More than 45 million people in the United States live below the poverty line. For many of these Americans, the Federal Communications Commission’s Lifeline program has been a lifesaver, offering essential communications in times of emergency, not to mention help in everyday life. But it’s a 20th century government program aimed at spreading a 19th century technology: basic voice telephone service. Nearly all agree that, in today’s broadband world, this program from the 1980’s needs a major overhaul.

The decades-old premise of the Lifeline program is that low-income consumers should have access to the communications service Americans commonly use. In the 1980’s, that meant assuring the availability of basic voice service; today, that means broadband.

Each day brings new examples of how broadband-delivered Internet services are fundamentally changing the nature of communications. In the 1980’s, the wired telephone was the predominant communications platform for almost everyone. Today, just five percent of Americans rely exclusively on “plain old telephone service.” The rest use a variety of communications devices, a growing number of which are broadband-enabled.

So the question is not just whether to expand Lifeline to include broadband, an idea endorsed by two FCC commissioners and the chairman at the agency’s December open meeting; the question is how to incorporate broadband without exploding the cost of the program.

A recently released report from the Internet Innovation Alliance (IIA) charts a path toward reform. In today’s highly competitive communications market, the new reality is that consumers are now in charge. No longer do communications users passively accept a service designed by regulators and delivered by telephone companies. With 80 percent of Americans having access to five or more wireless offerings in addition to cable and wired telephone, consumers freely shift among communications services, selecting the one that is best tailored to their needs.

Respecting the new power of consumers in the market, IIA recommends that the Lifeline subsidy become user-directed. It’s an elegant and simple concept: Let the consumer decide. The aid could be applied to a broadband service that incorporates person-to-person communications applications such as Skype and FaceTime, or to plain old phone service, via a voice-only wireless carrier or a wired telephone. Similar to the federal Food Stamp program, eligible subscribers could receive a “Lifeline Benefit Card” with which they can easily shop among various communications providers.

In theory, the FCC could make this change, bringing millions of Americans into the competitive telephone market, without increasing Lifeline program costs. In fact, the simplicity of a Lifeline shopping card provided to eligible consumers may prove less administratively costly than the current program.

Another major shortcoming of the Lifeline program is related to its administration. Today, the carriers, who have obvious financial incentives to increase enrollment, determine subscriber eligibility. That determination is an inherently governmental function and should be given to a governmental agency such as the Universal Service Fund Administrator or state public utility commissions that have every motivation to eliminate fraud and program misuse. The change would not only significantly increase administrative efficiency, but would also reduce program cost.

Beyond these major program reforms, it would make sense to de-link the Lifeline program from any notion of “eligible telecommunications carrier” (ETC) status. This concept is as worn out as the notion of Lifeline only supporting voice service. With these targeted changes, we can bring an essential government program into the 21st century, offering direct and immediate benefits to the people it serves while strengthening it against fraud and misuse.

Imagine all the ways the 14.5 percent of Americans living below the poverty line could benefit from broadband. Modernization of this government program is a must because, today, the Internet is a jobs line, an education line, a health line, and an information line. The Lifeline Program has demonstrated success connecting millions of Americans for the first time, but its future can be even more meaningful than its past.

Download Boucher’s Op-Ed From Bloomberg’s Daily Report for Executives (PDF)

Download Boucher’s Op-Ed From Bloomberg’s Telecommunications Law Resource Center (PDF)

Originally published at Bloomberg BNA