Policy director at the Benton Foundation and daniel lyons is with American EnterpriseInstitutes Center for Internet Communications and technology. Hes a visiting scholar there from boston college. Amina fazlullah, what is this Lifeline Program . Howd it come about . Guest so the Lifeline Program actually came about during the Reagan Administration in order to provide a subsidy to make sure that low income persons would have access to Voice Service, Telephone Service. And, you know, this comes from the notion that having everyone on the network, having access to public safety, having access to each other and commerce is incredibly important. And for low income be persons, making sure that they had Additional Support to do that seemed necessary, and so thats where the program began. Host and how many people participate in this program . Guest as of this past year, about 13 million. Host and whats the cost . Guest well, so the cost of the program is, so its a 925 subsidy per household. Host 9. 25. Guest thats right. Host okay. Guest and so its a relatively minimal subsidy, and the cost has gone down over the past few years in terms of the overall costs for the Lifeline Program within the total universal service fund. Host and is it specifically for wire phones, or is it now wireless as well . Guest so currently, so, as i said, president reagan during the Reagan Administration the telephone voice, wired service began, and then after the Bush Administration they introduced wireless. And so as it stands today, theres wired and wireless vice available within the program. Host daniel lyons, has it been successful, in your view . Guest so its not clear what the success rate of lifeline is, and i think thats part of one of the problems with the program as it exists now. So lifeline was born more or less as a political compromise between the carriers and the fcc when the government broke up the at t monopoly. And part of the concern was, well, were going to establish this amount that were going to give to low income consumers with the goal of making sure that low income consumers can get access to Telephone Service. But no ones ever really done the study to figure out whether the amount that were giving is actually going toward people who would otherwise not fall off the telecommunication grilled, right . So the gao issued a report just last year that criticized the fcc for this purpose. So i think theres a bipartisan support for the idea that low income households should have some assistance to make sure theyre not falling off the grid and make sure that they take advantage of the latest telecommunications systems. The concern is whether lifeline is actually achieving. That. When the gao asked the fcc for evidence that lifeline is successful, the fcc reported to an academic report that suggested maybe as much as 88 of lifeline dollars are flowing to households that would have Telephone Service even without the subsidy. Host hows it funded . Guest its funded by the universal service charge, monthly tax on your wireless bill or our landline phone bill. The way its calculated is that the fcc estimates how much its going to need per year and then divides it over interstate telecommunications revenue, so Long Distance revenue largely. That then gets charged to the carrier and is passed along to you and me, the consumers. Host amina, has the program been successful in your view . Guest i think the program has been successful. I agree that it would be better for the fcc to take steps, i think, to understand the population better and understand the impact of the program and not have to rely on third party reports. But i do think the program is successful, and id like to step back just for a moment for us to understand who were talking about in terms of who the users are. So the Lifeline Program is reticketed to folks restricted to folks who are in about 135 of the poverty line or lower. So for a family of four in the contiguous 48, thats about 32,000 a year. And if you live in a city like des moines, so this isnt san francisco, its not new york, it costs about 63,000 a year for you to meet your average expenses for a family of four. So they are struggling. They are definitely well below, theyve got well below what they need per year in terms of income. And so there are times where theyre going to make decisions liking should i pay the phone bill or should i get food . Should i get food or should i get medicine . So folks do fall on and off. I think everybody understands today low income or high income that broadband and Telephone Service is incredibly important. And so people try to make that work because its a necessary tool for their lives. But when youre looking at the numbers, its really, really difficult to even conceive of how these families are going to be able to meet their needs and stay on, you know, a high cost sub viber program Subscriber Program like broadband or Telephone Service without the support. So i think that, you know, understanding the struggles that these families are facing, lifeline has done a really great job of stepping in and providing a support thats going to be there for them continuously. Host well, the fcc in their march meeting will be talking about the Lifeline Program, and to get some more perspective, lets bring Brendan Sasso of the National Journal into this conversation as well. Thanks, peter. Just to provide the context and the latest update, the fcc is scheduled to vote on some big changes, the biggest being that theyre going to include Broadband Internet service so that people can use that subsidy not just for their cell phone or their landline, but Internet Access either at home or a data package for their cell phone. My question is whether you both think that the 9. 