It began with providing landline telephones but then added cell phones in more recent years. The funding for it comes from a “tax” that’s included in everyone’s monthly phone bill.

Through the program’s rapid growth over the years, an overhaul was greatly needed, as Larry Downes, a Senior Adjunct Fellow at TechFreedom tells us.

“There’s general consensus among everyone, including all the commissioners at the FCC, that the Lifeline program has gotten very much out of control and very much sort of veered away from its intended goal,” he said.

He explained to us that the problems started because there was no cap included. As a result, everyone that was eligible applied, which meant that funds quickly ran out. To fix this, the FCC would simply raise the “tax” on ordinary users.

“The more people who apply, the more money that everyone else winds up paying on their phone bill every month to subsidize the plan,” said Downes.

An even greater problem, however, is the fact that the FCC didn’t have any checks and balances in place to monitor fraud or abuse. What this means is many people were getting multiple lifeline subsidies for both landline phones and wireless devices.

Downes explains that an entire industry was essentially built inside the program, in which groups of people would have the single job of signing up users. Since they didn’t have any equipment and had roaming arrangements with carriers, they were able to make a small profit.

“Some of the unscrupulous providers of the service were just signing up people multiple times or they were signing them up in multiple different programs and clearly violating the rules and, indeed, violating the law,” he said.

Downes believes that the FCC is rightly to blame for a lot of this fraud and abuse.

“It has never been particularly professional in the way it goes about its administration of this and other funds, including… [the] Internet fund for libraries called E-Rate fund as well as other universal service programs,” he points out.

In fact, an ongoing Department of Justice investigation into the E-Rate program recently sentenced 2 people to prison. Up to this point, the investigation has led to 7 companies and 24 people either pleading guilty, being convicted, or entering into civil settlements.

FCC Chairman Julius Genachowski released this statement on the news:

“The E-Rate program brings enormous benefits to students everywhere. I applaud today’s action by DOJ. This successful prosecution reflects the collaborative efforts of the DOJ and FCC to protect E-rate from waste, fraud, and abuse, and to deter future misconduct.”

“It’s pretty much, I think, inexcusable that the FCC just failed completely to introduce the kind of basic oversights – the kind of basic management techniques – to make sure that this kind of waste and fraud wasn’t escalating as it clearly was,” said Downes.

With the reform, the FCC now says it is putting in controls and expects to save an estimated $3 billion. With this money, it plans to begin a pilot program that would also grant high-speed Internet access to eligible participants.

Downes has a problem with this because he doesn’t think the Commission has the legal authority to implement such a program without Congressional consent. According to him, the FCC repeatedly uses Section 706 of the Telecommunications Act of 1996 to expand its authority even when it isn’t relevant.

While this is definitely a concern, he thinks an even greater issue is the fact that the agency is starting the broadband program now before it has had a chance to implement its checks and balances.

“If it turns out that they don’t actually save $3 billion over the next two years, they’re gonna have spent some of that money anyway on this pilot program,” said Downes.

He went on to say that a better plan would be to implement the audits and check them in six months. If they were working, then they would know the broadband plan was executable.

The FCC released its order late last week, which means that groups are likely reviewing it to see if they need to take legal action to get it reversed.

Do you think the FCC’s Lifeline program overhaul will solve the issues of fraud? Let us know in the comments.

The CTIA found that the number of wireless subscriber connections has surpassed the number of people in the U.S. and its territories. It also found a 111 percent increase in wireless data traffic.

While the situation is by all means challenging, the massive eruption of content that sparked it is both encouraging and exciting.

“We’re in this exciting arms race where the creation of content is happening so fast it’s exceeding even these amazing improvements in computing power, these amazing improvements in storage capacity, and particularly, these amazing improvements in connectivity,” said Bruce Mehlman, the former Assistant Secretary of Commerce for Tech Policy and the Co-Chair of the Internet Innovation Alliance.

To help solve this problem of congestion, Congress is currently examining legislation that would free up more spectrum from broadcast radio and television companies. While everyone agrees that more spectrum is needed, the dispute is over how it would be distributed and, specifically, the FCC’s role in this process.

In the past, the FCC has had a very active position in managing the auctions. In other words, it has had the power to place restrictions on auctions or conditions on spectrum based on the bidders’ market dominance and spectrum holdings.

However, the bill that’s currently in the House would remove this power from the FCC, which is a move that is sparking a lot of debate. Former FCC Chairman Reed Hundt recently called the proposed bill “the single worst telecom bill” he’d ever seen.

The House argues that previous government allocations are the reason that the current “spectrum crunch” is happening. It also believes that limitations in auctions would result in less revenue to help reduce the federal deficit.

