Concerns Raised About Phone Subsidy Fraud for Poor

The Federal Communications Commission said it is addressing fraud concerns about a federal program that supports phone access for low-income consumers.

The FCC implemented Lifeline in 1985, which provides discounts on monthly telephone service. Eligible people have incomes at or below 135 percent of federal poverty guidelines or participate in a qualifying state, federal or tribal assistance program such as Medicaid.

Lifeline's growth - the government spent $2.2 billion on it, up from $819 million four years ago - has raised questions about whether participants are eligible for the program.

The Oklahoma Corporation Commission sent letters to five carriers that participate in its state's Lifeline program, questioning whether they are signing up customers not eligible for the program, The Wall Street Journal reported. In some cases, the commission questioned whether the number of subscribers they had was mathematically possible, and asked if some customers had signed up multiple times, a violation of the program's rules.

The program is administered by the Universal Service Administrative Company and is funded by the Universal Service Fund, which phone carriers and consumers help support.

Last month, the Federal Communications Commission approved a number of reforms for the program, including creating an eligibility database and establishing a "one-per-household" rule.

"While Lifeline since 1985 has helped tens of millions of low-income Americans afford basic phone service - literally providing some of our most vulnerable citizens a communications lifeline to jobs, family, emergency services and more - the program rules we inherited were designed for the age of the rotary phone and failed to protect the program from abuse," FCC Chairman Julius Genachowski said in a statement.

Genachowski said the FCC's reforms have saved nearly $214 million in waste, fraud and abuse in 2012.

"This will preserve Lifeline for those who truly need it as we look ahead to the program's next great challenge: ensuring that low-income Americans have access to robust, affordable broadband," he said.