FCC's Pai Does Not Propose Capping Lifeline Budget...For Now

Circulates some Lifeline 'administrative' changes to deter waste, fraud and abuse, but big ticket issues like cap, wireless resellers, still pending
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FCC Chairman Ajit Pai is looking to rein in gaming of the broadband subsidy system, but his proposed "administrative" changes do not include the hot-button issues of capping the Lifeline subsidy or excluding wireless resellers...at least not yet.

FCC Chairman Ajit Pai

FCC Chairman Ajit Pai

Pai has circulated to the other commissioners for a vote a final order and Notice of Proposed Rulemaking that takes steps to strengthen the Lifeline program against waste, fraud and abuse--including making sure subsidies go to folks who are actually still living--but does not not address the FCC's 2017 proposal to cap the fund, exclude wireless resellers from the program, or create a mandatory minimum contribution by subs toward the cost of the service. That is according to senior FCC staffers speaking on background, who said those issues are still "pending."

The order was billed as an administrative "clean-up" order, which is why it does not tackle those larger issues.

The FCC is looking to weed out duplicative enrollments, including the use of the names of the deceased, different variations of the same name, the use of vacant lots for addresses, or a single home to enroll dozens or hundreds of subs. The idea is to cut down on the 18%-plus of subsidies going to ineligible subs.

Related: Free State Takes Issue with Fund Cap and Facilities-Based Limitation

Lifeline is the advanced telecommunications subsidy for consumers in low-income households. It provides a $9.95 monthly subsidy for broadband and phone service.

What the item does do, according to FCC sources, is take measures:

1. Prohibiting carriers to enroll subs if they can't be verified as still alive.

2. Prohibiting carriers from paying commissions based on the number of consumers who apply for or are enrolled.

3. Requiring carriers’ employees or agents involved to register with the Universal Service Administrative Company, which administers the Lifeline program, before accessing USAC’s databases. (The order requires carrier employees who want access to the USAC database to register, but does not require them to include the last four digits of their Social Security number [as USAC currently requires for database access], allowing for other ways to prove identity.

4. Restoring states' role to oversee carriers.

5. Restoring states’ role in designating carriers to participate in the Lifeline program.

6. Increasing transparency, including directing USAC to share information on suspicious activity with the states.

7. Taking additional steps to better identify duplicate subs, prevent reimbursement for fictitious subs, and to better identify potential violations via carrier audits.

The further notice seeks comment on goals and metrics for modernizing the program and further efforts to eliminate waste, fraud and abuse.

The FCC voted along party lines Nov. 16, 2017, to make major changes to the Lifeline program, including "clarifying" that premium WiFi did not qualify as mobile broadband under the subsidy, increasing the portability of Lifeline service among carriers, and targeting support for rural areas on tribal lands only to those tribal lands.

Related: FCC Extends Comment Period for Lifeline Revamp

But there was also an accompanying notice of proposed rulemaking (NPRM), as part of that 2017 vote, which sought comment on, among other things, capping the program--the most contentious issue in a previous Lifeline revamp -- ending preemption of states' role in eligible telecommunications carrier designations (which this week's order does); and targeting Lifeline to facilities-based, broadband-capable networks offering voice and broadband (the excluding of wireless resellers, which this order didn't tackle.

The FCC in 2017 also sought comment on adjusting the eligibility verification and recertification process.

Related: FCC Extends Comment Period on Lifeline Revamp

One of the things Pai did early on in his tenure was to revoke the then-most-recent round of Lifeline subsidies until the FCC addressed the verification issue. Pai's stated goal is to prevent waste, fraud and abuse, something he has long targeted in the program, though critics have suggested it was a draconian hit on lower income residents being denied service.

Related: FCC's OAG Warns of Ongoing Lifeline Fraud

The identifier was part of a controversial Lifeline reform item, adopted under former chairman Tom Wheeler (Pai's 2017 order and NPRM was an effort to revamp that), which included trying to combat waste, fraud and abuse by verifying a low-income subscriber's eligibility to receive the Lifeline subsidy for their communications services — phone and increasingly broadband. While then Republican Commissioner Pai opposed the item for failing to cap the fund, he supported the efforts to curb potential gaming of the system.

In June 2019, the FCC expanded its eligibility verifier for the subsidies to an additional 11 states in an attempt to further weed out waste, fraud and abuse.

The first soft-launch states were Colorado, Mississippi, Montana, New Mexico, Utah and Wyoming.

FCC officials said Monday that the plan was to roll the verifier out to the rest of the country by the end of the year.

Eligible telecommunications carriers (ETCs) in those states who were eligible for the Lifeline subsidies could not begin any subscriber re-certifications after June 25 and were told to wrap up any current certifications under the existing rules by Aug. 30.

Certification consists of verifying that the subs an ETC is serving with subsidies ($9.25 per month) qualify for the program, which is targeted at low-income residents and tied to qualifying for various other government subsidy programs—Medicaid, food stamps, etc.).

Pai in May did circulate a proposal to cap the overall Universal Service Fund program, of which Lifeline is one piece, at $11.4 billion--the other pieces are the E-Rate schools and libraries subsidy, the Rural Healthcare subsidy and the Connect America Fund (CAF). 

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