Five Reforms to Modernize the Lifeline Subsidy Program

Internet access is a key component in our rapidly advancing economy. While incredibly valuable, 15 percent of Americans remain disconnected, mostly by choice. To expand broadband adoption, the FCC plans to extend the Lifeline program to subsidize its purchase by low-income households. Given current eligibility and a lack of targeting mechanisms, we project the program to cost as much as $4.6 billion per year.

Independent studies have been conducted of the program for nearly as long as its existence, and almost universally it is found to be economically inefficient and ineffectual in achieving its stated goals. A recent Government Accountability Office reported that the Lifeline program is inefficient and costly as well.

The agency should look towards broader and much needed reforms for the program before implementing this expansion. In particular, the FCC should define the problem that Lifeline aims to solve, cap the budget, reform eligibility requirements, reconsider the current contribution method, which is harmful to the poorest families, and implement an economically rigorous evaluation. Only when these changes are implemented will the program truly begin to serve those whom should be receiving Lifeline assistance.

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