Report Showing FCC Subsidy Program Lapses Could Open Door to Scrutiny


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A watchdog report revealed major lapses in a Federal Communications Commission telephone and broadband subsidy program, which could prompt the FCC to plumb the program for abuse or target specific providers.

The Government Accountability Office, in a report released publicly June 29, couldn’t verify Lifeline program eligibility for more than a third of the recipients it studied—36 percent, or about 1.2 million out of 3.5 million. Sen. Claire McCaskill (D-Mo.) originally requested the audit.

The program began including broadband last year, and it gets funding from fees tacked onto customers’ phone bills. Those fees go to the Universal Service Fund, which the FCC uses to reimburse providers.

The price tag of the lapses GAO found could spur significant overhauls from within the FCC, where Lifeline has already drawn scrutiny. The report found 6,378 dead recipients, enrolled or re-enrolled after being reported deceased, receiving $707,958 in Lifeline benefits a year. The GAO found another 5,510 potential duplicates amounting to about $612,000 annually.

FCC Chairman Ajit Pai said the report evidenced a program rife with flaws, referring in a statement to a probe he led into the program last year. “Today’s GAO report confirms what we discovered then: Waste, fraud, and abuse are all too prevalent in the program,” Pai said in a statement.

Pai warned the agency would punish “unscrupulous providers that abuse the program.”

Commissioner Michael O’Rielly said he was “not surprised” by the report’s findings. “It’s why I sought to address fraud, waste and abuse prior to expanding the scope of the program and pushed unsuccessfully for a host of needed reforms, including the adoption of a budget for the program.”

Senate Commerce Committee Chairman John Thune (R-S.D.) blamed “the previous leadership of the FCC” in 2016 for “scuttling a bipartisan reform intended to bring needed accountability to ensure honest and efficient use of Lifeline program funds.” Thune in a statement called on current FCC commissioners to fix the program.

Democratic Commissioner Mignon Clyburn warned against using the report as a basis for Lifeline cuts, a move “that would be catastrophic for those most in need,” she said in a statement. “The answer is not denying access to those who cannot afford connectivity and access to critical services like 911. The next steps should include rolling up our sleeves and addressing any imperfections that remain.”

A verification system already in the works would remedy the program’s problems, Clyburn said.

As for further steps, the FCC could potentially target specific providers with enforcement actions and remove them from the program, or it could subject Lifeline to further investigations or changes.