The FCC’s decision to allow qualified low-income households to use funding from the Universal Service Lifeline program toward broadband service was welcomed back in March when it was made, but problems with the program are mounting. Key Lifeline broadband problems: big carrier participation and rural carrier stand-alone broadband pricing.

According to a press release from The National Hispanic Media Coalition (NHMC), more than 80 service providers have opted out of participation in the Lifeline broadband program for at least part of their territories. Verizon, for example, only wants to offer Lifeline broadband service in areas where it has deployed its FiOS fiber-to-the-home service, according to NHMC.

Other major service providers opting not to participate in Lifeline broadband include AT&T, Cox, Windstream, Charter, CenturyLink, FairPoint and Frontier.

“[W]e urge those that have opted out of this obligation to reconsider their position to help bridge the digital divide,” said Jessica J. Gonzalez, executive vice president and general counsel for NHMC, in the press release.

Lifeline Broadband Problems: Big Carriers Opt Out

The Lifeline program now gives qualified low-income users $9.25 per month, which recipients can use toward voice or broadband service. FCC standards call for qualifying services to provide speeds of at least 10 Mbps downstream and 1 Mbps upstream and a data allotment of at least 150 gigabytes (GB).

Reforms adopted in March also called for the government to create a national eligibility verifier – essentially a database of eligible households — thereby eliminating the need for service providers to determine whether recipients are qualified to receive Lifeline payments.

But according to a November 23 blog post from AT&T executive Joan Marsh, the eligibility verifier will not be fully implemented until 2019. Until then service providers are still responsible for verification – a responsibility that also entails compliance risks.

Rather than take on that responsibility, AT&T would prefer to hold off on offering Lifeline broadband until the verifier is operational. Other carriers opting not to participate in the program may have similar motivation.

“[I]t makes little sense to spend resources on implementation of soon-to-be-replaced administrative rules for a new service when we are already offering low-income consumers a better deal through our Access from AT&T program,” argued Marsh.

Access from AT&T lets consumers participating in the Supplemental Nutrition Assistance Program (SNAP) to get 10 Mbps or 5 Mbps wireline broadband for $10 a month. If those speeds are not available customers can purchase 3 Mbps service for $5 a month.

According to Marsh, those prices are lower than what customers might pay through the Lifeline broadband program and SNAP is one of the most common programs used by consumers to qualify for Lifeline. She also notes that customers living in areas without 4/1 Mbps service get no discount at all under the new Lifeline rules but they could get broadband for $5 monthly through Access from AT&T.

Some other carriers also have low-income broadband offerings at rates in the range of $10 monthly. And considering recent settlements involving AT&T and other providers regarding alleged Lifeline violations, carriers also may be concerned about the compliance risk that Marsh highlights.

Lifeline Broadband Problems: Stand-alone Pricing

As Marsh notes, there are a few areas where AT&T will offer a Lifeline discount on broadband – namely, anywhere the company receives high-cost Universal Service funding. The reason is that carriers accepting high-cost program funding are required to participate in the Lifeline broadband program.

But there, too, the Lifeline broadband program is encountering problems.

Rural rate of return carriers, many of whom rely on high-cost funding, do not expect to be able to offer stand-alone broadband service at rates that are comparable with those available in urban areas. With rates projected to exceed $100 monthly, a $9.25 discount wouldn’t go far toward making service more affordable for low-income consumers.

Rural carrier associations argue that this situation is the result of insufficient funding for the high-cost program.