The future of "Obamaphones" - Axios
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The future of "Obamaphones"

Photo illustration: Greg Ruben / Axios

The FCC subsidy program that pays for phone and internet service for low-income people — derisively called "Obamaphone" by critics—stands to be overhauled now that Republicans are in control.

The so-called Lifeline program, which was actually created during the Reagan administration, started to see signs of change last week when new FCC Chairman Ajit Pai revoked the participation of nine providers in the program, saying the applications needed more review.

Democrats worry the FCC will take more drastic measures. While Pai and Republicans in Congress have long argued the Lifeline program needs reform to cut waste and fraud, they haven't yet laid out a roadmap for how they'll change it.

Adding a budget cap: In 2015, as the FCC headed toward expanding the program to cover internet service, Pai said the agency should have considered placing a cap on the program's budget of $1.6 billion to align with spending on the subsidies that year. "A budget induces careful spending," he said in a dissent the next year. The idea has support in Congress, where one bill would set the cap at $1.5 billion.

  • The counterpoint: Opponents of a cap say that it would arbitrarily keep eligible Americans out of the program. "A cap on the Lifeline program will inherently exclude an undetermined number of the eligible low-income consumers," said Scott Bergmann, an executive with wireless trade group CTIA, in congressional testimony last year.

Targeting subsidies more narrowly: Pai and Republican Commissioner Michael O'Rielly both support the idea of targeting the program's subsidies. That's echoed in Congress. Marsha Blackburn, who now chairs the House subcommittee on Communications issues, wrote with O'Rielly in 2015 that "the program must be better targeted to eligible low-income individuals who would not otherwise sign up for service."

  • The counterpoint: Jessica Gonzalez, Deputy Director and Senior Counsel at advocacy group Free Press, said that restricting subsidies could cause trouble for poor people who are stretched thin financially. "When you're right on that line, you're making hard decisions," she said.

Asking subscribers to contribute: Pai floated the idea in 2015 of "requiring Lifeline subscribers to pitch in as a condition of getting service." (It wasn't included in a dissent he wrote the next year when the commission voted to expand the subsidy to broadband.) O'Reilly has also backed the idea of a minimum contribution.

  • The counterpoint: Gonzalez said that requiring even a small contribution would push some Lifeline recipients into making tough spending choices. "A dollar, five dollars, that can feed a family dinner," she said.
Looking closely at fraud: Republicans want to cut down what they see as significant fraud in the program. "I think all of us would say we want Lifeline to meet the needs of those that have a need, and we want to make certain that the waste, fraud and abuse of the program is routed out," Blackburn said Wednesday.
  • The counterpoint: Amina Fazlullah, the Director of Policy for the Benton Foundation, said the FCC has already been "diligently working" to make the program more efficient.
More power to the states: Pai recently questioned whether the FCC has the authority to designate providers for the program at all, rather than the state-level officials who have traditionally done so. He said that putting "the designations on hold gives the FCC the chance to make sure the process is legally defensible and to avoid potentially stranding customers if the courts ultimately deem the process unlawful."
What's next: We wait. The FCC recently asked a federal court to hold off for 90 days on proceeding with two cases related to the FCC's expansion of the program to broadband. Pai has declined to comment on his plans for the program, as did an FCC spokesman on Wednesday.
Congress is also not yet ready to announce concrete actions, but Blackburn indicated this week that lawmakers on the House Energy and Commerce Committee plan to take a look. "I think that E&C has jurisdiction over this issue and when we decide what the appropriate action is going to be, we will take it," she said.
The bottom line: Closing the digital divide is going to be an ongoing topic of conversation, especially as Pai has made it priority. Once again, Lifeline is going to be a flashpoint in that debate over how government subsidies should be used to connect poor people in hard-to-reach regions.
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New Trumpcare amendment would require states to define essential health benefits

(Alex Brandon / AP)

A final amendment to the American Health Care Act was introduced Thursday night by the authors of the legislation, a last-minute attempt to win conservatives over by requiring states to define what services insurers must offer enrollees.

