February 7, 2017 - 12:45 pm
By Ajit Pai | FCC Chairman

In my first remarks as Chairman of the Federal Communications Commission to the agency’s terrific staff, I stressed that one of my top priorities would be to close the digital divide — the gap between “those who can use cutting-edge communications services and those who do not.” I’ve explored that divide for myself in places like Barrow, AlaskaLos Angeles, CaliforniaClayWest Virginia; and many more places. Now that I’m at the helm of the agency, I’m determined to address it.

We’ve already hit the ground running. In the first vote under my Chairmanship, I worked with New York Governor Andrew Cuomo, Senator Charles Schumer, Representative Chris Collins, and other officials to direct $170 million in federal funding to build out broadband in upstate New York to places that are currently unserved.

In the second week of my Chairmanship, I shared with my colleagues and set votes for February 23 on two detailed proposals for closing the digital divide. One of them would direct billions of dollars — with a “b” — over a decade toward making sure that all parts of this country have 4G LTE coverage. (Currently, there are too many gaps where your phone displays “No Service” — as I saw for myself during a recent drive from Wichita, Kansas to Des Moines, Iowa.) The other would allocate nearly $2 billion — again with a “b” — for advancing fixed broadband service across the country. With more connectivity, more Americans than ever before will have digital opportunity.

Finally, I’ve engaged with Members of Congress about my proposal for Gigabit Opportunity Zones. Under this infrastructure plan, the government would use tax incentives to encourage the deployment of ultra-fast broadband in lower-income areas as small as an urban city block and as large as a rural county. It would also encourage entrepreneurs to take advantage of these next-generation networks by creating jobs in those areas. Gigabit Opportunity Zones would enable Americans to become participants in, rather than spectators of, the digital economy. They would be a powerful solution to the digital divide. I hope our elected officials will give the idea serious consideration.

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At the same time, one recent FCC decision has caused some controversy of late. Specifically, some have asked why the agency’s Wireline Competition Bureau issued an order reconsidering nine companies’ eligibility to participate in the Lifeline program, which aims to help make voice and broadband more affordable to low-income Americans. It’s vital that low-income Americans have access to communications services, including broadband Internet, which Lifeline helps to achieve.

Unfortunately, many of the media headlines have sensationalized this story and given some an entirely misleading impression of what is going on. Indeed, based on the some of the coverage, one would think that we had ended Lifeline broadband subsidies altogether. So I want to set the record straight about the modest steps we have taken and why we have taken them.

First, our action only impacted 9 of the over 900 providers participating in the Lifeline program. In other words, 99% of the companies participating in the program are not affected at all.

Second, the applications of these nine providers to participate in the program have not been rejected. They simply remain pending at the Commission.

Third, all but one of the newly designated providers covered by the order do not yet have any customers.

Fourth, the prior FCC disregarded the well-established process for approving applications like these. As the National Tribal Telecommunications Association pointed out, several of the providers had never coordinated their applications with Tribes, despite an FCC rule clearly requiring them to do so. These Tribal representatives thus requested that the designations be reversed. Moreover, two of the designated providers were approved in the middle of the 30-day period for public comment — that is, before the public even had a chance to weigh in on the designation. Whatever one thinks of the merits of these applications, that was plainly improper.

Fifth, many of these designations were approved in the last days of the last Administration (two days before Inauguration Day), over the objections of two of the four Commissioners, despite the fact that the FCC’s congressional oversight committees had requested that the Commission not take controversial actions during the transition between Administrations (consistent with the request from those same committees during the Republican-to-Democrat transition in 2008–09). Thus, a majority of Commissioners never supported approval of these designations.

Sixth, every dollar that is spent on subsidizing somebody who doesn’t need the help by definition does not go to someone who does. That means that the Commission needs to make sure that there are strong safeguards against waste, fraud, and abuse before expanding the program to new providers. But consider:

  • The National Verifier — which is a new database that is intended to verify eligibility to participate in the Lifeline program — does not currently exist and will not start operating until the end of 2017. Further, it is not scheduled to cover all states until 2019.
  • My investigation last year into these matters revealed serious weaknesses in federal safeguards, allowing providers to indiscriminately override checks that are supposed to prevent wasteful and fraudulent activities. (These checks include common-sense steps like verifying the identity of would-be Lifeline recipients.) From October 2014 until June 2016, wireless resellers had overridden such safeguards 4,291,647 times in total.
  • The investigation also uncovered other loopholes, including one that let a company claim subsidies for approximately 22,000 phantom subscribers each month in the state of Michigan.

Seventh and finally, there is a serious question as to whether the FCC has the legal authority to designate Lifeline providers or whether such designations must be made by state governments, as has long been the norm. Indeed, well before the prior FCC issued these last-minute designations, state regulatory agencies had filed a substantial legal challenge to the entire process of the FCC designating Lifeline Broadband Providers, arguing that it’s unlawful, and the FCC itself recently asked the court for additional time to consider this issue. For instance, Section 214 of the Communications Act explicitly says that states must make designations for purposes of allowing companies to receive Lifeline subsidies. The FCC has repeatedly, and for many years, recognized states’ primary role in this area. By preempting the states’ role in certification, the federal designations appear to run afoul of this legal framework. Putting the designations on hold gives the FCC the chance to make sure the process is legally defensible and to avoid potentially stranding customers if the courts ultimately deem the process unlawful.

Hyperbolic headlines always attract more attention than mundane truths. For example, a story detailing how the FCC was undertaking further review of the eligibility of 1% of Lifeline providers wouldn’t generate too many clicks. That’s long been the case in policy debates, of course. But at the end of the day, my focus has been — and will continue to be so long as I have the privilege of serving as the Chairman of the FCC — doing everything within the FCC’s power to close the digital divide. I am committed, both by belief and by law, to ensuring that the agency is focused on the 21st century version of our 20th century charge: “to make available, so far as possible, to all the people of the United States, without discrimination on the basis of race, color, religion, national origin, or sex, a rapid, efficient, Nation-wide, and world-wide wire and radio communication service with adequate facilities at reasonable charges.” We’ve made progress over the past few weeks, and we’ll do more in the time to come to benefit all Americans.

 

Please Note: This article was originally posted on Medium.com