Most of the same telecom companies that want to create Internet paid fast lanes, drag their feet on delivering 21st century broadband speeds, refuse t0 wire rural areas for broadband without government compensation, and have cut investment in broadband expansion are warning that any attempt by the FCC to enact strong Net Neutrality policies will “threaten new investment in broadband infrastructure and jeopardize the spread of broadband technology across America, holding back Internet speeds and ultimately deepening the digital divide.”

Twenty-eight CEOs of some of the same cable and phone companies that have fueled the fight for Net Neutrality protections by their actions signed a letter published on the website of the industry-funded astroturf group Broadband for America.

“An open Internet is central to how America’s broadband providers operate their networks, and the undersigned broadband providers remain fully committed to openness going forward,” says the letter. “We are equally committed to working with the Commission to find a sustainable path to a lawful regulatory framework for protecting the open Internet during the course of the rulemaking you are launching this week.”

Ironically, some of the same companies signing the letter earlier successfully sued the Federal Communications Commission to overturn Net Neutrality policies the agency attempted to enact under a lighter regulatory framework.

The industry now fears the FCC will reclassify broadband as a “telecommunications service,” which makes the service subject to oversight far less likely to successfully be overturned in the courts.

That has caused a panic in the boardrooms of some of America’s largest phone and cable companies.

“In recent days, we have witnessed a concerted publicity campaign by some advocacy groups seeking sweeping government regulation that conflates the need for an open Internet with the purported need to reclassify broadband Internet access services as Title II telecommunications services subject to common carrier regulation,” the letter says.

The companies warn that any attempt to rein in the largely unregulated broadband industry would be a major disaster for the U.S. economy and further broadband expansion:

Broadband investment is falling even without Net Neutrality.

Not only is it questionable that the Commission could defensibly reclassify broadband service under Title II, but also such an action would greatly distort the future development of, and investment in, tomorrow’s broadband networks and services. America’s economic future, as envisioned by President Obama and congressional leaders on both sides of the aisle, critically depends on continued investment and innovation in our broadband infrastructure and app economy to drive improvements in health care, education and energy. Under Title II, new service offerings, options, and features would be delayed or altogether foregone. Consumers would face less choice, and a less adaptive and responsive Internet. An era of differentiation, innovation, and experimentation would be replaced with a series of ―Government may I? requests from American entrepreneurs. That cannot be, and must not become, the U.S. Internet of tomorrow.

Net Neutrality advocates point out that even without Net Neutrality, broadband investment has fallen in the United States for several years, a point conceded by some cable operators.

In 2010, Suddenlink CEO Jerry Kent explained cable companies are now taking profits now that they don’t have to spend as much on upgrades.

“I think one of the things people don’t realize [relates to] the question of capital intensity and having to keep spending to keep up with capacity,” Kent said. “Those days are basically over, and you are seeing significant free cash flow generated from the cable operators as our capital expenditures continue to come down.”

“We should seek out a path forward together,” suggests the CEOs. “All affected stakeholders need and want certainty and an end to a decade of legal and political wrangling.”

It may prove difficult for observers to take the CEOs seriously considering the litigation record on broadband oversight and regulation. The largest cable and phone companies have repeatedly sued to overturn policies that do not meet with their full approval, something likely to happen again if these giant providers don’t get exactly what they want.

Phillip “The circus is in town” Dampier

Yesterday afternoon I got to experience both the pain of having a tooth pulled and watch Comcast and Time Warner Cable defend its merger for more than three hours before the Senate Judiciary Committee. The Festival of Nonsense from Comcast’s top lobbyist David Cohen and Time Warner Cable’s chief financial officer Arthur Minson hurt more.

Despite the $45 billion dollar deal, the real powers that be couldn’t be bothered to turn up at the hearing. Comcast’s chief executive was nowhere to be found — perhaps he was playing golf with President Obama again. Comcast’s top lobbyist David Cohen showed up instead, wearing an outfit that looked like it was stuffed with cash waiting to fall from his pockets into the hands of his “friends” on Capitol Hill. Cohen is a well-known Democratic money bundler who raised $1.44 million for the president’s reelection campaign in 2011 and 2012, and $2.22 million since 2007. (Obama spent time in Cohen’s Philadelphia home as well, part of a DNC fundraising party.)

