Dems Hit ‘Faulty Assumptions' on Telecom Subsidy Fraud

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By Lydia Beyoud

July 12 — Alleged fraud in a federal subsidy program to provide mobile phones and other telecommunications services to low-income consumers may not be as pervasive as Republican lawmakers claim, according to a House Democratic staff report issued July 12.

House Energy and Commerce Committee Democratic staff said that a $500 million figure Republicans have cited to quantify waste, fraud and abuse in the Lifeline subsidy program is drawn from an assumption that all subsidy recipients who reside in a multi-household address, such as a nursing home, homeless shelter or veteran group home, received their mobile phone or other subsidy fraudulently.

The report is the first organized counter to a steady drumbeat of Republican criticism of the Lifeline program, which many Republicans had said needs a hard budget cap and stronger mechanisms to tamp down on program abuses. Republican lawmakers began an investigation into mismanagement of the program in May.

Because the $2 billion Lifeline program generally prohibits a household from receiving more than one Lifeline subsidy, those mobile phones required a Lifeline mobile provider to fill out an “Independent Economic Household” (IEH) worksheet used to verify a recipient's eligibility.

“The recent allegations of fraud in the Lifeline program rely on the broad assumption that every IEH worksheet was fraudulent. Democratic staff has uncovered no evidence to support this assumption,” the report said.

The Democratic staff report acknowledged that fraud does exist in the program, and made recommendations for the FCC to take to reduce improper subsidies.

Pai Pressed on Investigation

The Energy and Commerce Communications and Technology Subcommittee focused on Lifeline waste, fraud and abuse during a July 12 Federal Communications Commission oversight hearing.

Approximately 13 million low-income individuals were enrolled in the program as of October 2015, according to FCC data. Nearly 2.2 million recipients reside in 890,000 multi-resident addresses nationwide, FCC Chairman Tom Wheeler said during the hearing.

Subcommittee ranking member Rep. Anna Eshoo (D-Calif.) pressed Republican FCC Commissioner Ajit Pai on the preliminary findings from an investigation conducted through his office related to Lifeline fraud (2016 TLN 5, 4/1/16).

Pai's office has been looking into different areas of potential fraud in the program, including cases of more than one person at an address receiving a subsidized mobile phone, which he said cost consumers approximately $476 million a year.

However, Pai said he hadn't uncovered any fraud “so far” in the course of his investigation. “We've uncovered potential fraud,” he said.

The FCC has found and cracked down on Lifeline fraud in the past, including a $51 million fine against Total Call Mobile in April for fraudulently enrolling more than 32,000 duplicate Lifeline program recipients.

A Pai spokesman declined to comment on the report, but told Bloomberg BNA on background that Pai was pleased to hear lawmakers on both sides of the aisle agree that strong oversight of the FCC’s Lifeline program is necessary. Pai's investigation remains ongoing, the spokesman said.

Partisan Rift

The continued partisanship and attacks on the Lifeline program underscore what Jessica J. Gonzalez, executive vice president and general counsel at the National Hispanic Media Coalition, told Bloomberg BNA has become a disturbing trend in Congress and elsewhere in the political realm.

“There's a demonization of the people who are using Lifeline, it's really unfortunate,” Gonzalez said.

The Lifeline program has a long history of bipartisan championship, and helps provide low-income Americans with “pathways out of poverty” by giving them the ability to connect with employment and educational opportunities through their mobile devices, Gonzalez said.

“There's a lot of issues we work on where industry is fueling opposition for one reason or another,” Gonzalez said. “But there are basically no industry opponents to Lifeline.”

The Lifeline program survived a recent effort to curb the program's ability to help provide mobile phone service after the House rejected a bill (H.R. 5525) June 21 to prohibit wireless providers from receiving Lifeline funds (2016 TLN 14, 7/1/16) (2016 TLN 16, 7/1/16).

The program is still the target of other legislation to set a hard $1.5 billion annual budget cap (H.R. 4884).

To contact the reporter on this story: Lydia Beyoud in Washington at

To contact the editor responsible for this story: Keith Perine at

For More Information

Text of the report is at

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