FCC to vote on broadband stipends for low-income families

On June 18, the Federal Communication Commission will vote on a proposal to include broadband Internet service in its Lifeline subsidy program. On the face of it, the whole idea sounds like a farce.

If the commissioners (three Democrats and two Republicans) vote to approve the plan—and they almost certainly will—low-income families that already qualify for a $9.25 a month stipend to help them pay for cell service will also be allowed to use the funds for broadband. Gee, thanks. How can people who can barely afford to put food on their plates acquire cell phone service and/or Internet service for under 10 bucks? It would seem smarter to either boost the subsidies enough to make a real difference, or just scrap the program altogether.

So here’s the surprising part of the story—the broadband subsidy can work. Back in 2011, when it was eager to win the FCC’s approval for a merger with NBC-Universal, Comcast launched something called the Internet Essentials program. It made Internet service available to families with kids in the nation’s school lunch program for the incredibly low fee of $9.95 a month. And in March of 2014, when Comcast was eagerly awaiting the FCC’s decision on the firm’s proposed merger with Time Warner Cable, company executives extended that program indefinitely. (The merger never went through.)

To be clear, this is a no-frills service. Its 5.0 Mbps download speed is a good heap less than the FCC’s recommended 25.0 Mbps standard. It only helps families with school-age children, and it excludes current Comcast subscribers. But the program does demonstrate that Internet service can cost just 10 bucks a month.

And that’s the point. By granting low-income families the option to put that $9.25 a month toward Internet service, the FCC hopes to demonstrate that there’s an eager market. If Comcast doesn’t want to seize it, perhaps some other broadband provider will. Time Warner, Cox and Charter have all flirted with the $9.95 price point.

And, by the way, if you’re wondering why the FCC didn’t just add $10 onto the existing Lifeline subsidy—helping families to pay for both cell service and broadband—the answer is funding. The money for the program (roughly $1.7 billion a year for 12 million families) comes from the universal service fee attached to everyone’s mobile and land-line phone bills. And most Americans think their monthly bills are high enough.

—Chris Raymond