President Joe Biden and his team are working overtime to reverse the worst excesses of the Trump Administration. To that list of “must undo” items, they should add this: the eleventh-hour attempt by former Federal Communications Commission chairman Ajit Pai to impair a key part of the Emergency Broadband Benefit (EBB), created as part of the second COVID-19 stimulus bill. The EBB is urgently needed by low-income seniors, vets, and COVID-unemployed people here in Nebraska and other primarily rural states.

Chairman Pai waited until a few weeks before he resigned to issue a staggeringly demanding and overreaching “data collection order” designed to impede many of the wireless and broadband service providers who have been at the heart of the Lifeline program, the phone program for qualifying low-income Americans. It seems clear that Pai wanted to do whatever he could to tie up in knots the very companies that should be putting the new Emergency Broadband Benefit out there to the public in the midst of the COVID-19 pandemic.

Why would Ajit Pai do such a thing?

Lifeline in the Crosshairs

During his time as FCC chairman, Pai presided over a far-reaching assault on Lifeline.  In the process, the ranks of Lifeline recipients were literally chopped in half. The former FCC chairman starved Lifeline to such an extent that only about 18% of eligible Americans now have access to the program, which is supposed to help ensure universal access to telecommunications for everyone, including the poorest among us.  When you compare Lifeline to other income-based federal programs — including Medicaid and food stamps, which serve well over 80 percent of qualifying Americans — it is apparent that former chairman Pai’s war on Lifeline was only too successful.

This is why observers were not surprised when the former FCC chairman (without the consent of other commissioners) imposed a massive data demand.  It was just another way for him to throw sand into the gears of Lifeline — all in the hopes of seeing the program grind to a halt once and for all. Getting a chance to undercut the rollout of the Emergency Broadband Benefit was just a bonus for the FCC chairman.

What is perhaps most ironic is that the onerous “data collection order” in question here is coming from a Trump-appointed agency head who claimed to oppose overregulation by the government. Yet this very same FCC chair paused in packing up his office only long enough to require a voluminous and burdensome paperwork demand … and one that would be submitted to a new FCC chair who never asked for it and has no use for it. (There already is an enormous amount of data demanded of and submitted by Lifeline providers. Until Pai made this move, no one had suggested the current mountain of Lifeline data was somehow deficient. And that is for a good reason: It is more than sufficient to manage the program in a rigorous and transparent fashion.)

Experts say Pai’s scorched-earth move to further undermine the Lifeline program violates the federal Paperwork Reduction Act, which is designed to prevent precisely the kind of abuse of government agency power that is on exhibit here. Here’s hoping that acting FCC chair Jessica Rosenworcel (who is a champion for solving the “homework gap”) or the new Biden-run Office of Management and Budget (which administers the Paperwork Reduction Act and is chartered to shoot down this kind of abuse) step in and put the former FCC chair’s abusive order where it belongs:  in the nearest shredder.   

EBB Crucial in Rural America

The danger here is that Pai’s bureaucratic mischief will work exactly as he intended by hindering the new Emergency Broadband Benefit. President Biden, acting chairwoman Rosenworcel and Congress can’t allow that to happen. Nebraska is just one of the states where rural broadband is lacking and that creates an even bigger crisis in the COVID-19 era, where people need access to vaccine details, other health-related information, emergency services, employment opportunities, and older family members in quarantine.  Rather than leaving tied up in paperwork knots the companies that can make the Emergency Broadband Benefit a huge success, let’s unleash them to make life better for the millions of pandemic-stricken Americans who need this vital assistance now.

Crystal Rhoades is a Democratic member of the Nebraska Public Service Commission representing District 2. 

FCC Commissioner Geoffrey Starks said that the digital divide has morphed during COVID-19 to a monstrous divide that leaves people of color disproportionately on the wrong side. "This cannot stand," he said, adding that the country can no longer put off the hard work of digital equity. "This is the time. This is the moment."

He also called that disparity the "smoldering front" in the battle against internet inequality.

Commissioner Starks was speaking Tuesday (Jan. 26) at the State of the Net conference, the 17th annual but the first virtual. 

