Hearing Recap: Lifeline: Improving Accountability and Effectiveness

The Senate Commerce Committee’s Subcommittee on Communications, Technology, Innovation, and the Internet held a hearing to examine the Federal Communications Commission’s progress in reforming Lifeline, a government program that subsidizes monthly telephone services for eligible low-income participants, and how to prevent waste, fraud, and abuse in the program. Recently, the FCC revealed its intention to launch on June 18 a public proceeding to consider expanding the Lifeline program to include broadband. The update would also include accountability measures, including a new third party to determine who is eligible for the program. Currently, eligibility is determined by the phone service providers.

Both sides of the aisle agreed the program needed modifying, with Democrats united in support of expanding it from phone service to broadband, but Republicans were less sure about the increased costs of such an expansion and preventing waste fraud and abuse. Republicans were looking for some more cost-containment—like a budget on the program—before expanding eligibility to broadband, while Democrats argued that the FCC could do both at the same time and had already made strides with targeted reforms meant to increase efficiency and prevent waste, fraud and abuse.

Critics at the hearing said that the government should be wary of an expansion before there are more accountability measures in place. Subcommittee Chairman Roger Wicker (R-MS) said, “Before again expanding the program, we need to consider what problems remain and how we can address them, since consumers are bearing the cost of funding the program with increasing phone bills.” He talked about the expansion of the subsidy from $800 million in 2009 to $2.2 billion in 2012. Though he conceded reforms since then had reduced that figure to $1.7 billion, he also said there were lingering problems and issues, including how to verify eligibility and the low pilot program participation. He said before expanding the program, it was necessary to identify and address the remaining problems.

Sen. Deb Fischer (R-NE) said that because of “the waste, fraud and abuse that’s already been identified,” she supports capping the program’s budget and requiring participants to provide a copay. Lawmakers also raised questions about how the program is perceived in their home states. Sen. Joe Manchin (D-WV) said he heard many stories of people using their Lifeline service for “illicit” purposes and said his constituents were “sick and tired” of waste in the program.

The program also has supporters. “With this enduring principle in mind, it is critical that we not forget the importance of the FCC’s Lifeline program to advancing our universal service goals,” Sen. Bill Nelson (D-FA) said.

Sen. Richard Blumenthal (D-CT) spoke up strongly for the FCC's reforms to date, calling them a "serious and sustained effort" that the FCC should get credit for. He said that while there are still modifications that need to be made, including to reduce waste, fraud and abuse, that should not prevent the FCC from extending the program to broadband, as it has proposed, and that Congress would legislate that move if necessary.

There were five witnesses at the hearing: Free State Foundation President Randolph May; Michael Clements, the Acting Director of Physical Infrastructure Issues at the Government Accountability Office (GAO); Scott Bergmann of the CTIA - The Wireless Association; Florida Public Service Commissioner Ronald A. Brisé (speaking on behalf of the National Association of Regulatory Utility Commissioners); and Jessica Gonzalez, Executive Vice President and General Counsel of the National Hispanic Media Coalition.

• Michael Clements talked about a recent GAO study that concluded there is a number of issues with the program. Those included that the FCC, while having made progress on some 2012 reforms, still had three of 11 reforms to complete, that the FCC had not evaluated the effectiveness and efficiency of the program, and that a pilot program the FCC conducted to test expanding the program to broadband had a low turnout. The FCC has agreed to come up with a way to better evaluate the program.
• May said he supported Lifeline as a targeted program, but also said the FCC needed to undertake more reforms, and meanwhile should take a cautious approach to expanding the program, saying there were some suggested reforms GAO had made back in 2010 that the FCC had still not made.
• Bergmann suggested some reasons why the FCC had not capped the fund. He said CTIA was definitely concerned with the size of the fund, given that 44% of low income and high-cost subsidies come from wireless carriers and their customers, a figure he said would soon be 50%. But he said his concern about a hard cap was that it was targeted to individuals, not carriers, and was means tested.
• “As a former Lifeline recipient,” said Gonzalez, “I know firsthand how effective and life-changing it can be. In 2004, after being laid off from my teaching job, I was on Lifeline for a short time. With my subscription, I was able to list a reliable phone number on my resume, and use my phone to communicate with the law school admissions and financial aid offices that ultimately made it possible for me to become an attorney. As a former public school teacher, I would be remiss not to underscore how the digital divide is creating strikingly unequal provision of public education across this great country. FCC Commissioner Rosenworcel has raised concerns about what she calls the Homework Gap. That is, that seven in ten teachers assign homework that requires broadband access, yet, one in three households do not subscribe, including five million households with school-aged children. Nearly 100% of high school students say they are required to access the Internet to complete homework. Nearly 50% have been unable to do so and 42% say they received a lower grade because of lack of Internet access. Lifeline already provides many with a pathway out of poverty. In fact, over 4.2 million households represented by members of this subcommittee alone, currently rely on Lifeline telephone service; an estimated 90% of them are without broadband. I will be forever grateful for the investments that this country made in my future, and I will fight to give opportunity to my fellow Americans. Modernizing Lifeline for the digital age, is, I believe, one such fight.”