The WasteWatcher: The Staff Blog of Citizens Against Government Waste

The FCC’s Lifeline Breakdown

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


Citizens Against Government Waste highlighting the programmatic issues of the Universal Service Fund (USF) and its Lifeline program for low-income individuals in its 2014 report Telecom Unplugged: Ushering in a New Digital Era.  The USF was created by Congress to expand communications technology in unserved regions of the country.  The original mission of the Lifeline support program was to provide basic telephone service to low-income individuals.  This program was expanded in 2008 to include wireless phone service, and on March 31, 2016, the Federal Communications Commission (FCC) voted to further expand the program to include broadband internet subsidies.

Since the expansion to include wireless phone services, the program has seen widespread mismanagement, waste, fraud, and abuse of the program.  On January 31, 2012, the FCC voted to modernize and reform the Lifeline program in order to reduce the waste, fraud and abuse within the program.  Among the changes that were to be implemented following this modernization were set a savings target of $200 million for 2012; create a national lifeline accountability database to reduce duplication of services by multiple providers; create an eligibility database to enable a fully automated verification of consumers’ initial and ongoing Lifeline eligibility; establish a one-per-household rule, defining a household as an “economic unit;” and reducing burdens on carriers through a uniform interim flat rate of reimbursement.  However, despite this attempt to reduce waste, fraud, and abuse, the problems appear to continue. 

On April 8, 2016, the FCC fined Total Call Mobile $51 million for allegedly enrolling ineligible recipients and receiving subsidies for participating in the Lifeline program.  Both republican commissioners Ajit Pai and Michael O’Reilly have raised concerns about various problems within the Lifeline program, including the lack of safeguards against abuse within the program, and the use of the Supplemental Nutrition Assistance Program (SNAP), which Commissioner O’Reilly noted is “riddled with waste, fraud, and abuse.”  On June 6, 2016, the Government Accountability Office released a report on the SNAP program, which found improper payment rates ranging from 5.2 percent to 3.2 percent of all payments.  The report noted that while some policy changes may have decreased the incidence of improper changes, other policies (both state and federal) may have caused the rate of improper payments to increase.

Exacerbating the problem of fraud within the SNAP program is the use of data older than 2009 by the U.S. Department of Agriculture to determine the extent of fraud within the SNAP program.  According to the SNAP fraud website, “the trafficking rate has fallen significantly over the last two decades, from about 4 cents on the dollar in 1993 to about 1 cent in 2006-08 (most recent data available).”  One can understand how using SNAP assistance to determine eligibility for Lifeline can be problematic. 

On July 15, 2016, the House Committee on Energy and Commerce Chairman Fred Upton (R-Mich.) and Subcommittee on Communications and Technology Chairman Greg Walden (R-Ore.) contacted the Universal Service Administrative Company (USAC), which oversees the Universal Service Program, to obtain a thorough accounting of the integrity of the Lifeline program. 

In their letter to USAC the Chairmen specifically called on administrators to explain the USAC’s current and planned programs and initiatives; list all telecommunications service providers who have participated in the program since January 1, 2009; provide to the committee all audits, investigations, or reviews of these companies since January 1, 2009; provide the committee with all materials the USAC gave to the FCC relating to waste, fraud, and abuse in the lifeline program since January 1, 2012 to the present time; as well as all communications, written and electronic, between USAC and the FCC, its bureaus, or the FCC Office of Inspector General relating to Total Call Mobile, Inc., or duplicative, fraudulent, or improper or ineligible enrollments in the Lifeline program; and all communications between USAC and Total Call Mobile, Inc. from May 26, 2011 to the present time.  In addition, the Chairmen also contacted FCC Commissioner Ajit Pai requesting a briefing on his ongoing investigations into waste, fraud and abuse within the Lifeline program. 

It remains clear that the problems of waste and fraud within the Lifeline program, including the issue of using another program ripe for fraud as an eligibility requirement, must be fully addressed before any additional expansion of the program is implemented.  Otherwise, taxpayers will be on the hook for additional costs with little benefit to those who actually may need such assistance.

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