25 is enough. I mean, i know that most people it costs a lot more than that to get Home Broadband connection or a data plan for a family. Is that enough to encourage people to adopt broadband if they werent otherwise . Guest i mean, i think that its a good first step. And i think that the fcc is going to be making a lot of changes to this program and moving in a deliberate fashion makes sense. The, there are programs that are out currently that are not part of the usf that are available to low income families that are coming in right around that 10 mark. There are a lot of other costs that are required to be able to access the internet, so youre going to have to have a device, potentially access to training and support. And there are programs out there to support low income families so that they have access to all those pieces. So 9. 25 i think is a good place to start, but its yet to be seen whether thats going to be enough going forward. Guest my concern is path dependency. We seem to be getting to telephones, why not extend that out . I think theres a sense that the fccs putting the cart before the horse because they havent done a real study to suggest these are the drivers that are keeping people from adopting broadband service. We dont know if we need 9 a month for ten Million People or 45 a month for two Million People. The fcc hasnt done that level of analysis. We had a series of broadband trials that the fcc adopted in 2012, and the goal was to try to provide some data. But unfortunately, they were not conclusive. They were not designed in a way that had measurable output results, and the sample sizes were too small. The one thing i think we did learn was the higher the sub subsidy, the greater its not clear that giving a 9 discount is going to be enough to incentivize people who cant afford broadband to suddenly make that room in their budget. One thing that i think is interesting about the fccs proposal is that it would phase out support for mobile, voiceonly. So im wondering maybe theres some people, maybe elderly especially who maybe just dont want to get broadband, and maybe they like the fact that theyre able to get Free Cell Phone Service right now. Is it a concern that those people wont be potentially supported under the program anymore . Guest there is a, i think as of right now it looks hike a threeyear like a threeyear phaseout, and theres definitely concern how this Consumer Population is going to shift from having a product that was focused on voice and now a product that theyre used to using to a product that might have some component of voice as well as some component of data or a different device completely. So from a feature phone to a smartphone. So its going to take, i think, a careful approach by the fcc to transition those folks. But i think we all understand the benefits of making sure that everyone has access to broadband. So its a difficult, i think its a difficult role for the fcc to play, you know . They want to encourage if modernization the modernization of the program, and they definitely dont want anybody to be left behind because theyve not quite ready for that step. Go ahead. Host in a sense, is this a back door reform of the universal service fund . Guest well, its one step among many that the fccs taken over the years to try to transition the universal service fund from a telephonebased program to a broadbandbased program. Theres Additional Support that the fcc provides for rural areas in what we call the High Cost Fund to help cover carriers that provide service in places where theres not a lot of people. And the fccs transitioned that slowly to broadband as well. But i think part of the problem of taking the old telephone system and simply moving it to broadband is we replicate some of the errors and some of the difficulties we had in the old system. I think what makes more sense is for the fcc to rethink this from ground zero rather than this revolutionary change. To think from the ground up. If i was starting atsore and designing a service today, how would i do it . Host and how would you do it . Guest with regard to highline in particular, i think what makes lifeline in particular, i think what makes sense is a voucher system, something direct and portable which is language president obama used in his recent connect all initiative. I think it makes a lot of sense for the fcc to figure out, first of all, what are the drivers of low broadband adoption. Unlike Telephone Service, right, its not just the monthly fee that is a problem. You can have free broadband, but if you dont have a computer, for example, thats problematic, right . So i think a holistic approach would involve not just a subsidy for monthly service, but also some type of equipment subsidy to get computers in the hands of eligible recipients. And also some sort of digital outreach so when we do surveys about why people who are not on broadband have chosen not, theres going to be some big chunkings of the Elderly Population that never adopt for any price. But for those who dont appreciated everything you can get, a Digital Literacy outreach program, i think, is a critical component. Those are things i would group together and fund in different ways as well. Host and you would fund it how . Guest so rather than use the universal Fund Mechanism which is problematic, a, because until recently there wasnt a cap on it, there wasnt a budget on the program and, b, its growing exponentially. So the usf surcharge was 3 in 1998, its now 18 which is pretty close to that tax they put on hotels for suckers who are coming in from out of town, right . Rather than fund it that way, i think it