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FCC blocked from ending Tribal internet subsidy

Apples court rules the agency likely to lose its court case

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A federal appeals court has blocked the Federal Communications Commission (FCC) from ending or limiting the Lifeline program, a subsidized telephone and internet plan for low-income consumers.

Lifeline, enacted in 1985, provides a subsidy to qualifying low-income consumers to make sure that all Americans have access to vital communications services. It began as a program to subsidize phone service but was later expanded to cover broadband internet.

The program is paid for by the small Universal Service Charge fund that is on every telephone bill and is available to eligible low-income consumers in every state, territory, commonwealth, and on Tribal lands.

But last November the FCC voted along party lines to make it harder for consumers living on rural Tribal lands to qualify for the $25 a month subsidy to offset the cost of internet services. It would have eliminated the subsidy for Tribal members living in cities. The changes were scheduled to take effect in October.

Tribes and small providers sue

A group of small internet service providers, along with the non-profit National Lifeline Association, sued the FCC, seeking to block the change. Last month it asked the agency to stay its order until the court case could be heard, but the FCC refused.

So the plaintiffs appealed to the U.S. Court of Appeals, which did grant the stay, telling the FCC it could not proceed with its plans because, in the court's opinion, it was going to lose the case when it got before a judge.

"Petitioners have demonstrated a likelihood of success on the merits of their arguments that the facilities-based and rural areas limitations contained in the Order are arbitrary and capricious," the court said. "In particular, petitioners contend that the Federal Communications Commission failed to account for a lack of alternative service providers for many tribal customers."

The justices also dismissed the FCC claims that making the subsidy harder to get would result in development of more broadband infrastructure in these underserved areas.

"On the contrary, petitioners credibly assert that providers have generally declined to offer Lifeline service in many tribal regions in the nearly two decades since the implementation of the Tribal Lifeline program, and furthermore that the Order’s new eligibility requirements do not attract providers to expand into those previously-ignored regions," they wrote.

FCC objects to Tribal members' choices

The FCC's main objection to the program seems to revolve around the choices Lifeline program participants make. The FCC pointed out that most program participants use the subsidy to obtain service from one of the discount resellers instead of purchasing the more expensive service from one of the four major carriers, who build and operate cellular networks.

The court order blocks the FCC from making changes to the Lifeline program until the case can be decided.

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