Here's what's in the amendment, which will be voted on in the Rules Committee tomorrow before the bill heads to the House floor for a final vote:

  • Beginning in 2018, states will determine essential health benefits. There are currently 10 federal ones under Obamacare, which apply to the individual and small group markets.
  • The repeal of the Medicare payroll tax on high earners would be delayed until 2023.
  • The original bill's Patient and State Stability Fund would get an extra $15 billion to be used for maternity coverage and newborn care, as well as mental health and substance abuse disorder treatment.
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Apple says flaws in latest WikiLeaks disclosure are all old

Mike Deerkoski / Flickr cc

Although much was made about a new batch of iPhone and MacBook flaws disclosed by WikiLeaks on Thursday, Apple says the issues appear to all be old, since-fixed vulnerabilities.

"We have preliminarily assessed the Wikileaks disclosures from this morning," Apple said in a statement to Axios. "Based on our initial analysis, the alleged iPhone vulnerability affected iPhone 3G only and was fixed in 2009 when iPhone 3GS was released. Additionally, our preliminary assessment shows the alleged Mac vulnerabilities were previously fixed in all Macs launched after 2013."
Apple added that it has "not negotiated with Wikileaks for any information."

We have given them instructions to submit any information they wish through our normal process under our standard terms. Thus far, we have not received any information from them that isn't in the public domain. We are tireless defenders of our users' security and privacy, but we do not condone theft or coordinate with those that threaten to harm our users.
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Trump orders tougher Visa screenings

J. Scott Applewhite / AP

President Trump is ordering tougher screenings for Visa applicants as part of his "extreme vetting" policy. Last week Secretary of State Rex Tillerson sent four cables to U.S. embassies and consular officials demanding scrutiny be tightened up, as originally reported by Reuters.

The new rules don't apply to 38 countries who can be admitted using the visa waiver program, including Australia, New Zealand, Japan, South Korea, and most of Europe.

Profiling and delays: This will include "mandatory social media check" if an applicant has been in a territory controlled by ISIS. Such checks are rarely done at present, former officials told Reuters. Consular officials and immigration experts told the NYT this will make it much more common to be denied a Visa to the U.S. and they fear this might lead to profiling based on nationality. It will likely also extend Visa review times.

Context: The cables were issued to complement the travel ban that was upended by a court in Hawaii, but some provisions were remedied to abide by the temporary restraining order. Namely, questions specifically aimed at applicants from the six countries listed in the ban were rescinded.
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Trump's ultimatum: If vote fails, Obamacare stays

AP

Budget Director Mick Mulvaney has just laid down a gauntlet to House Republicans on behalf of President Trump: pass this bill, or Obamacare remains in place.

Members of the conservative Freedom Caucus want more concessions but, according to Mulvaney, Trump will not negotiate further.

The president demanded a vote tomorrow, and now it appears he will get it. He is all but daring Republicans to vote no.

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Twitter is weighing whether to build a paid version of TweetDeck

Richard Drew / AP

Twitter is considering whether to build premium software geared toward power users of its service.

The company already owns TweetDeck, a program geared toward those who juggle multiple Twitter accounts and spend a lot of time on the social media service. A paid version could offer extra features and bypass advertising.

Andrew Tavani, managing editor of Women in the World, first spotted a message from Twitter about the potential service.



Still pondering: It appears the idea is still in the early stages and Twitter hasn't decided if it'll build this. "We're conducting a survey to assess the interest in a new, more enhanced version of TweetDeck," a Twitter spokesperson told Axios, adding that Twitter is "exploring several ways to make TweetDeck even more valuable for professionals."

Why it matters: Twitter acquired TweetDeck in 2011 from developer Iain Dodsworth, but hasn't done much with it since as far as expanding features and capabilities. This could be a welcome option for users for whom Twitter is a critical part of doing their job.

