Lifeline Oversight Hearing Turns Into Partisan Finger Pointing
House Communications Subcommittee Chairman Greg Walden, R-Ore., said there is “plenty of blame to go around” but the current data on the program “doesn’t paint a picture of success,” in his opening remarks. He said the Lifeline fund grew 226 percent since 2008 and, in 2012, the FCC spent $2.2 billion on the program. “Specifically, it spent $2.2 billion of your money, my money -- virtually every American’s money -- since the Lifeline program and the entire Universal Service Fund is paid for through a charge on phone bills,” he said. “We are spending large sums of money and probably squandering much of it.”
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"There is near unanimity among the FCC, both parties of Congress, and almost anyone familiar with the program that the Lifeline fund has been fraught with waste, fraud, and abuse and that the money has not been spent as wisely as it should have been,” Walden said. He said some reports “suggest some subscribers have eight or more phones with subsidized service, with one woman saying that to get one ’she just goes across the street and gets it.’ One man has claimed to have a bag full of 20 phones on the program that he sells ‘for about 10, 15, 20 bucks’ each,” Walden said. Walden referenced a broadcast news report published by News on 6 in Tulsa, Oklahoma (http://bit.ly/V1pfmk).
Walden did credit the FCC with enacting some reforms that he said “beefed up” the certification process and aim to bring more accountability to the program. Specifically he noted how the commission now requires all subscribers to annually recertify their eligibility, restrict the program to one subsidy per household, and set an interim base subsidy amount of $9.25 per month, among other modifications. But Walden asked if the commission’s reforms are enough and asked whether the program should be eliminated entirely.
Julie Veach, chief of the FCC Wireline Bureau, said the FCC has limited household eligibility for Lifeline subsidies, included an annual recertification requirement, began work to eliminate duplicative subscriptions, is readying the deployment of a national Lifeline accountability database “by the end of the year,” eliminated link-up support on non-tribal lands, adopted new oversight and auditing requirements, and launched a broadband pilot to collect more data. As a result of the reforms “the Lifeline program is currently on track to save approximately $2 billion by the end of 2014,” she said. “The goal of these reforms ... is to ensure that the truly needy in our nation are not deprived of something as basic to everyday life as phone service.”
Walden said the subcommittee “may need to probe deeper into the issue from different angles” in further hearings. Walden would not say what remedy he advocated but said: “Whatever we do, staying on the present course seems out of the question.”
Rep. Doris Matsui, D-Calif., said there’s much more waste in other USF initiatives like the high-cost program, and despite the abuses in the Lifeline program efforts should be made to expand it to offer broadband services to low-income households. “We need to reform and modernize Lifeline, not eliminate it,” she said. Matsui introduced a bill Tuesday to reform the Lifeline program and codify a provision that would permit eligible users to use subsidies to acquire wireless, landline and broadband services. Matsui’s Broadband Adoption Act (HR-1685) would require the FCC to expand Lifeline to help Americans subscribe to most broadband services while changing its rules to reduce waste and abuse (CD April 24 p3). The bill garnered the support of outgoing FCC Chairman Julius Genachowski, Commissioner Mignon Clyburn, Verizon and the National Cable and Telecommunications Association, among others.
House Communications Committee Ranking Member Anna Eshoo, D-Calif., commended Matsui’s legislation, which she said would make permanent Lifeline’s support for broadband services. “In order to compete in today’s economy, every American needs high-speed access to the Internet, whether to apply for jobs or receive healthcare or education,” Eshoo said. The Broadband Adoption Act will also ensure accountability for participating carriers, she said, and it must be a “top priority” of the program to implement a national database to “ensure program eligibility and prevent duplication.” Eshoo co-sponsored the bill along with House Commerce Committee Ranking Member Henry Waxman, D-Calif.; and Reps. Diana DeGette, D-Colo.; Zoe Lofgren, D-Calif.; Jan Schakowsky, D-Ill.; G.K. Butterfield, D-N.C.; and Ben Lujan, D-N.M.
So-called “Obama phones ... have come to be, more or less, a symbol of the mismanagement not only within this program but within the entire USF and the FCC budget,” said Rep. Marsha Blackburn, R-Tenn. “This is an administration that has said ‘we want to be transparent, we want to be accountable, we want to be the best’ and we are repeatedly shown mismanagement and a lack of transparency and ... accountability.” Blackburn said “many in Congress” want to eliminate the Lifeline program or ensure better certification of individuals who receive Lifeline subsidies. Blackburn also questioned whether the “terrorists who committed the bombings in Boston” had received Lifeline benefits.
Waxman criticized majority members who he said were seeking to make the Lifeline program a partisan issue, in order to “score political points.” Obama “did not create Lifeline, the government does not give away free cellphones or iPads, nowhere in America, except in Tennessee, do they call it an Obama phone, and eliminating the Lifeline program -- or disqualifying wireless services -- would not reduce our nation’s budget deficit by one penny.” Waxman said he’s “not opposed” to oversight of the Lifeline program “but I am opposed to those who want to turn this into a partisan issue or pick on subsidies to low-income families while ignoring the even larger subsidies their constituents receive.”