Perhaps Time Warner Cable CEO Robert Marcus was unavailable because he was too busy counting the $8.52 million he was paid before agreeing to sell the company. Don’t expect him at the next hearing either, because he is shopping for a bigger safe to hold the $80 million he will receive for agreeing to change Time Warner Cable’s name to Comcast.

The other usual suspects were also missing in action. Not a peep from the major networks or cable programmers at the hearing. Instead, the Senate endured a guy with a golf channel nobody ever heard of using the hearing to try to get his calls returned by Time Warner and a wireless provider who believes his technology is faster than fiber. Sure it is.

Brought to you in part by America’s cable industry.

I suppose it’s also worth mentioning Christopher Yoo – Comcast’s intellectual sock puppet straight out of the cable company’s home town of Philadelphia. He serves at the pleasure of the “Center for Technology, Innovation & Competition” (cough) at the University of Pennsylvania. The “center” is financially supported by the cable industry. David Cohen just happens (by sheer coincidence) to chair the university’s Board of Trustees. Yoo’s testimony could be boiled down to a nod in Cohen’s direction with an affirming, “whatever he said.”

The Cohen and Minson Comedy Hour began with opening statements extolling the virtues of supersizing Comzilla, with dubious claims about its benefits for consumers.

Without laughing, read the following out loud:

“We welcome this opportunity to discuss the proposed transaction between Comcast Corporation (“Comcast”) and Time Warner Cable Inc. (“TWC”), and the substantial and multiple pro-consumer, pro-competitive, and public interest benefits that it will generate, including through competitive entry in segments neither company today can meaningfully serve on its own,” the two companies wrote in their joint opening statement.

Cohen

“Comcast and TWC do not compete for customers in any market – either for broadband, video, or voice services. The transaction will not reduce competition or consumer choice at all. Comcast and TWC serve separate and distinct geographic areas. This simple but critically important fact has been lost on many who would criticize our transaction, but it cannot be ignored – competition simply will not be reduced. Rather, the transaction will enhance competition in key market segments, including advanced business services and advertising.”

To emphasize just how little this merger will impact the current state of non-competition in the broadband marketplace, Comcast repeatedly emphasized you can’t subscribe to a competing cable company today and still won’t tomorrow:

“Consumers in Comcast’s territories cannot subscribe to TWC for broadband, video, or phone services. And TWC customers cannot switch to Comcast. For that reason, this is not a horizontal transaction under merger review standards, and there will be no reduction in competition or consumer choice,” said the written statement.

In other words, since there was no competition between cable companies before, making sure consumers still don’t have a choice is not anti-competitive.

Watch the entire hearing on the Senate Judiciary Committee website.

(The hearing begins at the 24 minute mark.)

Here are some other “benefits” promised by Cohen and Minson:

Post-transaction, Comcast intends to make substantial incremental upgrades to TWC’s systems to migrate them to all-digital, freeing up bandwidth to deliver greater speeds. For example, Comcast typically bonds 8 QAM channels together in its systems, and Comcast’s most popular broadband service tier offers speeds of 25/5Mbps upstream across its footprint. In comparison, TWC bonds 4 QAM channels in nearly half of its systems, and its most commonly purchased service tier offers speeds of 15/1Mbps. Comcast’s fastest residential broadband tier offers speeds of 505/100Mbps; TWC’s current top speeds are 100/5Mbps. Comcast’s investments in the TWC systems will also improve network reliability, network security, and convenience to TWC customers.

Minson

Of course, nothing prevented either company from boosting speeds without a $45 billion merger deal. In fact, Comcast is doing exactly that this week. Marcus’ own revival plan for TWC, dubbed TWC Maxx, promised Time Warner Cable customers would get even faster speeds than Comcast offers most of its customers.