Also Read: NCTA Says Broadband Pledgers Should Automatically Qualify for EBB

He called the COVID-19 era both an unprecedented crisis and an unparalleled opportunity, starting with getting the billions in COVID-19 related Emergency Broadband Benefit (EBB) aid to as many Americans as possible.

The FCC has only 60 days to stand up at $3.2 billion emergency broadband benefit for low-income Americans. The FCC is empowered to offer up to $50 per household per month for broadband connectivity ($75 per month on tribal lands), and up to $100 to subsidize access devices for those households that also contribute to the cost.

The FCC has gotten a lot of industry comment on the program this week--the deadline was Jan. 25--and Starks had his own, saying it should focus on two priorities (Starks is now speaking to an acting Democratic chair, Jessica Rosenworcel, and eventually a 3-2 Democratic majority, so his party will have the power to make those changes):

1. He said the FCC should do broad outreach that includes state and local governments, ISPs, philanthropies and others, pointing out that the current FCC Lifeline low-income subsidy--through which the emergency funding is being handed out--is only tapped into by 20% of eligible subscribers.

2. Starks said the FCC should make the rules as clear and simple as possible to encourage ISPs' voluntary participation. He said he has already started reaching out to ISPs and their associations to encourage participation.

But Starks also said he recognized that while the EBB, if successful, could reach more disconnected people of color than any previous FCC effort, it was a short-term solution to a long-term problem. 

Also Read: Verizon Proposes Government-Funded Broadband Debit Cards

He said the FCC has focused almost exclusively on the rural broadband divide while three times as many unconnected households are in urban areas. For example, he said, almost half the residents of Detroit lack access to broadband. 

To address that long-term issue, he said the FCC should update its Lifeline subsidy by entering into memoranda of understanding (MOU) with other federal agencies that when they administer programs with similar criteria to low-income broadband eligibility, they be told about the Lifeline subsidy. If someone is enrolled in SNAP (the Supplemental Nutrition Assistance Program), they are probably broadband insecure as well. 

He also said the FCC needs to complete its study of the Lifeline program and update the E-rate schools and libraries subsidy to make it clear that it can be used for remote education from home. The FCC under former chairman Ajit Pai interpreted the "classroom" language in the E-rate statute to preclude subsidizing home broadband or equipment, even in the pandemic when the home has morphed into the classroom. Starks called that a cramped reading.

The nation’s only program aimed at helping low-income American families afford mobile communications is known as Lifeline for a reason. Through a federal subsidy of $9.25 per month, Lifeline helps those most in need obtain the phone or broadband service that the pandemic has made a necessity of everyday life.

Unfortunately, the program is so tied up in red tape that it’s cumbersome and expensive to administer, which reduces the number of participating providers and makes it difficult for consumers to access the benefit. Because of the shortcomings, the program is substantially underutilized, evidence that Lifeline in its current form is inadequate for making broadband available to the less financially fortunate. The Federal Communications Commission’s Universal Service Administrative Co. estimates that there are about 38.6 million Lifeline-eligible households, but only around 9.6 million participate, meaning that only one in four eligible households is taking advantage of the program subsidy.

Modernizing and simplifying the Lifeline Program could extend the benefit to more families in need and open up the program to many more competitive service providers, such as cable broadband operators.

A multitude of companies offers telecommunications services in the United States. They range from small, local companies such as the Hot Springs Telephone Co. in Hot Springs, Montana, to large industry leaders like AT&T and Verizon Communications. American consumers have a buffet from which to choose, but because many companies have decided not to participate in the program, Lifeline beneficiaries order from a limited menu.

Costly Middleman Mandate

The program saddles service providers with the burden of acting as middlemen between the federal government and consumers, an unnecessary and costly responsibility that has greatly reduced the number of participating carriers. Companies are discouraged from taking part by a broad list of Lifeline regulations, including multiple annual audits, many years of required record-keeping, and the necessity of filing reimbursement claims to the Lifeline program for each customer served. Participating providers are also required to bill customers directly and then seek reimbursement from the Lifeline program. This cumbersome and costly process is totally unnecessary.

