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FCC on Track to Save $400M in 2013 Following Action to Reform Lifeline Program

Wednesday, February 13, 2013

The Federal Communications Commission (FCC) is on target to save $400 million in 2013 following efforts taken to trim spending in the federal Lifeline program, the agency announced Feb. 12.

The commission created the Lifeline program in 1984 to ensure that every American had telephone service during emergencies. The program provides a $10 monthly discount on phone service, which is supported by a tax applied to U.S. phone bills. To be eligible for the discount, an individual must meet federal low-income guidelines or qualify for one of a handful of social service programs, including food stamps or Medicaid.

Although Lifeline has been successful in helping lower-income families maintain basic telephone service, the program has been beset by fraud and abuse.

In recent cases, phone companies and wireless carriers have sought and received reimbursement for service to the same residence.

The size of the fund increased from $667 million in 2000 to $1.3 billion in 2010, leading FCC officials to increase the fees that consumers pay to support the program. According to a November report from the Government Accountability Office, the increases are due in part to the addition of prepaid wireless service from America Movil SAB TracFone, a marketer of subsidized SafeLink phones.

To address these issues, the FCC last February approved a number of changes to the program, including limiting the $10 monthly subsidy to one phone line per home, requiring proof of income eligibility from new subscribers, and creating a national database to prevent duplicative subsidies.

These and other changes helped the FCC cut $214 million in spending in 2012, the FCC said.

“The program rules we inherited were designed for the age of the rotary phone and failed to protect the program from abuse,” Julie Veach, chief of the FCC Wireline Competition Bureau, noted in a statement Feb. 12.

The goal of the FCC is to save $2 billion by the end of 2014. While it carries out its reform effort, the agency is mulling changes that would redirect subsidies to help pay for broadband internet service.

By Paul Barbagallo  

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