The Federal Communications Commission today voted for two broadband-related proposals. One is designed to give Internet users more control over how Internet service providers monitor and monetize their Web usage. The second proposal will update the 31-year-old Lifeline phone subsidy program so that it can also be used to buy Internet service.

Both votes were 3-2, with Democrats approving and Republicans dissenting. The Lifeline vote was particularly contentious, as commissioners had worked on a bipartisan compromise last night and early this morning. The compromise fell apart at the last minute, delaying the meeting’s start by three and a half hours.

The Lifeline proposal that was approved today will let poor people use a $9.25 monthly household subsidy to purchase home Internet or mobile broadband, or bundles including both voice and Internet. The vote set the Lifeline budget at $2.25 billion a year, indexed to inflation, while creating an independent entity to verify subscriber eligibility in order to reduce fraud.

The rejected compromise would have set a $1.75 billion budget, according to Republican Commissioner Ajit Pai. He said commissioners were on track for a 5-0 vote until Democratic Commissioner Mignon Clyburn backed out.

Pai blamed Chairman Tom Wheeler. “It turns out that since early this morning, the chairman and his staff have been actively working to undermine that bipartisan compromise,” in part by leaking information to the press, Pai said. Wheeler “launched a political campaign to force a Democratic commissioner to renege on a compromise on her signature issue,” Pai continues, saying today’s events represent “the worst of government.”

Clyburn described the events differently. “I negotiated in good faith to have a budget mechanism in place that ensures millions of new households will have the opportunity to afford advanced telecommunications services,” she said. “Upon further deliberation, I concluded that such a mechanism could not fully achieve my vision of a 21st century Lifeline program, but I applaud the deliberative process and want to thank Commissioners Pai and O’Rielly and their staff for engaging well into the night and morning.”

Wheeler praised Clyburn for her leadership on the broadband subsidy rulemaking, saying “there is no greater champion for Lifeline.”

“Sometimes the deliberative process doesn't lead to consensus in the end, but that doesn't mean it isn't worthwhile,” Wheeler added.

Clyburn described a few specific people who will benefit from broadband subsidies. Bridgid, of San Francisco, recently enrolled in college after being laid off from her job, but she can’t afford Internet access to complete her homework, Clyburn said.

“Bridgid cannot afford to purchase food and drinks in the coffee shops that offer free Wi-Fi, so she often sits on the sidewalks to take advantage of their signal—that is until she is asked to leave,” Clyburn said. “She has been known to enter a hotel or two, sneak on the elevator, return to the lobby, pretend to be a guest, and ask the front desk attendant for the hotel’s Internet access code, all so that she can complete her homework from the lobby. As creative or crafty as Bridgid is, her methods are not always effective or safe. She has been chased off of neighborhood sidewalks, has had to repeat a class or two, and as a result of this and more, her grades have suffered.”

Though Republicans weren’t able to get their desired budget cap, Wheeler said the vote will make the program more fiscally responsible than it is today. Having an independent body verify subscriber eligibility will ensure that “the fox is no longer guarding the henhouse,” he said.

This is also the first time under either Democratic or Republican leadership that the FCC has “ever proposed a budget and a mechanism for reviewing that budget” for Lifeline, he said. Lifeline is the only Universal Service program without a budget cap.

Consumer advocates praised the FCC's vote and so did a few trade groups that represent Internet providers. USTelecom said the Lifeline change “will help to bring the transformative benefits of the Internet to millions of low-income Americans.” CTIA, which represents wireless providers, said that its members “stand ready to work with the Commission to ensure that a fiscally responsible Lifeline program continues to meet the mobile wireless needs of low-income consumers.” The National Cable & Telecommunications Association said the vote "takes important steps to help even more Americans adopt broadband at home."

Privacy proposal seeks to put consumers in control

The Lifeline vote was the final one required to implement the new rules. The vote on privacy was a preliminary one, approving a Notice of Proposed Rulemaking that could lead to final rules later this year.

The proposal, as we’ve previously written, would require fixed and mobile Internet providers to seek permission from customers before using their private information for certain marketing purposes. ISPs could only share a subscriber's Internet usage habits with advertising companies or other third parties if the subscriber opts in to such usage, and they would not be able to serve targeted ads to customers based on their Web browsing habits without first obtaining opt-in consent.

“There is one indisputable fact, that it is the consumer's information and the consumer should have the right to say whether it is used for non-network purposes,” Wheeler said. Customers should not be turned into “consumer products” without their knowledge or permission, he said.

“When a consumer makes a phone call, all the information about that call is protected unless the consumer authorizes its disclosure,” Wheeler said. “How does the fact that the network is connecting to the Internet rather than to a telephone make the expectation of consumer privacy any different?”

Pai argued that ISPs shouldn’t be “singled out” for greater scrutiny than other companies that deliver advertising online. “It makes little sense to give some companies greater leeway under the law than others when all have access to that very same personal data,” Pai said. “This disparate approach doesn't benefit consumers or the public interest, it simply favors one set of corporate interests over another.”

Wheeler countered that it’s easy for consumers to visit different websites to avoid privacy violations but that customers have much less flexibility to change Internet providers.

O’Rielly argued in favor of preserving programs like AT&T’s Internet Preferences, which gives customers discounts if they opt in to a system that scans their Web traffic in order to deliver personalized ads. While O’Rielly said programs like that one could be banned, that wouldn’t necessarily be the case. As currently described, the proposal would let ISPs serve targeted ads as long as they have customers’ consent.

ISPs and broadband industry trade groups are not happy about the privacy plan.

“The proposed rules will not provide meaningful consumer Internet privacy protections, and will block ISPs from bringing new competition to the online advertising market that could benefit consumers,” Comcast Senior Executive VP David Cohen wrote. The FCC plan "inexplicably" tries to block ISPs from becoming “disruptors and upstarts in the online advertising marketplace” currently dominated by Google, Facebook, and other companies, he added.