March 8, 2016 / 3:58 PM / in a year

FCC unveils proposal for $9.25/month low-income broadband subsidy

Federal Communications Commission (FCC) Chairman Tom Wheeler arrives to testify before a Senate Appropriations Subcommittee hearing on FCC's proposed budget for 2016, in Washington, May 12, 2015.Carlos Barria

WASHINGTON (Reuters) - The head of the U.S. Federal Communications Commission circulated Tuesday a final proposal seeking approval for a $9.25 monthly subsidy for low-income Americans to get broadband Internet access.

Since last year, the FCC has been considering revamping the $1.5 billion annual program, called Lifeline, which has helped lower income Americans get access to telecommunications technologies since 1985.

FCC Chairman Tom Wheeler has said he wants to give those receiving the subsidy a choice of using it for phone services, high-speed Internet, or both. But households will get only a single $9.25 a month subsidy that would apply to both services. The program currently helps about 12 million U.S. households afford landline and mobile phones, according to agency estimates.

The commission will vote on the proposal at its March 31 meeting and will set a budget of $2.25 billion a year indexed for inflation for the program. The additional budget would allow more than 5 million additional households to take advantage of the program, but the FCC does not expect the entire budget will be used immediately.

The FCC estimates that some 95 percent of U.S. households with incomes of $150,000 have access to high-speed Internet, while less than half of households with incomes lower than $25,000 have Internet access at home.

FCC Commissioner Jessica Rosenworcel said the lack of broadband access leads to a "homework gap" for lower income Americans because most teachers assign homework that requires Internet access.

"Five million American families with students at home go without regular broadband access," she said. "We need to bridge this gap and fix this problem because our shared economic future depends on it."

The proposal requires phone providers to offer unlimited talk time for all plans for subsidy users after December 2016 and by the end of 2019 providers would have to offer both phone and broadband service to qualify under the program

The proposal aims to crack down on fraud by creating a national eligibility verifier as a neutral third-party entity that removes the opportunity for providers to enroll ineligible subscribers.

FCC Commissioner Michael O'Rielly said in a blog post last week that Wheeler's proposal would "massively expand the size and scope" of the program that would "balloon a program plagued by waste, fraud, and abuse."

O'Rielly noted that only 40 percent of eligible Lifeline recipients currently take advantage of the program.

Reporting by David Shepardson; Editing by Chizu Nomiyama

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