No more lifeline for wasteful program

By The Orange County Register

Life, liberty and … free cellphone service? The questionable “Obamaphone” program is still plagued by waste, fraud and abuse.

Yet another U.S. Government Accountability Office audit has found widespread waste in Federal Communications Commission’s Lifeline program, which offers free or reduced-price phone and internet service for low-income beneficiaries.

Services are supposed to be limited to one participant per household for those with incomes of no more than 135 percent of the federal poverty line, or who receive benefits under a means-tested welfare program such as Medicaid, federal housing assistance (Section 8) or the Supplemental Nutrition Assistance Program (food stamps). The program is funded by a Universal Service Fund tax, which is generally passed on to landline and wireless consumers and itemized on their bills.

The Lifeline program was initially established in 1985 during the Reagan administration, but grew significantly after prepaid wireless carriers began offering wireless Lifeline service in 2008, along with free cellphones, prompting it to be dubbed the “Obamaphone” program. A lack of accountability led to substantial fraud and abuse, as those who should have been eligible were signed up and many received multiple free phones. Enrollment skyrocketed, from 6.8 million households in 2008 to 18.1 million in 2012, and the cost of the program rose 167 percent during that time, from $820 million to $2.2 billion.

Some accountability reforms have helped to bring those numbers down a bit, though it remains to be seen how an expansion into broadband service that went into effect in December will affect participation rates and cost.

And waste, fraud and abuse continue to be major problems for the troubled program. The GAO study found that the FCC was unable to confirm the eligibility of 36 percent of the 3.5 million Lifeline accounts the GAO reviewed. Thousands of accounts belonged to either fake or dead people, costing taxpayers more than $100 million in improper payments, the study concluded.

The study also questioned whether there is actually a need for the program, as the “digital divide” between the poor and middle or upper classes has rapidly declined, and service is common even among low-income households who do not participate in the program. “Lifeline participation rates are low compared to the percentage of low-income households that pay for telephone service, and broadband adoption rates have increased for the low-income population even without a Lifeline subsidy,” the GAO found.

Only 32 percent of eligible households participate in the program, it noted. Moreover, private providers are offering their own low-income programs. A couple of them, which operate in at least 21 states, offer broadband internet service for less than $10 per month, well below the FCC’s “reasonable-comparability cost benchmark” of about $55 per month.

Broadband service, and telecommunications services generally, may be a valuable service, but it is hardly an unalienable right protected by the Constitution. Rather than continuing to prop up a program with a long history of waste, fraud and abuse that serves a small percentage of poor households — while far more poor customers have proven that they can obtain services without subsidies — Congress should give telecomm customers a break and stop giving Lifeline a lifeline.

By The Orange County Register