Time Warner Cable now advertises it does not have usage caps on broadband. Comcast cannot say the same, although it tries very hard to tapdance around the matter by calling the 300GB monthly cap spreading into more and more Comcast territories a “data threshold.”

Comcast’s speed upgrades for TWC customers are likely to come with a big catch — an arbitrary usage allowance that limits their usefulness. By the way, that 505Mbps service is available only from Comcast’s extremely limited fiber network that the overwhelming majority of customers cannot get.

The transaction will similarly speed the availability of advanced Wi-Fi equipment in consumers’ homes. The quality of broadband service depends not only on the “last-mile” infrastructure but also the delivery of the signal over the last few yards. Comcast has led the entire broadband industry in rolling out advanced gateway Wi-Fi routers to approximately 8 million households and small businesses, giving these customers faster speeds (up to 270 Mbps downstream as compared to 85 Mbps downstream from the prior generation devices) and better performance over their home and business wireless networks. In contrast, TWC only recently began deploying advanced in-home Wi-Fi routers. With the greater purchasing power and economies of scale resulting from the transaction, Comcast can not only offer TWC customers access to today’s best routers, but also invest in and deploy next-generation router technologies for all of the combined company’s customers.

Comcast doesn’t like to mention that “advanced Wi-Fi” equipment costs customers $8 a month… forever. Comcast is also using it to boost its own Wi-Fi service by sharing it with the neighbors. This merger “benefit” will cost customers almost $100 a year. Customers can do better buying their own equipment and don’t need a merger to make that decision.

The transaction will give Comcast the geographic reach, economies of scale, customer density, and return on investment needed to massively expand Wi-Fi hotspots across the combined company’s footprint, including in the Midwest, South, and West, particularly in areas like Cleveland/Pittsburgh, the Carolinas, Texas, and California, where there will be greater density and clustering of systems. Our goal is to provide greater Wi-Fi availability that allows the combined company’s customers to access the Internet in more places, more conveniently, and at no additional charge.

Your usage allowance will likely apply to this “free Wi-Fi” that most customers cannot access because they live in an area where neither company offers it now and likely won’t anytime soon.

The transaction will also enable Comcast to invest in network expansions and last-mile improvements that provide an even stronger foundation for innovative applications, including education, healthcare, the delivery of government services, and home security and energy management. And with greater coverage and density of systems, Comcast will also have the ability and incentive to build out and make available interconnection points in more geographic regions. This will be especially beneficial to companies like Google, Netflix, and Amazon, which aggregate massive data traffic when they deliver their own and others’ services to consumers.

For the right price. Nothing precluded Comcast or Time Warner Cable from investing some of their lush profits into improvements for customers. But why bother when your only serious competitor is usually DSL. Investment in broadband networks has declined for years in favor of profit-taking. Making Comcast bigger introduces no new market forces that would provoke it to improve service. In fact, Comcast’s massive size and reach would likely deter would-be competitors from entering a market where Comcast can use predatory pricing and retention offers to keep customers from switching.

Helping people successfully cross the digital divide requires ongoing outreach. To increase awareness of the Internet Essentials program, Comcast has made significant and sustained efforts within local communities. To date, those outreach efforts have included:

• Distributing over 33 million free brochures to school districts and community partners for (available in 14 different languages).
• Broadcasting more than 3.6 million public service announcements with a combined value of nearly $48 million.
• Forging more than 8,000 partnerships with community-based organizations, government agencies, and elected officials at all levels of government.

Cohen does not mention the company planned to offer Internet Essentials earlier than it did, but held it back for political reasons.

“I held back because I knew it may be the type of voluntary commitment that would be attractive to the chairman” of the Federal Communications Commission, Cohen said in a 2012 interview. Comcast’s generosity was limited. It specifically designed its discount Internet program to make it difficult to qualify and protect its regular-priced broadband offerings. The goodwill from handing out Comcast sales brochures and getting free exposure in the media offers little to customers. Comcast also has a way of getting the community-based organizations it “partners” with to advocate for Comcast’s business interests.