should be a line item in the federal budget just like any other subsidy program, something thats subject to congressional oversight, that has a hard cap that forces the program to figure out how you use these dollars most efficiently to get people on the grid. And maybe even, dare i say, move it out of the fck and over to something fcc and over to Something Like hhs that has a better understanding of poverty issues. One of the critiques over the past 20 years is its focused much more on the needs of carriers than on the needs of the consumers its serving. Finish the host amina fazlullah, has the usf worked, in your view . As a funding mechanism and guest i think the usf program has worked for many years now. I think its at a crossroads where were going to have to consider, you know, how i we contribute to that program as more consumers migrate from traditional Telephone Service which is in Voice Service the traditional base of where the usf dollars come from and we are going to leave our scheduled Communicators Program now, you can see it later in its entirety. Going to go live now to the annual policy conference, among the speakers today, democratic president ial candidate hillary clinton, House Majority leader kevin mccar and minority whip steny hoyer. This is just getting underway. Think theyre actually going to reinvent the wheel and go about doing it. Please join me in welcoming Daniel Burrell and [inaudible] of shot wheel. Hello. Morning. Gentlemen, welcome to the policy conference. Where did this idea of reinventing the wheel come from . Its actually the result of a mistake. I wish i could take credit, but it just happened as a mistake. It all happened a few years ago, in 2011, when a good friend of mine, a farmer from the south of israel, broke his pelvis. And he was confined to a wheelchair for about six months, and he found that the ride on the wheelchair both off and on road is excruciating. So being the creative farmer that he is, he tried to trick that. He thought how can it be better. So you have been confined to a wheelchair for how long . Well, im going to be 48 at the end of the month, so 24 years. Another life, 24 years in a wheelchair. Youve been in a wheelchair half your life. And how did you come to be confined to a wheelchair . Well, at that time i was a pilot in the air force, in the Israeli Air Force. I flew [cheers and applause] i flew f16s, and i was an instructive in the cadet school. I had to go fly air flight another base. So they came and took me and some other pilots and, unfortunately, we slept in the car, and the driver also fell asleep, and the car rolled over. I was thrown out on my back, broke it, and you see the result actually. So i assume as a former Israeli Air Force fighter pilot, youre a pretty active guy even in a wheelchair. What are the limitations . What is a conventional wheelchair like when youre active in it . I encounter many difficulties sometimes x along the way im trying to figure out how to make my life better for myself, riding it and for other people. So, like, if im going down curbs, steps, some gravel, i hurt my back. At the end of the day, thats how i got the soft wheel, to try to solve the problem. Okay. Lets get back to the farmer whos confined only for six months, and he wants to make it a better thing. What happened . So hes a farmer, so he took the air cushion from a john deere tractor and tried to put it inside of the frame of the wheelchair. It didnt really work, but it did caught the eye of one of israels most famous incubator. Its a Governmental Program where you get Government Funds for innovation. So soon after we were set on with a government grant to develop suspension for a wheelchair. And so we did for about a year. Howd it go . Not that well, actually. Okay. [laughter] you know, suspension in its core is very limited. It hasnt evolved in the past 90 years, so no matter what we tried to do, how we tried to innovate, it simply didnt do well enough. It didnt work. So one day the guys came in, and we got to talk. The talk. Yeah, the talk. Basically, we make a breakthrough or they close down the company. So we set up in a room, we took a wheelchair, and we just stared at him. And, you know, brian, a wheelchair. Its a wheel and chair. Wheel and chair. Even i understand that. Yeah. You know . [laughter] so we couldnt put it in the chair, so we said, okay, nowhere else, lets put it in the wheel. And so we were so excited putting it in the wheel, we made a small mistake, a great small mistake. We forgot to do our homework. We were so excited we didnt research that inwheel suspension. And if you were to do that, we would have found out people have been trying to do this for about 200 years and failing time over time. You guys never heard of google . Who . Sorry. [laughter] so 12 months later we had the firstever inwheel suspension for wheelchairs. We didnt know, you know . So we just no one told you it was impossible, so you went ahead and did it. Yeah. We dont believe in impossible. All right. [applause] so here we, this is a soft wheel wheel. Lets hold this up so we can see this. This is a softwheel wheel. As you can see, its round, and its a wheel. It doesnt have spokes. And all the magic happens inside. Every vehicle is connected through the hub. Okay. Any kind of vehicle. What happens is that this hub as opposed to other meals moves. It can move freely within the diameter of the wheel. The center moves within it . Exactly. Okay. And that Small Movement is so efficient that it can absorb all the impact, all that energy from the road and not transfer it to the riders body or the shocks. It is a breakthrough in terms of how you look at suspension because it is selective. Whe