STEVE STOCKMAN
36TH DISTRICT, TEXAS
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March 8, 2013
Mr. Julius Genachowski
Chairman, Federal Communications Commission
445 12th Street SW
Washington, D.C. 20554
Chairman Genachowski:
326 CANNON HOUSE OFFICE BUILDING
WASHINGTON, DC 20515
(202) 225-1555
The undersigned wish to register our concerns over the rampant, mostly unrestrained,
growth of the federal Universal Service Fund's (USF's) Lifeline program. Significant increases
in the size of this program threaten the sustainability of universal service in general, to the
detriment not only of low income consumers, but also the millions of beneficiaries of the Schools
and Libraries, Rural Health Care and High Cost programs.
The Lifeline program was created in 1985 to serve the laudable objective of ensuring
quality basic telephone service and 911 connections were available to low-income consumers at
just, reasonable and affordable rates. Yet, more recently, the Federal Communications
Commission (FCC) has allowed the program to be manipulated, primarily by prepaid wireless
providers, into an unintended source of company revenues rather than the true consumer
"lifeline" that was intended.
Even in the wake ofa January 2012 FCC Lifeline Reform Order, the Lifeline program
stands alone among its USF program counterparts as not subject to any control by an annual
budget. In just the past three years alone, the program has sweIled at an average rate of between
two and five percent per month, jumping from a total annual cost of around $600 million to more
than $2.4 billion. The program's spiraling growth continues to threaten the sustainability of the
overall USF.
We can no longer afford to overlook the largely unchecked growth that continues to
permeate the Lifeline program while the other universal service programs are restricted to the
degree that they are increasingly unable to fulfiIl their statutory mandates. In short, the
uncontroIled growth of the Lifeline program threatens to compromise the legitimate goals of the
other programs.
The FCC stated its January Order would finaIly begin to limit the waste, fraud and abuse
associated with the program in recent years, suggesting the reforms would yield savings of$200
milIion in 2012, and more than $2 billion over three years. While the initial $200 million in
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savings might be achievable, the longer term objective seems highly unlikely. At best, the
program looks poised to grow only somewhat less rapidly than it has in recent years, and
depending upon what assumptions are made, it is possible we could see more phenomenal
expansion ofthe Lifeline program in coming years.
Many factors contribute to our concern. First, only 50% ofeligible consumers are
estimated to receive Lifeline support today. Second, the Order expanded the base of eligibility
for Lifeline support to include a host ofother low income criteria. Third, the program will soon
expand to cover not just voice but broadband level service as well. This confluence of factors
could easily lead the Lifeline program to engorge to an annual $4 billion level in no time at all.
If there are reliable checks on the program that would somehow offset these factors, it would be
useful to have you identify those and to detail the assumptions that lead you to conclude that
such checks will control rampant growth and continuing increases in the Lifeline Program over
time.
We are further concerned that the Lifeline Order sets up a program that is altogether
divorced from the cost required to deliver services to consumers. For example, the Lifeline
Order established a flat rate level of support of $9.25 to carriers for each Lifeline subscriber they
enroll. There is no relationship between this level of support and the cost ofproviding such
service. Indeed, the torrent (or "gold rush") ofnew prepaid wireless providers flooding the
Lifeline market would appear to indicate that this level of support constitutes a windfall for such
providers.
At the same time, the FCC has waived facilities and service area requirements for
companies applying for designation as "Lifeline-only" carriers. Consider that neither the FCC
nor any state commission in the country has denied a Lifeline-only Eligible Telecommunications
Carrier (ETC) application. There are now hundreds of Lifeline-only ETCs, with more in the
pipeline. None ofthese companies provides new broadband infrastructure in unserved areas of
the country-a goal of the National Broadband Plan. If anything, this policy discourages, rather
than promotes, investment in the kinds ofadvanced networks and infrastructure that will deliver
benefits to all American consumers and businesses.
Weare concerned that the recent growth and lack ofapparent controls on the Lifeline
program creates poor incentives and places USF as a whole injeopardy. Rural constituents, such
as our seniors and other beneficiaries of universal service supported investments in our schools
and libraries, rural health care providers and rural broadband infrastructure, are affected
negatively by the wake ofrnismanagement in the Lifeline program.
We understand that the FCC has launched a further notice ofproposed rulemaking
seeking recommendations for further improving the Lifeline Program to eliminate waste, fraud
and abuse, and we applaud such an examination. But we remain concerned that not enough has
yet been done to check growth in the Lifeline program or to set appropriate incentives for
delivery ofcritical services to low-income consumers. In this regard, we urge the FCC to take
prompt action to constrain growth ofthe Lifeline program by setting a budget in the same vein as
it has for other aspects of the USF program, and by taking meaningful steps to set more proper
incentives for carrier participation in the program than exist in the current version.
Please let us know what the FCC is planning to do to rein in the Lifeline program, and
please provide details for any asswnptions with respect to why you may believe that actions
already taken will help to control growth in the program. We look forward to your response and
to further steps that can be taken to ensure that this program is a more reasonable and weII­
governed component of the USF.