“Sometimes we need a kick in the butt.” — Cohen

If only the government got out of the way and approve the merger, Comcast will improve on its already amazing customer service:

Improving the customer experience is a top priority at Comcast. We are investing billions of dollars in our network infrastructure and are developing innovative products and features to make it easier and more convenient for our customers to interact with us. While our satisfaction results are beginning to rise, we know we still have work to do and are laser-focused on continuing to improve our customers’ experiences in a number of ways.  Comcast has improved its customer satisfaction ratings significantly. Since 2010, Comcast has increased its J.D. Power’s Overall Satisfaction score by nearly 100 points as a video provider, and close to 80 points in High Speed Data – more than any other provider in our industry during the same period.

Twice nothing is still nothing. Cohen even admitted at the hearing Comcast’s progress at improving customer service is not as rosy as his written testimony might suggest.

“It bothers us we have so much trouble delivering high quality of service to customers on a regular basis,” Cohen said. “Sometimes, we need a kick in the butt.”

That has never worked before. Comcast has kicked its customers around since at least 2007 when it also promised major customer service improvements that turned out to be figments of a press release. Comcast’s “laser-focused” efforts to improve instead won it the 2014 Consumerist Worst Company in America award this week and more than 100,000 consumers signing petitions vehemently opposing the merger.

Comcast has a long record of improving consumers’ online experiences and working cooperatively with other companies on interconnection, peering and transit.

Just ask any Comcast customer about their Netflix viewing experience lately and how it took a checkbook to improve matters. Ask any online video competitor whether Comcast is a good neighbor when it exempts its own video traffic from its “usage threshold” while making sure to count competitors’ traffic against it.

Comcast also likes to suggest Americans are awash in competitive options for broadband service. Why there is DSL, satellite broadband, fiber, wireless Internet, public libraries, and books.

In fact, Comcast’s filing points to various “competitors” that don’t even exist yet, if they ever will. Comcast suggests Google Fiber is popping up everywhere, despite the fact Google announced it was delaying its fiber rollout in Austin, and most of its latest expansion plans lack firm commitments to deploy and are framed only in the context of opening a dialogue with targeted communities.

Satellite Internet speeds are severely limited and usage-capped. The same is true for exorbitantly expensive mobile broadband. Comparing a $40 unlimited broadband offering from Time Warner Cable to Verizon Wireless’ 4GB for $50 mobile wireless Internet package is silly.

Comcast characterizes the competitive telecom marketplace as a veritable dogfight, but it looks a lot more like a well-executed dog and pony show. Just how rabid are these dogs?

• Verizon’s pit bull zeal to compete has more bark than bite. Verizon Wireless customers can sign up for Comcast or Time Warner Cable service in Verizon stores (woof);
• Comcast’s rottweiler isn’t supposed to get along well with others, but it manages pretty well pitching Verizon Wireless service (grrr).

An hour into the hearing, it was clear there was some bipartisan discomfort with the merger, with Sen. Al Franken (D-Minn.) leading the charge with pointed questions cutting through Comcast’s government relations fluff.

“I’m against this deal,” Franken concluded. “My concern is that as Comcast continues to get bigger, you’ll have even more power to exercise that leverage — to squeeze consumers.”

Like an orange.

The cable industry believes the majority of America not using the Internet remain offline by choice.

The National Cable Telecommunications Association (NCTA) says the digital divide is not their fault. Price have very little to do with it, according to an NCTA infographic showing just 6% cite “cost” as the main reason they are not signed up for Internet service.

“Cable has made extensive efforts to connect all Americans to the Internet. And while high-speed Internet adoption has rapidly increased in the United States, still too many low-income families remain unconnected and are at risk of falling behind in the global information economy,” writes NCTA blogger John Solit. “Connecting all Americans in order to bridge the digital divide and expand the availability of broadband service remains a national goal embraced by cable companies. In a recent blog post, David L. Cohen, Comcast Executive VP & Chief Diversity Officer said, “[I]n just over two years through our Internet Essentials program, Comcast has connected an estimated 1 million low-income Americans, or more than 250,000 families, to the Internet at home.”

