FCC announces plan to expand 'lifeline' program for low-income Americans to include Internet access

The top U.S. communications regulator on Thursday revealed a plan to expand a government phone subsidy program for low-income Americans to begin covering broadband Internet access.

The Federal Communications Commission is expected to vote on June 18 to begin the process of revamping the $1.7 billion program, called Lifeline, which has helped poorer Americans get access to telecommunications technologies since 1985.

FCC Chairman Tom Wheeler wants to give those receiving the subsidy a choice of using it for phone services, high-speed Internet, or both. The program helps about 12 million U.S. households afford landline and mobile phones, according to agency estimates.

"As communications technologies and markets evolve, the Lifeline program also has to evolve to remain relevant," Wheeler said in a blog post. "Broadband is key to Lifeline’s future."

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.

The latest changes to Lifeline seek to bridge the digital divide for poorer Americans as companies routinely require basic digital literacy skills and Internet access becomes increasingly important for healthcare, financial planning or education.

The subsidy is currently available to households with an income at or below 135 percent of the federal poverty line, or receive federal assistance through other programs such as food stamps or Medicaid.

It is funded through fees paid by landline and cellphone users and offers each eligible household $9.25 a month. The new plan does not propose changes to the funding cap.

Nonetheless, the proposals are likely to spark a new round of political battles of the Lifeline program, which has faced criticisms for its history of fraud and abuse, often by individuals and small telephone companies.

Republicans, who in recent years have referred to Lifeline as "Obamaphone" program, have fought to shut it down for being too wasteful.

Wheeler's proposal aims to address some concerns, seeking comments on how best to ensure that those receiving financial support are the ones who need it most, for instance by putting third parties instead of phone companies in charge of deciding eligibility.

The proposal also seeks comments on how the FCC can encourage more providers to participate in the program and suggests increasing minimum standards for phone and Internet service that low-income users receive through Lifeline.

Wheeler's proposals are a renewed push for reforms of Lifeline, which has gone through several alterations in recent years to accommodate the growing use of wireless phones, cut its spending and crack down on fraud.

(Reporting by Alina Selyukh; Editing by Alan Crosby)