Recap: FCC Oversight Hearing Focuses on Lifeline Program

The House Commerce Committee’s Subcommittee on Communications and Technology held a Federal Communications Commission oversight hearing on July 12 – just for fun. The staff for the subcommittee’s majority framed the hearing as an examination of both the FCC’s “policy decisions and the process by which it reaches them under Chairman [Tom] Wheeler’s leadership.” The staff teed up four issues in particular: privacy and broadband providers, set-top TV boxes, media ownership rules, and management of the Lifeline program. All five FCC commissioners testified.

In his written testimony, FCC Chairman Wheeler updated the subcommittee on the FCC’s progress regarding Open Internet rules recently upheld in court, the world’s first incentive auction aimed at convincing television broadcasters to relinquish spectrum licenses, efforts to accelerate the development and deployment of 5G wireless technology, a proposal to encourage competition in the Business Data Services (also known at Special Access) marketplace, the FCC’s Lifeline Modernization order, a proceeding on how to ensure consumers have the tools they need to make informed choices about how and whether their data is used and shared by their broadband providers, set-top boxes, and the need to improve the 911 system.

Press reports of the hearing focus on the sparring over the Lifeline program which makes telephone service more affordable for low-income households. FCC Commissioner Ajit Pai has expressed concerns that households may be receiving extra or unneeded subsidies, which are against the program's rules. Rep. Anna Eshoo (D-CA), the Ranking Member of the subcommittee, ripped into Commissioner Pai at the hearing, pressing him on whether he had actually found evidence of fraud and if his investigation into the program had considered that some addresses include more than one household, for example homeless shelters or veterans' homes, where residents might be entitled to multiple subsidies. “Because they exist in my congressional district, in everyone’s congressional district,” she said. “And if you’re using those multi-household addresses to allege that there’s fraud, then, you know what, you’ve got to be really careful with this.” Chairman Wheeler came armed with stats showing that more than two million people getting lifeline subsidies were in those multiple-dwelling units.

“I agree completely congresswoman,” Commissioner Pai responded. “That’s why I said we don’t know, it’s potentially fraudulent and we need to investigate given the magnitude of that number.” “So you don’t know, you’re just saying it might be?” Rep Eshoo shot back. She then repeatedly asked Pai whether he had found concrete evidence of fraud in the Lifeline program. “No, just answer me, yes for no,” she said, eventually. “Have you uncovered any fraud so far?” “To date, I have not reached that conclusion,” Pai replied.

Rep Frank Pallone (D-NJ) released a report concluding that recent Republican allegations of $500 million of waste, fraud, and abuse in the Lifeline program are based on faulty assumptions and bad data. The research found that the Republican claims relied solely on a faulty assumption that all Lifeline beneficiaries living in multi-household addresses — including veteran group homes, nursing homes, and homeless shelters — received their phones due to fraud. The investigation has uncovered no evidence to support this assumption, and found that 43 percent of the multiple-household filings were submitted out of an abundance of caution for consumers whose information had already been verified.