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New FCC Chairman Scales Back Broadband Subsidies for the Poor

Amid a slew of moves Friday, new FCC Chairman Ajit Pai reversed the addition of nine network providers to a program that subsidizes broadband internet access for low-income Americans. The FCC statement said the move was intended to “promote program integrity” and give the agency time to implement anti-fraud measures in the program, known as Lifeline, which has been repeatedly scammed by providers.

But, as with many efforts to fight fraud and waste in safety net programs, the FCC’s decision could harm vulnerable populations. The internet policy and advocacy group Public Knowledge (which is partly funded by broadband providers) yesterday said in a statement that the decision “will likely result in needy families losing access to the critical connectivity they use to communicate with loved ones, look for employment [and] complete homework assignments”. Speaking to the Washington Post, the founder of Kajeet Inc., one of the affected companies, expressed similar concern that the decision could impact programs the provided internet access to schoolchildren.

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According to Pew, only 45% of American households with incomes under $30,000 have home broadband access. This so-called digital divide may limit economic mobility and the overall strength of the economy.

The Lifeline program has existed since 1985, and until recently focused on subsidizing phone service. In March of 2016, the FCC expanded the program to also include a subsidy for home broadband service.

But conservatives have criticized the program both for its high cost—$2.25 billion last year—and as a magnet for fraud. The FCC has levied tens of millions of dollars in fines against mobile phone providers for claiming subsidies for fake or duplicate customer accounts. In early 2015, it was discovered that the FCC had failed to actually collect many of those fines.

Following his appointment as FCC chair by President Donald Trump, Pai has moved swiftly with what he has characterized as a pro-business, anti-regulation agenda at the FCC. Also on Friday, Pai halted investigations into so-called “zero-rating” programs by mobile providers. Critics say those programs violate net neutrality rules—rules which Pai is broadly expected to work to rescind.

The United States, despite having invented the Internet, has average broadband prices more than double those of most European and Asian nations. The Wheeler FCC lowered some barriers to the development of city-owned broadband systems, which advocates say increase access and lower prices. But Pai also opposes municipal broadband programs, suggesting that his FCC may take little definitive action to lower broadband costs for Americans more broadly.