The “digital divide” — broadband have’s and have-nots — has been a regular topic among regulators and legislators for more than a decade. A suspicion that cost is a major factor keeping people from signing up could result in legislation compelling providers to offer low-cost Lifeline broadband service to the income-disadvantaged. In the last three years, the cable industry has tried to fight off that type of approach with voluntary programs that selectively target non-customers.

Comcast’s Internet Essentials provides 5/1Mbps service for $9.95 a month, but signing up isn’t easy.

The discounted service is available only to families with school-age children that qualify for the school lunch aid program. Comcast often promotes its discount program to legislators and others in the industry as an example of the voluntary effort the cable industry is making to solve the digital divide. Target customers who most likely qualify for the service are not going to learn about it through television ads or cable company mailers targeting low-income zip codes. Most of Comcast’s marketing effort is in cooperation with area schools.

Ironically, Comcast’s Internet Essentials actually forces some people to temporarily give up Internet access if they want to participate.

Customers must be current on their Comcast bills and must not have a subscription to any Comcast Internet service for the last 90 days to receive consideration. If you already have Comcast broadband service, you must disconnect it for at least three months before you can apply for Internet Essentials.

This requirement is designed to protect Comcast’s bottom line. Why offer a discount to customers already willing to sacrifice for home Internet service at Comcast’s regular price?

“How is this helping me and my family out,” asks one Tennessee customer who tried to sign up for Internet Essentials but couldn’t because they were already paying for Comcast Internet service. “The Comcast representative said that if I wanted to be enrolled in the program I would have to discontinue my Internet service for 90 days and then reapply. We have the Economy Internet Promotion and pay $19.95 per month. After the promotion ends our fee will increase to $26.95 a month. In our current economy and financial situation saving $17 per month would greatly help our family to keep our service. I will not rest until I find a solution to this problem. My children at least deserve that.”

Comcast also makes it its business to check your household to make sure at least one child still qualifies for the National School Lunch Program. The company reserves the right to immediately cancel service if you miss a payment or move. Participants also must not upgrade, alter or change Comcast service for any reason or risk being removed from the program.

Comcast’s Wi-Fi Ban

Shapiro

One of the most annoying conditions of the Internet Essentials program is that it does not allow Wi-Fi access.

Phil Shapiro, who refurbishes donated computers and distributes them to needy families regularly runs into Comcast’s Wi-Fi ban — a significant issue for larger families that need to be online concurrently.

“I’ve taken three donated computers to [one] family and I was expecting to get them all online with this cable modem service,” Shapiro tells The Hechinger Report.  “But not so fast. Comcast’s telephone tech support tells me that Internet Essentials users cannot use Wi-Fi with their cable modems. Nowhere in Comcast’s printed literature or on the website is this limitation mentioned. Naturally, families who sign up for Internet Essentials get confused about this, but they are not well positioned to advocate for their needs.”

Charlie Douglas, a Comcast spokesperson, confirms that Internet Essentials does not offer Wi-Fi service, although he noted a customer could theoretically buy a wireless router themselves and use that to provide wireless connectivity. But that isn’t what Comcast’s technical support team recommends. Any deviation from the terms of the service offered to Internet Essentials customers could lead to an immediate disqualification. Comcast defines Internet Essentials as a wired service, including one outlet and a basic (not wireless) modem.

“The family that I was helping patiently waited for me while I talked on the phone,” said Shapiro. “They could see that I spoke very politely with the tech support person. They also saw that I had reached the end of my patience.”

A representative told Stop the Cap! Internet Essentials accounts have insufficient bandwidth and speed for Wi-Fi service, so it is not offered.

Shapiro dismisses Comcast’s explanation. Many public Wi-Fi networks offer even slower service than Comcast.

Douglas defended Comcast’s policy noting families served by the program don’t miss Wi-Fi and don’t need it.

But those using tablets might disagree, and with an increasing number of students using them as school textbooks are gradually phased out, Wi-Fi will only grow in importance.

