- David McCabe
- Feb 9
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.
- 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.