As Mehlman explained to us, Congress is remembering what happened in the controversial 2008 spectrum auctions as well as the recent failed merger of AT&T and T-Mobile. He sides with policymakers on this issue because he believes the previous restrictions are to blame for the current problems.

In a post on the Internet Innovation Alliance, Mehlman wrote:

Many in Congress fear FCC micromanagement and seek open auction rules free from FCC interference. The FCC, of course, objects to Congressional micromanagement of their micromanagement, seeking maximum flexibility to set auction rules.

The irony here is that these auctions are needed because the last time this spectrum was assigned, policy makers limited its potential use and transfer. Thus much of the spectrum is under-utilized and our economy suffers for it.

In our recent interview, he expressed concern that the same issues would continue if the FCC were permitted to keep its authority.

“The biggest challenge is if the FCC gets its way and follows through with what many in the House fear they might do, which is limit who’s allowed to compete, I think the very spectrum crunch these very auctions are expected to alleviate doesn’t get alleviated… then problems continue,” pointed out Mehlman.

“I think most people would concede the reason there’s inefficient use of spectrum is because of old government decisions on who could and could not use spectrum,” he continued. “Logically, you want less government constraints in the future.”

Some mobile companies are perfectly happy with the FCC’s authority over the auctions as a group of them led by Sprint and T-Mobile sent a letter to lawmakers asking that the Commission’s position remain the same. AT&T and Verizon are not part of this support since they believe the FCC would favor the smaller carriers.

Incidentally, not everyone agrees that auctions would solve the issue. Rick Whitt, Google’s Washington Managing Counsel, recently indicated that auctions would not completely eliminate the spectrum crunch saying, “Auctions will fall short of meeting that gap.”

Mehlman told us that he agrees with Whitt in that content will likely be created faster than bandwidth can be apportioned. But, he believes that this provides an even greater urgency to get policy in place that would encourage an open marketplace.

“Having everybody eligible to acquire the spectrum and to subsequently sell the spectrum to a higher and better user is letting the market allocate the spectrum,” he said. “If we had done that the first time, we would have less congestion, we’d have more high speed wireless, and, I think, we’d have the same amount of competition.”

“We don’t have a problem with lack of competition, we have a problem with a lack of investment, [and] we have a problem with a lack of spectrum aggregation to meet the marketplace needs,” he added.

Even though Sinclair Broadcast Group CEO David Smith said it was doubtful that Republicans and Democrats would be able to agree on legislation for a broadcast television auction this year, Mehlman thinks it is a possibility. As he explained, this legislation is part of larger jobs bill that both sides want to see pass.

Should auctions be open, or should the FCC have a say? What do you think? We’d love to hear your thoughts.

DISH Network announced a partnership with ViaSat Inc. at CES today to bring next-generation satellite broadband to homes across America bundled with their satellite television service. The company also announced a new DVR system that will bring impressive storage and recording abilities to their service.

The new satellite broadband service, called DISH Broadband, is the most appealing new option just because it’s the fastest satellite offered yet in the United States and it’s squarely aimed at rural Americans who can’t get access to broadband Internet.

“This is one more example of DISH meeting the needs of consumers,” DISH CEO Joe Clayton said. “The market potential for this new Internet service is substantial given the nearly eight million to 10 million mostly rural American households that are unserved and millions more left with slower broadband alternatives.”

The service will cost $79.98 per month with an installation starting at $99. ViaSat will handle the satellite delivery services while DISH will handle the billing and tech support.

During the same conference, DISH also took out time to announce their new set-top boxes Hopper and Joey. The Kangaroo names are intentional as that is the mascot for their new devices.

The Hopper is the main unit DVR that features three satellite TV tuners, a 2TB hard drive that can store up to 2,000 hours of video content, bluetooth for linking to devices like wireless headphones and picture-in-picture for watching any two channels at the same time.

The Joey is the smaller set-top box that connects to the Hopper unit. This allows for the most interesting feature of the new set-top box in that it can deliver up to four different on-demand or recorded shows to four rooms in the house. This essentially allows every member of the family to watch something different any time they please.

The other big feature of Hopper is PrimeTime Anytime which records every PrimeTime television show on every major network. This also means that the Hopper DVR can record up to six shows at once.

The Hopper will also offer the usual plethora of TV apps like Facebook, Twitter, Pandora, photo sharing and games.

While the new Internet service is definitely appealing, especially to those in rural communities, it’s the new DVR and set-top boxes that create the most excitement. It’s hard not to be in love with a system that can record and play back that many programs simultaneously throughout a household.