A structural change could make the Lifeline program far more useful and let it play a larger role in closing the digital divide. The monthly benefit should be converted and greatly simplified, opening the door to use of the program by a larger number of service providers and Lifeline beneficiaries.

Beginning in 2014, I began advocating for the current Lifeline structure to be scrapped. Service providers should no longer be required to engage in extensive record-keeping and submit invoices to the government for reimbursement. Instead, the monthly Lifeline benefit should be provided directly to consumers in the form of a “Lifeline Benefit Card,” a debit-like card that would automatically reload each month. Consumers could then use the benefit card to shop among carriers in order to select the carrier and specific services that best meets the consumers’ needs, and they could choose between telephone service or broadband service or some combination of the two with the monthly benefit defraying all or a portion of the total bill.

SNAP Offers a Model

The Supplemental Nutrition Assistance Program (SNAP) is proof that the provision of government benefits through a debit card is highly workable. Not only would a direct-to-consumer Lifeline Benefit Card empower subsidy recipients to shop among providers, it would also make the program far more attractive to carriers by eliminating the carrier costs associated with record-keeping, auditing and billing. More carriers would be willing to participate, and more participating carriers would increase competition in the marketplace, benefitting consumers by substantially expanding their range of service provider choices.

With internet access now required for working from home, learning virtually, shopping on e-commerce websites and being entertained through the ever-expanding program offerings of a variety of streaming services, subscribing to a broadband service has never been more necessary for everyday living. The Lifeline program can help to provide that essential service to millions more American homes — but only through a modernized program that attracts more carriers and is more accessible to low-income Americans.

The FCC's Lifeline subsidy program is plagued by "massive fraud" and "waste," according to the top Democrat on the Senate Homeland Security & Governmental Affairs Committee.

Sen. Claire McCaskill (D-Mo.) released the results of a three-year GAO study that identifed significant risks in the program, which subsidizes baseline telecom services to low-income residents; historically the program covered phone service, though it is being migrated to broadband.

FCC chair Ajit Pai has long said the program needs a reset to institute better protections against waste, fraud and abuse. McCaskill has also called for Lifeline reforms, including stronger FCC oversight. Former FCC chair Tom Wheeler also instituted reforms to boost oversight, but there were continuing problems, said McCaskill.

For example, GAO was unable to confirm whether 36% of the 3.5 million invididuals it reviewed (or some 1.2 million) actually participated in any of the qualifying programs, like Medicaid, that they stated on their applications for the subsidy.

Related: Pai Pushes States for Lifeline Subsidy Abuse Info

McCaskill requested the GAO investigation, and didn't like what she saw.

“A complete lack of oversight is causing this program to fail the American taxpayer — everything that could go wrong is going wrong,” said McCaskill, who is the former Missouri State Auditor. “We’re currently letting phone companies cash a government check every month with little more than the honor system to hold them accountable, and that simply can’t continue.”

Related: Senate Drills Down on Universal Service Fund

Among the report's key takeaways, according to McCaskill, are:
• "Eligibility could not be verified for 36% of Lifeline customers. Auditors reviewed 3.5 million Lifeline accounts by comparing subscribers’ stated eligibility information with multiple federal and state databases. Of the 3.5 million accounts examined, the eligibility of 1.2 million subscribers could not be confirmed—who collectively represent $137 million per year in Lifeline subsidies.

• "$1.2 million per year in subsidies is going to fictitious or deceased individuals. Auditors found over 5,500 active Lifeline subscriber accounts with matching names, dates of birth and Social Security Numbers, collectively representing $612,000 per year in Lifeline subsidies. Over 5,400 deceased individuals were enrolled in Lifeline more than a year after they died, totaling $600,288 in improper subsidies.

• "Undercover testing found that phone companies approved Lifeline applicants with fictitious eligibility information 63 percent of the time. GAO investigators contacted 19 Lifeline providers and applied for service using false eligibility information. They were approved in 12 cases.

