Should the Government Stop Providing Low Income Americans With Cell Phone and Internet Subsidies? (H.R. 5525)

What is H.R. 5525?

(Updated May 3, 2020)

Since 1985, the Federal Communications Commission (FCC) has operated the Lifelines program to provide subsidized phone service to low-income Americans. In 2005, the program expanded to cover basic voice-only mobile phone plans, and in March 2016, the FCC voted to expand the program to include internet service (including mobile data).

This bill seeks to remove wireless voice and data services from the list of eligible Lifelines services. Sponsoring Rep. Austin Scott (R-GA) argues that the program is already too expensive and that the FCC does not do a sufficient job preventing fraud and misuse.

The FCC, however, believes cell phone and internet access are modern-day necessities that help people pursue education, access services, and maintain connections with friends and families. According to a press release from the FCC announcing the program expansion, 43 percent of America’s lowest income households cannot afford broadband. This gap in access can contribute to greater income inequality.

Argument in favor

The simplest way to stamp out fraud in the Lifelines program is to remove cell phones and wireless broadband from the list of eligible services. Americans should not be forced to pay tax dollars to subsidize fraud.

Argument opposed

Fraud in the Lifelines program should be investigated, but cell phone and internet subsidies should not be stripped from struggling Americans. These services are crucial for accessing education, jobs, and services to lead a stable life.

Impact

The FCC, People who participate in the Lifelines program or may in the future, Taxpayers

Cost of H.R. 5525

Additional Info

In Depth: The Lifeline subsidy provides up to $9.25 per month to qualifying participants in U.S. states and territories who earn less than 135 percent of the federal poverty line. It is funded through a tax on mobile phone bills.

Although 40 million Americans are eligible, only about 13 million take part in the program. The FCC estimates that the addition of internet services will draw another 5 million participants, bringing the program cost to $2.25 billion.

Ajit Pai, an FCC Commissioner, has criticized the Lifelines program for failing to catch and prevent fraudulent enrollment. For example, although each eligible household is allowed just one subsidy, a special override that permits two users to enroll at the same address has been used millions of times.

Critics of the program like Pai and Scott believe Lifelines should have a hard cap on its budget (Rep. Scott has suggested a budget of $1.5 billion). Currently the program has a flexible budget of $2.25 billion, meaning it can be expanded if enrollment grows.

Of Note: Sponsoring Rep. Austin Scott said in a press release:

“While the program’s original purpose had merit, the program in its current form is wrought with fraud and abuse, and it's past time for Washington to respond to the calls of our constituents to rein this program in.”

In an advocacy letter opposing the bill, civil rights group The Leadership Conference wrote that the bill:

“would undercut both the goals of the Lifeline program and the principles for Lifeline modernization… It is essential to ensure that people of color, low-income people, and other vulnerable populations have access to broadband. Without Internet access, students of color cannot do their homework, working single mothers cannot earn degrees online at night, and seniors and people with disabilities cannot utilize the most modern and accessible health care."

Media:

• Sponsoring Rep. Austin Scott press release

• Politico

• Alliance for Innovation and Infrastructure

• Inside Sources

• The Leadership Conference (anti)