'Obamaphone' program expands to Internet use

obama phone
Following a controversial vote on Thursday, the FCC will now allow the more than 18 million Lifeline recipients to buy broadband with their Obamaphone subsidies too.

The FCC has voted to expand the "Obamaphones" program to include discounted Internet service for poor people.

The federal subsidy for low-income Americans, officially called Lifeline, provides eligible recipients with $9.25 a month to buy phone service. Following a controversial vote on Thursday, the FCC will allow the more than 18 million Lifeline recipients to buy broadband with their subsidy too, following a public comment period.

Eligible recipients (those living at or below 135% of the poverty line) will receive the same benefit card, which will still come loaded with the $9.25 a month that they get for discount phone service. The difference is now subscribers will get to choose how they spend that money, either on cell phone service or, instead, spending it on broadband.

The FCC defines broadband as Internet service with speeds of at least 25 Megabits per second. It's usually accessed through in-home connections and is about twice as fast as the average 4G phone connection.

The Lifeline program was a Reagan-era initiative that was expanded to include cell phones under President George W. Bush.

But the program has generated considerable controversy in recent years. Critics emerged in September 2012 when a YouTube clip went viral, showing an Obama supporter claiming, "Everyone in Cleveland, low minority, got Obamaphone." It became grist for conservative radio talk shows, largely because of its $2 billion annual price tag.

It became even more unpopular in the wake of a 2012 corruption scandal in which cell phone providers were found to be enrolling ineligible people into the Lifeline program.

Aware that adding more funds to the program would not be politically viable, the FCC expanded the program in a 3 - 2 vote to include broadband without actually spending more money to do it. The subsidy will remain the same.

Despite its controversy, the FCC's vote is important one. 100 million Americans do not have a broadband connection, and the percentage of poor, less-educated populations who connect to broadband is far lower than rich, educated communities, according to a 2013 Pew study.

Just 54% of people who make less than $30,000 a year connect to the Internet via broadband, compared with 88% of people who make more than $75,000 a year.

Related: How your cell phone taxes help poor people

The FCC successfully piloted a broadband subsidy program last year before officially expanding it to all eligible recipients on Thursday.

The expansion of Lifeline didn't need congressional approval, since the FCC collects funds for the program through additional charges on Americans' monthly cell phone bills -- not through taxes.

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