Zennstrom is now part of FreedomPop, the group partnering with LightSquared to bring this huge undertaking to life. Apparently, the services will be offered by the FreedomPop company and the infrastructure necessary to support such a massive service will be provided by LightSquared’s existing wireless network. Currently, LightSquared is in the process of rolling out a 4G-LTE network, and it’s expected to be available later in 2012.

While the infrastructure and the other details concerning a nationwide broadband network are still in the gestation stage, the technical details are not the driving force behind this service. The goals of the partnership is. Simply put, FreedomPop thinks all Americans should have access to high-speed Internet connections, and instead of talking about it, they are working to make such a dream a reality. Some press release quotes from both companies indicate as much:

“The Internet is a right, not a privilege,” said Matt Ingrid, COO of FreedomPop. “With the economic efficiencies delivered by LightSquared’s wholesale business model, we can achieve our objective to deliver flexible high-speed wireless access to anyone at a fraction of the cost and inconvenience seen in today’s market.”

And:

“FreedomPop represents the kind of disruptive service model that LightSquared is enabling, and shares our belief that broadband access is a right for everyone,” said Sanjiv Ahuja, chairman and chief executive officer of LightSquared. “Our nationwide network will allow FreedomPop to make a profound impact by delivering affordable high-speed wireless access to underserved communities across the country.”

The question is, would the traditional powers-that-be in the Internet service provision industry allow such a service to operate? Would AT&T/Verizon/Comcast/Time-Warner be open to a competitor that offers a free version of a service the previous companies charge a premium for? Comcast wasn’t too pleased when Google discussed bringing its free fiber optic network to Ann Arbor, Michigan, so it’s doubtful they would welcome the LightSquared/FreedomPop partnership with open arms, either.

Is a broadband connection to the Internet a human right or a privilege? What about running water and electricity? While it may be a stretch to compare these services, some clearly believe a high speed Internet connection is as much a human right as clean water.

Another point to consider is how would the traditional ISPs react if FreedomPop’s vision become reality? What if they actually build the infrastructure capable of supporting such a potentially huge amount of users? Would that mean companies like the aforementioned ISPs be willing to match FreedomPop’s offer, or at least improve upon their “last mile” infrastructure so they can offer increased speeds that people would consider paying for?

AT&T, however, is standing its own ground and fighting for its acquisition to get approved. It filed a formal response to the DOJ lawsuit, in which it said the complaint “fails to come to grips with the significant efficiencies this transaction will generate.”

Are you for or against AT&T buying T-Mobile? Let us know.

The telecom giant, who would become the largest U.S. wireless operator if the deal goes through, is also receiving its fair share of support. Early on, the Heartland Institute, an organization that promotes free market initiatives, expressed their support for the merger and called it a “natural” business acquisition.

Large organizations including Microsoft and Facebook have also endorsed the proposed merger as well as numerous governors across the country. Most recently, 15 House Democrats wrote to President Obama yesterday encouraging his administration to settle the DOJ lawsuit in order for the deal to go forward.

The Internet Innovation Alliance (IIA) has additionally been very outspoken in its support of the merger, especially its Honorary Chairman, former Congressman Rick Boucher. He originated the House Internet Caucus and has a history of being active in Internet-related issues. He spoke with WebProNews specifically about AT&T’s bid to buy T-Mobile and told us that, while the opposition was loud, the support was actually larger.

“The level of support for this merger greatly exceeds the level of opposition,” he said.

The primary goal of the Internet Innovation Alliance is to promote broadband deployment. Through this merger, the IIA and Boucher believe that innovation would increase and that jobs would be created. In turn, both of these areas would result in an improved economy.

“We [IIA] think there are very few steps that could be taken that could do more to help the American economy today than deploying broadband to everyone nationwide,” said Congressman Boucher.

Earlier this year, President Obama laid out a broadband plan in which he said 98 percent of U.S. residents would have access to high-speed mobile broadband service over the next several years. According to AT&T, their merger would bring this access to 97 percent of Americans throughout the country.

“The President’s goal is almost entirely fulfilled simply by allowing this merger to go forward,” pointed out Congressman Boucher. “I, frankly, don’t see a way that the President’s goals of having 98 percent deployment within the near term can be met in the absence of this merger.”

He also pointed out that, through the merger, this initiative that would practically meet the President’s goal would be funded privately. In other words, it would not cost taxpayers anything, whereas other broadband endeavors would.

Congressman Boucher told us that the AT&T/T-Mobile deal would be especially beneficial for rural areas as well. Up to this point, the deployment of broadband to these areas has been largely prohibited due to the high cost it takes to string wires over mountainous regions. However, he explains that AT&T plans to deploy 4G wireless technology, which not only reduces the costs associated with wires, but also has speed that is said to rival the fastest broadband connections today.

