The Federal Communications Commission today in their monthly meeting voted narrowly to move forward with two high-profile, contentious proposals. One is formally adopting a plan to modernize the Lifeline program, and the other is to start considering how to apply stronger consumer privacy protections to ISPs.

The meeting, originally scheduled to begin at 10:30 a.m. Eastern time, got off to a late and rocky start, being delayed at the very last minute first to 12:00 and then to 1:30, before finally kicking off at 2:00.

Shortly before the meeting began, conservative Commissioners Ajit Pai and Michael O’Rielly told the press that they had reached an agreement with Commissioner Mignon Clyburn, the prime backer of the lifeline reforms, regarding budget caps on the program but that Chair Tom Wheeler blew that deal up at the last minute.

We’ll get back to that issue below…

Privacy

The privacy proposal has been contentious from the moment it was first announced earlier this year.

The gist of the notice of proposed rulemaking (NPRM) is that the FCC has a mandate to protect certain consumer information transmitted over common carrier networks, which now includes broadband thanks to the landmark net neutrality vote in 2015. Before reclassifying broadband, all online privacy matters came under the umbrella of the Federal Trade Commission, but now the FCC has to devise privacy rules for these Internet service providers.

And that’s what they’re now proposing. The action the commission voted on today is not itself a rule, but rather a decision to begin the process that will eventually create a rule, after months of internal deliberation and public comment have passed.

If the first wave of pushback from ISPs is any indication, the broadband industry is prepared to fight this one tooth and nail. The arguments the industry seems to be cuing up are that having protections placed on their broadband operations that (1) do not apply to their other operations and (2) do not apply to the thousands of edge providers (like Facebook, Google, and so on) out there in the world are onerous and unfair and won’t fix anything anyway.

Your broadband provider doesn’t just know when you’re going online and how much data you’ve used, but may also know which sites and services you’re using at any given time.

“This is a treasure-trove of information,” said Clyburn at today’s meeting. “That is not only very personal to me, but is also very valuable to marketers and retailers. As a consumer of these services, I want the ability to determine when and how my ISP uses my information.”

These sentiments were echoed by Commissioner Jessica Rosenworcel, who noted that “Our digital footprints are hardly in sand. They are effectively in wet cement.”

Pai acknowledged that there is a need to fill the privacy regulation vacuum, but accused Wheeler and supporters of the proposal of restricting ISPs’ to the benefit of “edge providers” — companies like Facebook and Google that make billions from tracking and selling information about users.

“The FCC tilts the regulatory playing field by proposing more burdensome regulation on Internet service providers than it imposes on edge providers,” said Pai, adding that “Consumers don’t necessarily know which particular online entities can access their personal information — let alone the regulatory classification of those entities. They do care that their personal information is protected by everyone who has access to it… It makes little sense to give some companies greater leeway under the law than others when they all have access to the very same personal data.”

This is effectively the same argument that AT&T and others have been making against the proposed rules. The response from supporters of the regulation point out that the FCC does not have the legal authority to set privacy rules for content providers.

However, Pai snarkily countered that the Wheeler and the FCC could use the same argument they used to push through broadband reclassification — to expedite the deployment of Internet access.

He pointed out that the Commission’s annual National Broadband Plan reports have identified that privacy concerns are a barrier to more widespread Internet adoption.

“Under the Commission’s expansive reading of the Telecommunications Act and the ‘virtuous cycle’ theory — a reading I don’t support, to be clear — the FCC can take practically any action necessary to break down those barriers… This agency hasn’t been shy about pushing legal boundaries.”

In response, Wheeler used the analogy of long-held phone privacy regulations.

“When a consumer makes a phone call, all the information about that call is protected unless the consumer authorizes its disclosure,” he explained. “How does the fact that the network is connecting to the Internet — rather than to a telephone — make the expectation of consumer privacy any different?”

In the end, the Commission voted as expected, 3-2 in favor of moving forward with the rulemaking.

Lifeline

The FCC first voted to consider adopting a proposal to add broadband to Lifeline back in June of last year, and a few weeks ago announced that they’d finished the process, and would be voting to adopt the new proposal for real.

MORE: What is Lifeline, and how does it work?

In short, the rule would give Lifeline-eligible consumers the option of using their $9.25/month to pay for broadband services — fixed or mobile. Given that some ISPs offer service tiers for as little as $10-15/month, that could help get additional low-income consumers online.

It will also put in place a centralized, independent, national eligibility verifier that would ultimately replace the patchwork state-by-state system currently in place. Thus, an eligible consumer would be able to more readily carry that eligibility from location to location.

The new rule sets minimum standards for services that want to be eligible to accept Lifeline payments. Fixed broadband providers must offer at least 10 Mbps downloads with 1 Mbps uploads, while allowing users access to at least 150GB of data each month.

Mobile data standards and allowances will be phased in. By Dec. 1, they must offer at least 500 MB per month of 3G data. A year later, that minimum increases to 1 GB, then doubles again to 2GB by Dec. 1, 2018.

The big bone of contention this morning involved the notion of capping the annual budget on Lifeline expenditures. No previous administration has capped how much could be paid out in Lifeline allowances each year, even after it was expanded to include cellphones in the last decade.

The new rule includes a figure of $2.25 billion annually — indexed to inflation — but it’s not the hard number that the FCC’s more conservative commissioners had hoped to see.

Commissioners Pai and O’Rielly contend that, in an effort to reach a rare 5-0 vote among the Commission, Clyburn approached them yesterday and expressed her willingness to reach a compromise with regard to the budget.

At the end of her remarks, Clyburn addressed the “elephant in the room” and provided her side of what had transpired in the hours leading up to the meeting.

“I have been consistent in saying a cap should not be imposed” on Lifeline, said the commissioner. “And, to be honest and completely transparent, I continue to hold that view. However, I have also been steadfast in my desire to reach consensus and compromise whenever possible.”

Clyburn says her office “negotiated in good faith” to reach a budget that would be fiscally responsible for the Universal Service program — which funds that Lifeline — while also making sure that millions of Americans could take advantage of Lifeline.

“On further deliberation, I concluded that such a mechanism does not fully achieve my vision of a 21st Century Lifeline program,” she concluded. “But I applaud the deliberative process and thank Commissioners Pai and O’Rielly and their staff for engaging well, well, well into the night and early this morning.”

Pai and O’Rielly were more blunt with regard to their response to what they portrayed as a last-minute about-face.

Pai claimed in his statement that their staffs had reached an agreement on a document that memorialized the exact details of the compromise.

“Think about about what that signifies in this agency at this time,” he explained. “In this political environment on this politically charged of an issue, we had a bipartisan vote on Lifeline reform.”

He accused Wheeler’s staff of “actively working to undermine and unwind” the compromise by “leaking non-public information to the press” and “encouraging left-wing special interests to blast the deal before the vote could be cast.”

Pai, who said that these apparent machinations “represent the worst of government,” declared that it is “one thing to refuse to work toward bipartisan compromise” but “another thing to force a Democratic FCC commissioner to renege from a compromise on her signature issue.”

The commissioner’s chief staff maintained on Twitter that Clyburn had not just agreed to the deal, but had put her name to the document:

Before calling for the vote — which again, went 3-2 in favor of the reforms — Wheeler addressed the today’s behind-the-scenes confusion, praising all three commissioners involved in the compromise discussions.

“These are important issues, and these are issues that are worthy of agonizing over,” explained Wheeler. ” However, the deliberative process does not always lead to consensus in the end, but that doesn’t mean it’s not worthwhile.”

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