You are currently viewing the printable version of this article, to return to the normal page, please click here.

FCC to reform telephone subsidies, could eliminate Link Up to fight corruption

- The Washington Times - Monday, January 30, 2012

The Federal Communications Commission is considering big changes in two telephone subsidy programs for low-income customers that would combat corruption and make room for a new broadband Internet subsidy.

The FCC could eliminate Link Up, a one-time $30 credit that covers the cost of the installation fee for landlines or activation fee for cellphones, Commissioner Robert McDowell, the group's lone Republican, told The Washington Times. The commission is also looking to weed out fraudulent customers from its sister program, Lifeline, which provides a $10 monthly credit to subsidize phone service.

"We've worked to reform and modernize our programs  rooting out waste, fraud, and abuse," FCC Chairman Julius Genachowski said in a Jan. 9 speech. He was not available for comment.

The FCC will meet on Tuesday to vote on these issues. Mr. McDowell cautioned that negotiations are on-going.

Mr. Genachowski expects these changes to save $2 billion over the next few years. He wants to use the savings to begin subsidizing broadband Internet service for low-income customers.

"Broadband has gone from being a luxury to a necessity in the 21st century," he said.

But Mr. McDowell, who is pushing for greater savings than $2 billion, said that while he is not opposed to adding broadband to the program, he would rather wait until savings are achieved before adding another cost burden.

"I'm trying to squeeze more savings out of it," he said. "I'm concerned about expanding the scope of the program without making sure it's fiscally-sound first."

Many fraudsters are taking advantage of the two telephone subsidy programs. Phone companies will sometimes approve duplicate customers who are already using the program with another carrier. They will also approve customers who are not eligible, because they don't meet the low-income requirements.

Link Up, in particular, provides an incentive for companies to "sign up as many customers as they can," because much of the $30 fee can be pocketed by the phone provider, Mr. McDowell explained. So the FCC might drop that subsidy altogether.

"We're working on trying to remove incentives that encourage companies to sign up as many customers as they can," he said. "Link Up gave an incentive to sign up customers who might not be eligible, because it served as a bounty to sign up new customers. We're working to eliminate that perverse incentive."

Lifeline will continue subsidizing phone service for low-income customers, but it could face major reforms. The FCC is likely to approve a database that will spot and eliminate duplicate customers. That includes customers who take advantage of the program with multiple phone companies. This database could be up-and-running within 12 months.

But, aside from addressing the duplicate problem, it would do little to ensure customers meet the low-income eligibility requirements, Mr. McDowell said. Customers would be required to show proof that they participate in subsidy programs such as Medicaid, food stamps, National School Lunch Program's Free Lunch Program, or Section 8 Housing. But photo identification would not be required.

"Currently, there's no way to verify who's eligible with certainty," he said.

So Mr. McDowell is in favor of a second eligibility database that would also require customers to prove who they are and that they meet the program requirements. He said the second database could be up-and-running in 18 month to 24 months.

© Copyright 2014 The Washington Times, LLC. Click here for reprint permission.