In regards to the opposition over competition, Congressman Boucher told us that there were plenty of alternatives for consumers.

“Yes, this merger takes 1 competitor out of the space, but in the most densely populated, largest markets across the country, in 18 out of 20 of those, you would still have a choice of 5 or more providers of wireless service,” he said.

Price increases have also been a big concern for consumers. But, as he explained, when other wireless companies have merged in the past, prices have actually gone down instead of up.

Congressman Boucher told us that he did, in fact, believe that the deal would be approved. One reason he thinks it will is because Deutsche Telekom, T-Mobile’s parent company, clearly wants to exit the American mobile market. The company has stopped investing in T-Mobile USA and is not making plans to integrate 4G. For these reasons, it will eventually lose its subscribers unless someone buys it.

Some reports have speculated that Sprint should purchase it, but the Congressman said that Sprint has had trouble integrating previous acquisitions due to compatibility issues. He believes that a T-Mobile acquisition would turn out the same way.

While he does think that AT&T will be able to go forward with its purchase of T-Mobile, he did say that the terms of the deal would likely be negotiated. Congressman Boucher also told us that these terms are what the public should be focusing on instead of questions regarding whether or not the deal should go through.

“The discussion about the blanket ‘yes’ or ‘no’ – should the merger be approved- should be answered in the affirmative,” he said. “The real conversation needs to be about the conditions under which this merger will be approved.”

The status hearing for the merger is set to take place on September 21, and the presiding judge has stated that all parties should be prepared to discuss settlement options.

If the deal goes through, what terms would you like to see included?

After many applications to be the first city to host Google’s venture, in March of this year they selected Kansas City, Kansas as their first stop.

Today, Google announced on their new “Google Fiber Blog” that the second city that will be receiving the ultra-high-speed network is Kansas City. Wait – what? Oh, I meant Kansas City, Missouri.

That’s right, Google has decided to provide its services for all the residents of all Kansas Cities in the United States before moving on to other cities. I actually made that part up. This announcement makes sense considering the two cities are just a hop, skip and a jump across a river from each other.

From the fiber blog:

Google took on this project because we’re committed to moving the web forward. Just as the move from dial-up to broadband led to new and unpredictable innovations, we believe ultra high-speed bandwidth will push the web to even greater heights – and we couldn’t imagine a better place to start than the Kansas City region. With or without Google Fiber, this area is a hub for technology, innovation, and entrepreneurship, with a diverse population that represents the rest of the country.

Going forward, we’ll continue to talk to other cities about the possibility of us bringing Google Fiber to their communities. For now, we can’t wait to see how the Kansas City region comes together to benefit from this kind of connectivity.

Speaking of the fiber blog, Google just introduced it yesterday, and today’s announcement is it’s first post (besides some back posts aggregated from other Google blogs). Maybe the creation of the fiber blog is a sign that more fiber announcements will be coming in the near future? Who knows? Depending on how their experiment goes in the Kansas City region, we might see Google developing super-high-speed networks in many American cities.

The networks are supposed to be up and running sometime in 2012.

As a quick reminder, AT&T DSL customers will now be charged penalties for exceeding a 150 GB limit per month. For every 50 GB of additional data, users will be charged $10. UVerse users’ cap is set at 250 GB.

These data restrictions have already been in place if you have Comcast, who limits broadband users to 250 GB per month. Although true that many users don’t come anywhere close to 250 GB per month, 150 Gb is a different story. Heavy users who, let’s say, watch a lot of streaming video through Netflix and download a lot of media could surpass this limit in a month’s time.

The data cap implementation news has not been lost on two prominent policy groups, The New America Foundation and Public Knowledge. They have written a joint letter to the FCC asking that they investigate the motivations behind these caps.

In light of the fact that 56% of American broadband subscribers’ connections are restricted by some sort of broadband cap,1 Public Knowledge and New America Foundation’s Open Technology Initiative urge the Bureau to exercise its statutory authority to fully investigate the nature, purpose, impact of those caps upon consumers.2 The need to fully understand the nature of broadband caps is made all the more urgent by the recent decision by AT&T to break with past industry practice and convert its data cap into a revenue source.

The letter continues to single out AT&T, mostly for the fact that their 150 GB data limit seems motivated simply by profit, as it is unlikely that it would be an issue of volume incapabilities.