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Here are the AHCA changes demanded by the Freedom Caucus

Alex Brandon / AP

The key changes to the Republican health care bill demanded by the conservative Freedom Caucus:

  • A repeal of ACA's Essential Health Benefits (like emergency or maternity treatment) guaranteed under Obamacare
  • An elimination of the "single risk pool," which prevents insurers from splitting the market into healthy and sick groups
  • An elimination of rating restrictions, which allow insurers to base premiums only on age, area, tobacco use and family vs individual plan
  • A repeal on lifetime or annual limits
  • A reversal of standard documentation mandates, which make it easier to compare insurance plans
  • A reversal on Medical Loss Ratio standards, which force large insurers spend at least 85% of premiums on claims

Why it matters: These changes would appease the Freedom Caucus, but could see moderates abandon the bill.

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Fox News: GOP expects 'smoking gun' proving Obama admin spied on Trump

Jack Gruber / AP

Republicans in Congress are expecting a "smoking gun" showing the Obama administration intentionally spied on Trump associates, and possibly Trump himself, Fox News reports:

The intelligence is said to leave no doubt the Obama administration, in its closing days, was using the cover of legitimate surveillance on foreign targets to spy on President-elect Trump, sources said.

A source told Fox that the surveillance left a "paper trail" indicating there was "no other plausible purpose... than to damage the incoming Trump administration." No, Trump Tower wasn't bugged, as POTUS claimed, but if the report is accurate his transition team was targeted for surveillance.

What's next: Fox says the House Intelligence Committee expects to receive the evidence this week. Trump said he felt "somewhat" vindicated by Devin Nunes' statements yesterday about "incidental" surveillance of Trump's communications. Expect him to be less restrained if this report proves accurate.




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Marketo apologizes after video promo for its conference panned as sexist

Marketo, which specializes in helping companies promote themselves, apologized Thursday after one of its own promotions fell flat.

The ad, promoting an upcoming Marketo conference, featured a ditzy female newscaster and the company's male CEO, Steve Lucas. Marketo told Axios the ad, which was roundly criticized on Twitter, has been pulled down.

We sincerely apologize for the offense we caused with what was intended to be a light-hearted promotion for Marketing Nation Summit. The video was created to promote the conference, playing off our theme of engagement. Marketo has always had a steadfast commitment to championing diversity and empowering female leaders in technology and beyond.
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Theranos offers shares to investors if they promise not to sue

Theranos

Theranos, the embattled blood-testing company, plans to offer additional shares to existing investors if they agree not to sue the company, according to a report from the Wall Street Journal citing anonymous sources. Theranos reportedly only has $200 million in cash left, but is already facing multiple lawsuits, including from former partner Walgreens and investor Partner Fund Management.

The deal: The shares would come from founder and CEO Elizabeth Holmes' personal stake in the company, which would result in her losing her majority ownership. According to the Journal, early investors aren't included in the deal, and weren't even informed of it.

Murdoch exit: Theranos has reportedly agreed to buy back the stake Rupert Murdoch, the executive chairman of News Corp. and 21st Century Fox, purchased for $125 million in 2015.

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Valeant's ousted CEO made $72.5 million in 2016

Manuel Balce Ceneta / AP

Michael Pearson, former CEO of Valeant Pharmaceuticals, cashed in $72.5 million worth of stock and severance pay in 2016 even as he and the drug company were under federal investigation for accounting fraud and a billing scheme tied to a specialty pharmacy it secretly owned.

Pearson took home $60.5 million in stock and the rest in severance pay and other benefits, Valeant disclosed Thursday to the Securities and Exchange Commission. He also still used Valeant's corporate jet. Joseph Papa replaced Pearson last year, and Papa earned $62.7 million even though Valeant remains mired in trouble.

Valeant's stock has cratered since the middle of 2015, and it has become a pariah in the pharmaceutical industry. Pearson led Valeant since 2008, building the company up on the controversial practice of acquiring drugs and jacking up the prices.