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FCC: Lifeline Program Needs Modernization, Reform

The FCC was sending letters to state Public Utility Commissioners Monday (Dec. 12) in its continuing get-tough policy on waste, fraud and abuse in its Lifeline program, which is the portion of the Universal Service Fund subsidy that goes to providing phone service -- wireless or wired -- to low-income households.

The FCC pointed out last week in an enforcement advisory (state utility commissioners ) that it had gotten word that some providers were not confirming eligibility for the program or ensuring they were not providing duplicative service. It is investigating those claims itself, but the chairman also wants states to take a more active role in policing the program.

"I encourage all of you to join the FCC in our efforts to reform the Lifeline program by closely scrutinizing the requests for ETC designation pending before you, to be on guard for abuse by ETCs designated to provide Lifeline service in your states, and to take swift and strong action when necessary to protect the program," he wrote.

The letter follows up on a conference call between commissioners and FCC staff on ways to improve oversight of the program. He says in the letter that the commission plans to vote "soon" on its proposals to reform and modernize the Lifeline program, which it teed up last March. That includes pilot programs to see how broadband fits into that program going forward. Currently, the wireless phone subsidy does not support a broadband phone plan, but the FCC is migrating the high-cost USF fund to broadband as the potential new must-have communications service for digital citizenship.

The FCC's main reform proposals include:

  1. Taking immediate steps to create a uniform national framework for validating ongoing eligibility;
  2. Ensuring Lifeline only supports services consumers are actually using;
  3. Allowing discounts to be used for bundled voice-broadband service plans; 
  4. Launching pilot programs to test strategies for supporting broadband service; and 
  5. Evaluating a cap on the program, either temporary or permanent, in light of recent, rapid growth.

Asked why the letter was being sent now, an FCC official speaking on background said it was a case of getting the FCC's "lifeline house in order" by ensuring the program's integrity is being protected, which he called "a crucial" step as the FCC considers modernizing the Lifeline program for the broadband age.

He also said the "challenges" of trying to cut out duplicative support have grown since the addition of pre-paid wireless to the program, which he said has exacerbated the problem of preventing duplicative payments from the Lifeline fund. "More needs to be done to deal with the risks that wireless provides."

The goal of the letter is to both have states ramp up their own oversight efforts, said the FCC official, and to let them know that the FCC is on the beat and has tools at their disposal like last week's enforcement advisory and investigative resources at both the FCC and Justice. "We feel now is the appropriate time for them to ramp up their engagement," he said.