FCC defends Lifeline phone subsidy program

Posted by Emma Woollacott

The Federal Communications Commission is defending its efforts to tighten up the rules for its Lifeline program, which subsidizes cellphones for people on low incomes.

Following a report from the Wall Street Journal, which found that fraud was still rife, it says it's on track to save $400 million this year by cutting waste, fraud and abuse.

"While Lifeline since 1985 has helped tens of millions of low-income Americans afford basic phone service – providing some of our most vulnerable citizens a communications lifeline to jobs, family, emergency services and more – the program rules we inherited were designed for the age of the rotary phone and failed to protect the program from abuse," says FCC Wireline Competition Bureau chief Julie Veach.

"In his first year on the job, Chairman Genachowski launched fundamental reform of Lifeline for today’s wireless and broadband-driven communications marketplace, and the reforms we adopted eliminated approximately $214 million in waste, fraud and abuse in 2012 and are on track to save the program more than $2 billion through 2014, fundamentally altering the course of the program. This will preserve Lifeline for those who truly need it."

Launched in 1985, the Lifeline program gives a discount on phone service for qualifying low-income consumers. This was extended in 2005 and 2008 to cover wireless service. However, the FCC discovered that the system was being abused in a number of ways, particularly through the making of duplicate payments, and made a number of changes.

These include a requirement that Lifeline customers re-register with carriers every year to make sure they're eligible, and making sure households only have one phone each under the program. It's also halted the process through which some carriers allowed customers to self-certify as eligible.

Nevertheless, says the WSJ, fraud is still rife. The program cost the US government about $2.2 billion last year; and, says the paper, more than four in ten subscibers either can't demonstrate their eligibility or failed to respond to requests for certification.

The FCC says that many of its reforms still need time to work though the system. Total savings over the next three years, it says, could amount to as much as $2 billion.