Consumer groups question whether FCC's Lifeline program reforms go far enough

Tools

The FCC has put forward a new plan that it hopes will extend more broadband service to more lower-income by updating its existing Lifeline phone service program.

Under the current Lifeline program that's supported by the Universal Service Fund (USF), the FCC provides a $10 per month discounts on both traditional PSTN and wireless phone service for low-income families. Although the program has been successful in bringing phone service to lower-income families, the FCC wants to update it to weed out potential abuse and fraud.

The move, which is part of a broader effort to overhaul the existing $8 billion USF program, would focus on preventing consumers from getting unnecessary duplicate benefits, subsidies for ineligible consumers and misuse of Lifeline funds.

FCC chairman Julius Genachowski said he would issue a draft order to other FCC commissioners that would provide a database of Lifeline service users that would prevent traditional ILECs such as AT&T (NYSE: T) and Verizon (NYSE: VZ) from taking on customers who have Lifeline discounts from other service providers.  

"Where individuals or companies have unlawfully defrauded or abused our programs, we will penalize them, and we will make it clear that it does not pay to rip off the federal government," Genachowski said in a speech.

In addition to cracking down on abuse, Genachowski said the new draft order will start "the process of modernizing Lifeline from telephone service to broadband."

Wade Henderson, president and CEO of The Leadership Conference on Civil and Human Rights, said that while the FCC's proposal is "an important step to narrowing the digital divide--but not yet the quantum leap necessary to include all Americans in the new economy."

Henderson added that according to FCC statistics, the Lifeline program currently serves about 10 million Americans, or about 32 percent of eligible households, while about 100 million people do not subscribe to broadband services because they are too expensive.

For more:
- see Genachowski's speech
- Reuters has this article

Related articles:
FCC asks PUCs to help it reduce fraud in Lifeline program
Rural telco groups want the FCC to rethink its USF reform program
Rep. Matsui puts broadband affordability bill back on the table
USF voice service subsidy comes under FCC scrutiny