Many large school districts, including Los Angeles, are introducing Wi-Fi only tablets for student use because they are cheaper and easier to support. When Internet Essentials participants ask about Wi-Fi access with the discounted broadband service, Comcast representatives are trained to up sell customers out of the program and sign them to a more costly plan than includes built-in Wi-Fi support.

Customers can successfully, if covertly, connect a router with Wi-Fi capability to the basic cable modem supplied by Comcast and configure wireless Internet Essentials service. But there are no guarantees Comcast will not give customers grief about it, if they wish.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Comcast Internet Essentials Key Milestones 11-13.mp4[/flv]

Comcast produced this video marking the start of the second year of its Internet Essentials program. Chicago Mayor Rahm Emanuel gushed Internet Essentials was “top of the line” Internet access. He was joined by other recognizable political leaders and the former chairman of the Federal Communications Commission Julius Genachowski. (2:47)

Comcast’s discounted Internet service for the poor forces customers to jump through hoops to get the service and considers protecting revenue from existing customers more important than expanding the service to reach those who need it most.

Those are the views of John Randall, program manager at the Roosevelt Institute/Telecommunications Equity Project.

For $9.95 a month, those that can meet some complicated eligibility requirements and prove they are not existing Comcast customers are qualified for 3Mbps broadband service with a 768kbps upload rate. It represents a $30 savings off Comcast’s regular price — a considerable amount of revenue that Comcast is effectively forfeiting for the benefit of poor families who live in Comcast’s footprint.

Except Comcast isn’t actually “out” that much at all, argues Randall.

Of the 2.6 million households eligible for Internet Essentials from Comcast, only 150,000 have taken Comcast up on their offer. That represents only 5.8 percent of those eligible. In Comcast’s hometown — Philadelphia — there are just 3,250 families hooked up, which represents only 3.3 percent of those eligible.

Randall calls the program ineffective and says the onerous requirements to qualify (and re-qualify) are such a hassle, few families bother. What is worse, those families already sacrificing something else in their lives to get broadband service for the benefit of their school-age children are punished for their noble efforts — they are completely ineligible for Internet Essentials regardless of income or need because they are existing customers. Randall argues Comcast carefully constructed the program more as a public (and government) relations exercise than a charitable endeavor. Comcast zealously protects its existing revenues from being cannibalized by customers switching to the discount plan.

Some might argue that Comcast is managing the program with costs in mind, but Randall dismisses that as nonsense.

“Within its footprint (which spans 50 million households in 39 states– 45 percent of the US population), the cost for Comcast to connect additional households is vanishingly low,” says Randall. “With no additional network build needed, Internet Essentials represents almost pure profit for Comcast.”

Randall claims Comcast’s gross profit margin on its broadband service is around 95 percent where the network has already been built. At that rate, Comcast’s cheap Internet still delivers almost $18 million in additional income, and there is a promise of much more as soon as a customer defaults on a bill, misses a qualification deadline, or their children graduate. When any of these occur, Comcast will reset customers to regular rates.

“While most observers might assume that the program is an act of corporate generosity, it was originally conceived in the fall of 2009 as a way to turn a profit by offering slower connections to certain low-income households,” said Randall.

“These plans were temporarily tabled at the direction of Comcast lobbyist David Cohen, who knew that this type of program would be attractive to the FCC and thus useful as a bargaining chip. When the time came for negotiations over Comcast’s $13.75 billion takeover of NBC Universal, Comcast was able to offer something it was planning on doing anyway. In the end, the FCC was able to claim credit for forcing Comcast to implement a program to combat the digital divide, while in reality no arm-twisting was needed,” he added.

One of the biggest challenges of America’s digital divide is making affordable Internet access available. Cable companies in particular are prepared to wring even more money from their Internet customers in the form of higher prices, new and increasing equipment rental fees, and consumption billing schemes that charge more for less service.

But that isn’t the story elected officials receive from Congress.

