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Pallone: FCC Not Addressing 'High-Cost' Waste, Fraud, Abuse

Rep. Frank Pallone (D-N.J.), ranking member of the House Energy & Commerce Committee, says he is concerned that the FCC is failing to deal with waste, fraud and abuse in the legacy high-cost Universal Service Fund subsidies and wants access to audits of that fund.

FCC chairman Ajit Pai has focused very publicly on cleaning up waste, fraud and abuse in the USF funds, but Pallone says he thinks the FCC is concentrating too much on smaller programs like Rural Health Care and wants three years' worth of audits to check for himself.

In a letter to USF CEO Radha Sekar, Pallone asks for audits from both the Legacy High-Cost Fund and the Rural Health Care Program.

Pallone said that he sought the audit after the FCC did not answer a November letter asking it to "immediately" address issues with the fund, the largest USF subsidy at $4.5 billion yearly. The money comes from telecoms who pay into it, then pass the fee along to their customers.

The Government Accountability Office has already agreed to conduct its own investigation of the Legacy High-Cost Fund (at Pallone's request), and the congressman points out that the FCC's Inspector General said last summer the FCC "lacks the resources to properly oversee the [fund]."

Pallone wants the info by Feb. 15. The FCC was checking on the status of Pallone's November request at press time.

"Just last week, Chairman Pai circulated an order to his fellow commissioners that would tighten controls on the high-cost program to ensure that federal funds are spent closing the digital divide," said an FCC spokesperson, adding: "[J]ust last month the FCC ordered Blanca Telephone to repay $6.7 million to the high-cost program."

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.