Eshoo urged majority members not to get so caught up in the partisan news headlines about Obama phones. “I think what we need to stay away from, with all due respect, is simply a disdain for the president and then move from that to apply it to policies in telecommunications,” she said. “It just doesn’t mix. It’s like water and oil. It doesn’t make sense, it’s not dignified and I don’t want anything to do with that.”
Rep. John Shimkus, R-Ill., criticized witnesses for failing to appreciate the public opposition to the program. “I don’t think you all understand the anger that is out there in America to this. To say it is not a free phone is not accurate. It is a free phone,” he said. “You are doing a terrible job of this because you have lost the public opinion on this.” CTIA Vice President-Regulatory Affairs Christopher Guttman-McCabe said he agreed carriers “aren’t winning the PR discussion. ... It is about having something that is efficient and accountable and that works.”
Rep. Steve Scalise, R-La., said the Lifeline program “really angers a lot of my constituents. Whether you call it an Obama phone or a free cellphone ... when they see the fraud and abuse in this program they get angry ... and their anger is justified.” Scalise said he supported legislation offered by Rep. Tim Griffin, R-Ark., that would exclude wireless providers from the Lifeline program (HR-176).
Following the hearing Eshoo and Lujan sent a letter to FTC Chairman Edith Ramirez asking the commission to investigate the “misleading and deceptive” website Obamaphone.net. The website, which was cited by Scalise as providing “accurate” information on the FCC’s Lifeline program, is spreading misleading information about the program, the letter said. The website does not contain a privacy policy and states in fine print that it is in no way affiliated with the U.S. government, despite making statements “that could lead consumers to conclude otherwise,” it said.
CTIA urged lawmakers to reject legislation that would exclude wireless providers from participating in the Lifeline program, said Guttman-McCabe. “Proposals like HR-176 are incompatible with the idea that universal service policy should be technologically and competitively neutral,” he said. CTIA doesn’t believe it’s “either necessary nor advisable to freeze the program, as doing so would deny legitimately eligible Lifeline subscribers from accessing the program,” he said. The group also opposes efforts to exclude mobile virtual network providers from the program “as it would unreasonably discriminate against a class of carrier solely on the basis of its business model,” he said. Policymakers should also avoid a Lifeline cap because an improved economy will alleviate “pressure on the fund and diminishing the need for a cap,” he said. CTIA members said imposing a minimum charge would be “unnecessary and perhaps counterproductive” because it creates a “significant imposition for those who fall within the income threshold for Lifeline eligibility,” he said.
Geoffrey Feiss, general manager of the Montana Telecommunications Association (MTA), said it’s time to “put the program on a budget,” according to his prepared testimony (http://1.usa.gov/17joSp9). “Continued growth in the Lifeline program could jeopardize the integrity of universal service in general, including vital support for our nation’s schools and libraries, rural health care providers and high cost rural broadband investment,” he said. Feiss recommended that the FCC make Lifeline support a cost-based mechanism, or could establish a $3 default Lifeline support benchmark level of support for prepaid wireless. He said the group agreed with recommendations by Sen. Mark Pryor, D-Ark., that the FCC eliminate wireless providers from the program, place a cap on the amount of Lifeline support, and freeze new certifications, among other options.
National Association of Regulatory Utility Commissioners (NARUC) President Philip Jones said expanding the scope of the program to include broadband services is “crucial to assure those with the most need have access to employment opportunities, education, communications, health and social services, and numerous other applications that only broadband provides,” according to his prepared testimony (http://1.usa.gov/YT9biR). Jones commended the FCC for its work to reform the Lifeline program: “One could argue that such efforts should have begun earlier but I and my NARUC colleagues prefer to look forward.”
The Lifeline program is “working precisely as intended,” and should be “nurtured and allowed to evolve” said Jessica González, vice president-policy and legal affairs at the National Hispanic Media Coalition, in her prepared remarks (http://1.usa.gov/1499Cgy). González said the group is “strongly oppose[d]” to any waste, fraud, or abuse that would be found in Lifeline. “However, we also feel very strongly that eliminating or curtailing the program would be an unmitigated disaster for our nation’s poor.”
Billy Jack Gregg, principal at Universal Consulting, said the program needs to go on a budget, according to his prepared testimony (http://1.usa.gov/11FqSVj). “In order to continue the public policy success of the Universal Service Fund, we must continue to support access, not excess,” he said. Gregg suggested the FCC implement program caps, conduct pilot programs to determine if the minimum contribution from Lifeline recipients is appropriate, reinstate state matching contribution requirements, and make the program technologically neutral.