In the world of broadband data caps, the caps recently implemented by AT&T are particularly aggressive. Unlike competitors whose caps appear to be at least nominally linked to congestions during peak-use periods, AT&T seeks to convert caps into a profit center by charging additional fees to customers who exceed the cap. In addition to concerns raised by broadband caps generally, such a practice produces a perverse incentive for AT&T to avoid raising its cap even as its own capacity expands.

Furthermore, it remains unclear why AT&T’s recently announced caps are, at best, equal to those imposed by Comcast over two years ago. The caps for residential DSL customers are a full 100GB lower than those Comcast saw fit to offer in mid-2008. The lower caps for DSL customers is especially worrying because one of the traditional selling points of DSL networks is that their dedicated circuit design helps to mitigate the impacts of heavy users on the rest of the network. Together, these caps suggest either that AT&T’s current network compares poorly to that of a major competitor circa 2008 or that there are non-network management motivations behind their creation.

The two groups ask that the FCC monitors a few points, such as the relationship of enforcement to times of network congestion, when and how often penalties are paid and how AT&T arrived at their specific limits.

“Broadband internet access is critical to the continued economic and cultural prosperity of our nation,” they say,

Amen. Although for some, data caps are unforgivable in principle, if these caps start affecting more American internet users, I’m sure there will be more than policy organizations writing letters.

DSL customers will have a 150 gigabyte per month usage limit (250 Gigabytes for UVerse users). Those that exceed the cap will be penalized an extra $10 for every 50 gigabytes they go over.

I can’t imagine how much more press the move would be getting, if it had not been for the Osama bin Laden death news, that currently has the world occupied. That’s not to to say the matter hasn’t had its fair share of press up to this point. The plans were announced last year.

A piece from Time Magazine points out that AT&T all but buries the info on their site “probably hoping it won’t scare customers who might opt for uncapped alternatives.”

The data limitations have been heavily criticized, particularly as online video is becoming a much more mainstream phenomenon, and uses up a lot of data, leaving plenty of concern that it will be too easy to surpass the limits, by simply enjoying web services as they are intended.

I’m guessing we’ll be seeing more tweets like this one in the future:

Earlier this year, AT&T announced plans to acquire T-Mobile USA.

Also today, AT&T announced updates to AT&G Smart Limits for Wireless. These include an increase in the number of blocked numbers allowed, and additional cost controls for parents to “better manage download activity” and “restrict download purchases and calls”.

Parents can also establish imps of the day when phones can be used for web browsing, messing, and outbound calls, filter access to inappropriate Internet content, define the number of text and instant messages allowed, determine the amount of web browsing usage allowed per billing cycle, and limit downloadable purchases (ringtones, games, etc.).

Initially, the service will only be available to the major markets: San Francisco, Seattle, Washington D.C., and Philadelphia. There are plans to roll out Extreme 105 to some of the smaller markets at a later date.

The upgrade presents a much needed speed increase, as the US struggles to catch up with other countries in terms of internet speed. Om Malik, of GigaOm, presents some caveats with Extreme 105. The service will be $105/month if you sign up for the Triple-Play plan which includes television and phone; services that cost extra. If you want the 105MBps plan on its own, it will cost you $199. Along with the price tag, the 250 GB bandwidth cap will be attached to the service as well.

Extreme 105 is based on Comcast’s DOCSIS 3.0 technology, which they rolled out with the 50Mbps service last year. With the tech, Comcast boasts that users can download HD movies in five minutes and full music albums in a matter of seconds.

Huh?

Okay, I will refrain from knocking a city of 150,000 where I have never been.  I’m sure it is a lovely place, and they are well-deserving recipients (lucky jerks).  Come on, Topeka briefly changed its name to “Google, Kansas.” That wasn’t good enough?  But I digress.

Google’s high-speed network will be lightning fast, providing 1 gigabit per second fiber-to-the-home connections.  That’s nearly 100x faster than most American’s connections.  “Imagine sitting in a rural health clinic, streaming three-dimensional medical imaging over the web and discussing a unique condition with a specialist in New York. Or downloading a high-definition, full-length feature film in less than five minutes. Or collaborating with classmates around the world while watching live 3-D video of a university lecture,” said Google in February of 2010.  Wait, go back to that 5 minutes HD movie download.  *Drool *

According to the official Google blog, here is why they chose Kansas City:

In selecting a city, our goal was to find a location where we could build efficiently, make an impact on the community and develop relationships with local government and community organizations. We’ve found this in Kansas City. We’ll be working closely with local organizations including the Kauffman Foundation, KCNext and the University of Kansas Medical Center to help develop the gigabit applications of the future.

The move is pending the city’s approval and Google plans to be up and running by 2012.  They also say they are looking at ways to bring this insanely fast internet to other cities.