• "Many providers rely on contractors or subcontractors—in some cases using overseas call centers—to enroll Lifeline subscribers and review government benefit documentation to verify eligibility. However, the FCC was unaware that providers were using third-party call centers. When undercover investigators applied to work for a company that contracts with Lifeline providers to perform eligibility verification, they were hired without an interview or background check and subsequently were paid for enrolling fictitious Lifeline subscribers.

• "USAC is supposed to audit telecommunication providers to ensure they pay required USF contributions, but GAO investigators found USAC only audited one-half of one percent of providers; in the most recent year GAO reviewed, they audited less than one-tenth of one percent of all carriers.

• "The FCC keeps funding for the Lifeline program and other USF programs in a private bank account with a current balance of over $9 billion, but does not have direct control over these funds. Only USAC is a party to the contract with the bank that governs the USF account. Since 2005, GAO has recommended that the FCC move these federal funds to the U.S. Treasury, but so far no change has been made."

The GAO recommended the FCC come up with a comprehensive review and enforcement plan. The GAO made the report available to the FCC, which said it generally agreed with the assessment and was already taking steps to address some of the issue.

Another prominent Democrat, Rep. Frank Pallone (D-N.J.), ranking member of the House Energy & Commerce Committee, was warning against throwing out the lifeline baby with the waste, fraud and abuse bathwater.

“The Lifeline program provides millions of low-income Americans access to basic communications services,"  he said in statement on the report. Today cell phones are a necessity, and low-income Americans rely on them more heavily than the overall population.  Lifeline has been a critical springboard for struggling families across the country for decades, and it would be a mistake to use this report as an excuse to rip away this essential service from struggling families and hardworking people."

“As an Energy & Commerce Democratic Staff Report found last year, the FCC has already reined in a billion dollars in waste, fraud, and abuse that was allowed under Bush-era changes to the program. In fact, much of GAO’s investigation took place before the FCC adopted its latest reforms. GAO’s report confirms the need for the FCC to act on our recommendations as quickly as possible.”

“Last year, I led an investigation into the Lifeline program that revealed serious weaknesses in federal safeguards," said Pai of the report. "Today’s GAO report confirms what we discovered then:  Waste, fraud, and abuse are all too prevalent in the program.  Commission staff and the Office of Inspector General have already been developing recommendations to better safeguard taxpayer funds. I stand ready to work with my colleagues to crack down on the unscrupulous providers that abuse the program so that the dollars we spend support affordable, high-speed broadband Internet access for our nation’s poorest families.”

“The bottom line is the FCC must fix what little needs repair and get on with the job of making broadband accessible to those who cannot afford the high prices providers charge for something everyone must have," said Michael Copps, former FCC chairman and now special adviser to Common Cause.

FCC commissioner Ajit Pai has sent letters to four state public utility commissions (PUCs) looking to compare notes on waste, fraud and abuse in the FCC's Lifeline program, which subsidizes advanced telecommunications to economically challenged areas.

In the letters -- to PUCs in Texas, Vermont, California and Oregon -- Pai said he was seeking their aid for a program riddled with waste, fraud and abuse ever since wireless service resellers were allowed in. Those are states that run their own lifeline accountability databases.

Related:House E&C Investigating Lifeline Reform | Lifeline Subsidy-Blocking Bill Defeated

The FCC does not subsidize more than one Lifeline subscription per household, but Pai noted that safeguards to prevent multiple subscriptions in the FCC's own lifeline accountability database have not been working, citing for one the FCC's proposed $51 million forfeiture against Total Call Mobile for registering more than 32,000 duplicates.

He said he wanted to alert the states to the abuses the FCC has seen and get input from their experiences combatting abuses.

To that end, he asked questions including how the states account for addresses not easily verified and what they does to remedy an abuse once identified.

He requested that they get back to him by Aug. 2.

In a split decision, with the Republicans strongly dissenting, the FCC in March voted on Lifeline reforms -- including migrating the program to broadband -- that Pai thought did not sufficiently address the issues of waste, fraud and abuse.

Pai was particularly unhappy that a compromise struck between the two Republicans and Democrat Mignon Clyburn fell apart at the last minute. It would have capped the fund, something Republicans argue is a key step in controlling abuses.