The potential public relations benefits far outweigh any costs to offer the service. Randall notes Comcast had delivered the Internet Essentials message to over 100 members of Congress and more than 2,000 state and local officials. To broaden its outreach effort, Comcast also engaged leading intergovernmental associations at the state and local level such as the National Governors Association, National Conference of State Legislatures, U.S. Conference of Mayors, and various other organizations of elected officials. On top of that, Comcast says that the impressions generated by media coverage of Internet Essentials launch events earned it “millions of dollars” worth of media.

What message don’t these public officials hear?

America is subjected to local broadband monopolies and duopolies that guarantee the lack of competition for high-speed Internet access.

“It earns Comcast good press while distracting regulators and public officials into thinking that changes in policy aren’t needed and that digital divide problems will somehow work themselves out on their own as a result of corporate generosity. In the long run, Comcast Internet Essentials will do no more than contribute to the delay of much-needed regulation,” concludes Randall.

The Lifeline program became campaign fodder last fall when the Drudge Report released a video showing a minority voter praising Obama for “free phones.”

Two competing philosophies to address the digital divide will clash in Congress this week as Democrats introduce legislation to subsidize Internet access for the poor and Republicans hold hearings critical of the FCC’s existing Lifeline program, which provides low-cost phone service for those on public assistance.

The Broadband Adoption Act, introduced by California Democrat Rep. Dorris Matsui, would reform and expand the Lifeline program to allow participants to choose between a discounted landline, cell phone, or broadband Internet access.

“In today’s digital economy, if you don’t have access to the Internet you are simply at a competitive disadvantage. For example, more than 80 percent of available jobs now require online applications,” Matsui said. “The Internet is increasingly the economic engine for growth and innovation.”

Matsui has introduced similar legislation in the past, but it has never been taken up by the Republican-controlled House.

The bill is co-sponsored by ranking member Henry Waxman (D-Calif.), communications subcommittee ranking member Anna Eshoo (D-Calif.) and five other Democrats.

The thought of discounted Internet access is about as popular with some House Republicans as Lifeline-subsidized cell phone service, which some conservatives have derided as “Obamaphones.”

The House Energy and Commerce Committee will hold a hearing on Thursday to look at Lifeline and consider its future. Members are expected to share stories of waste, fraud, and abuse, particularly over the controversial subsidized cell phone service.

Senator Tom Coburn (R-Okla.) is a regular critic of the program and offered the House committee anecdotal reports that some subscribers have eight or more subsidized cell phones with one subscriber saying that to get one, “she just goes across the street and gets it.” Coburn claimed to have evidence in one case where a man kept a “bag full of subsidized phones that he sells for about 10, 15, 20 bucks each.”

Still seen by some as a luxury, a program that subsidizes cell phones was likely to attract critical attention among politicians.

Senators Claire McCaskill (D-Mo.) and David Vitter (R-La.) both drafted amendments that would end the Lifeline subsidy in its entirety, calling it a waste and abuse of resources.

The program and providers have admitted there have been lapses in eligibility verification and there was fraudulent participation in the program.

Last year, the FCC modified the program to tighten eligibility requirements:

• Required all subscribers to recertify their eligibility and to do so annually by providing documentation of income or program participation;
• Confirmed the program’s restriction of one subsidy per household;
• Started a process to create a State-by-State and/or a National Lifeline Accountability Database to prevent multiple subsidies to the same household;
• Eliminated Link-Up support except for recipients on tribal lands that are served by ETCs that take part in both the low-income Lifeline and high-cost support programs;
• Imposed independent audit requirements on carriers receiving more than $5 million in annual support;
• Directed the FCC and Universal Service Administrative Company staff to take action no later than December 31, 2013, to offer an automated means of determining enrollment in the Medicaid, Food Stamps, and Supplementary Security Income programs, the three most common criteria for Lifeline eligibility;
• Set an interim base subsidy amount of $9.25 per month for non-tribal subscribers.

Lifeline was first enacted by Congress in 1985, during the Reagan Administration. In 2005, the Bush Administration expanded the program to include cell phone service.