learning materials is 
often out of reach for these students. Lifeline has the potential to 
help alleviate this problem.
    The data that reveals the ``homework gap'' is truly startling. 
Seven in ten teachers assign homework that requires broadband access 
yet one in three households do not subscribe to broadband services.\1\ 
Five million households with school-aged children are falling into this 
gap.\2\ A recent survey by the Hispanic Heritage Foundation and the 
Family Online Safety Institute revealed that nearly 100 percent of high 
school students report being required to access the Internet to 
complete homework assignments outside of school.\3\ Nearly 50 percent 
reported that they have been unable to complete a homework assignment 
because they did not have access to the Internet or a computer, and 42 
percent say they received a lower grade on an assignment because of 
lack of Internet access.\4\ Pew research shows that half of teachers in 
low-income communities say their students' lack of home broadband 
access has been a barrier to integrating technology into their 
lessons.\5\
---------------------------------------------------------------------------
    \1\ Remarks of Commissioner Jessica Rosenworcel, Taking the Pulse 
of the High School Student Experience in America, Hispanic Heritage 
Foundation, Washington, DC (April 29, 2015), available at https://
apps.fcc.gov/edocs_public/attachmatch/DOC-333274A1.pdf (``Remarks of 
Comr. Rosenworcel'').
    \2\ Id.
    \3\ Hispanic Heritage Foundation and Family Online Safety 
Institute, Taking the Pulse of the High School Student Experience in 
America (April 28, 2015), available at http://www.hispa
nicheritage.org/hispanic-heritage-foundation-mycollegeoptions-family-
online-safety-institute-and-other-partners-announce-findings-of-new-
study-titled-taking-the-pulse-of-the-high-school-student-experience/.
    \4\ Id.
    \5\ Remarks of Comr. Rosenworcel.
---------------------------------------------------------------------------
    According to Pew, ``Low-income households--and especially black and 
Hispanic ones--make up a disproportionate share'' of the five million 
households that find themselves on the wrong side of the ``homework 
gap.'' \6\ Indeed, nearly 40 percent of households with school-aged 
children that earn less than $25,000 per year lack broadband at 
home.\7\ For these families, being unable to afford a broadband 
connection is a major barrier to adoption.
---------------------------------------------------------------------------
    \6\ John B. Horrigan, ``The numbers behind the broadband `homework 
gap,' '' Pew Research Center Fact Tank (April 20, 2015) available at 
http://www.pewresearch.org/fact-tank/2015/04/20/the-numbers-behind-the-
broadband-homework-gap/.
    \7\ Id.
---------------------------------------------------------------------------
    Based on conversations that I have had with a friend who teaches 
fourth grade in a very poor Los Angeles suburb, in many classrooms 
across this country, far more than 40 percent of the students may lack 
broadband at home. A family of three (two parents, one child) earning 
less than $25,000 per year would be eligible to receive Lifeline 
support based on income as it would fall below 135 percent of the 
Federal poverty guidelines.\8\ While we clearly have a long way to go 
towards making sure that all of our students have the opportunity to 
succeed, helping make essential educational tools, like Internet 
access, more affordable is certainly the least that we can do. Lifeline 
is ready to help and is targeted to the families that need it the most.
---------------------------------------------------------------------------
    \8\ 2015 Federal Poverty Guidelines--135 percent, Universal Service 
Administrative Company, http://www.usac.org/_res/documents/li/pdf/
handouts/Income_Requirements.pdf.

    Question 1b. Do you think that the lack of affordable broadband 
access impacts our national shortage of workers educated in STEM 
fields?
    Answer. Yes, I do. Beyond STEM fields, if not remedied, lack of 
affordable broadband access may weaken our national workforce as a 
whole and make it difficult to fill even positions that we do not 
typically consider needing technical knowledge.
    To demonstrate our national challenge with boosting our STEM 
workforce, and the potential role that low broadband adoption rates 
could play, one needs to look no further than the Latino community. 
Latinos are among the fastest growing segments of our population and 
workforce and are expected to comprise 29 percent of the population by 
2060.\9\ However, Latinos are currently among the least likely to have 
home broadband, with nearly half of Latinos lacking a home 
connection,\10\ and the most likely to cite cost as the primary barrier 
to adoption.\11\ As a practical matter, it is exceedingly difficult for 
a student with and interest in pursuing a STEM career to act on that 
interest without access to a computer connected to broadband at home.
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    \9\ Sandra L. Colby and Jennifer M. Ortman, ``Projections of the 
Size and Composition of the U.S. Population: 2014 to 2060,'' U.S. 
Census Bureau (Mar. 2015), available at http://www.census.gov/content/
dam/Census/library/publications/2015/demo/p25-1143.pdf.
    \10\ Aaron Smith and Kathryn Zickuhr, Home Broadband 2013: Trends 
and demographic differences in home broadband adoption, Pew Research 
Center (Aug. 26, 2013), available at http://www.pewinternet.org/2013/
08/26/home-broadband-2013/.
    \11\ Dep't of Commerce, Nat'l Telecomm. & Info. Admin., Exploring 
the Digital Nation: Embracing the Mobile Internet at 15 (Oct. 2014), 
available at http://www.ntia.doc.gov/files/ntia/publications/
exploring_the_digital_nation_embracing_the_mobile_internet_10162014.pdf.

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    Given this reality, it is not surprising that Latinos are vastly 
underrepresented in the STEM workforce. Latinos held only 7 percent of 
the STEM jobs in 2011.\12\ Without action to ensure that more Latinos, 
and other underrepresented groups, are able to engage in this important 
field, our ability to compete globally as a country could be severely 
diminished.
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    \12\ Liana Christin Landivar, ``Disparities in STEM Employment by 
Sex, Race, and Hispanic Origin,'' U.S. Census Bureau (Sept. 2013), 
available at https://www.census.gov/prod/2013pubs/acs-24.pdf.
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    However, we risk jeopardizing more than STEM jobs if we are unable 
to help more Americans connect to broadband. By the end of the decade, 
nearly 77 percent of jobs will require some level of digital 
skills.\13\ We must ensure that everyone in this country can access the 
Internet and prepare themselves for the digital age.
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    \13\ Remarks of Comr. Rosenworcel.

    Question 2. Commissioner Brise, Mr. Bergman and Ms. Gonzalez, how 
would you propose verification for Lifeline eligibility if the program 
was expanded to broadband?
    Answer. On June 18, 2015, the FCC voted to open a proceeding with 
the goal of further reforming and modernizing Lifeline. In the item 
released by the FCC, the question of whether or not the current methods 
of verifying eligibility should be altered is on the table and 
addressed through a number of questions that NHMC is in the process of 
reviewing. While the FCC's 2012 reforms went a long way towards 
ensuring that only eligible individuals are able to receive the benefit 
and eliminating waste, fraud, and abuse from Lifeline, we are happy to 
engage in the FCC's process to explore further improvements. I will 
gladly share our forthcoming comments with your office, once they are 
completed, if they explore this issue with greater depth.
```