On January 22,
TracFone filed a petition for waiver of Lifeline program rules
that it claims inhibit the Federal Communications Commission’s ability to ensure
that carriers conduct thorough, accountable, and transparent eligibility
determinations. And on January 31, the agency issued a notice
soliciting comments on TracFone's petition.
Reforms that
help ensure Lifeline subsidies are distributed only to eligible applicants,
based on a proper application review process, will help achieve the
commendable goals of the program. Unlike those parts of the USF program that
distribute subsidies in a more indiscriminate fashion, like the high-cost fund, Lifeline provides targeted subsidies to those in need who meet
income eligibility requirements. The Lifeline program is worthwhile, but it can
only be sustained if it is administered efficiently and with minimal levels of
fraud and abuse. That's why reforms like those proposed by TracFone are
necessary to improve the Lifeline program and to maintain public confidence
that Lifeline funds are not being wasted.
TracFone’s petition
discusses several Lifeline program rules that should be reformed in order to
increase transparency and efficiency in the eligibility review process.
Specifically, TracFone asks the Commission to allow Eligible Telecommunications
Carriers (“ETC”) to retain income-based and
program-based eligibility documentation. The current rules require
ETCs to conduct a review of subscriber eligibility, but the rules do not
require proof that the review actually occurred, or of what evidence the review
was based upon. In fact, the rules prohibit
ETCs from retaining documentation used to determine a subscriber’s
eligibility. As such, TracFone seems to have a point when it claims the rules
provide no means by which the Commission or USAC can verify that ETCs have
actually conducted a review, or that the review was based on the proper
documentation to determine Lifeline eligibility.
By now, the Commission should be aware
of its problematic rules which erect unnecessary barriers to efficient subscriber
eligibility determinations. TracFone filed an Emergency Petition on
May 30, 2012 asking the Commission to amend its rules to allow ETCs to retain
program-based eligibility documentation. The Commission sought comment on
TracFone’s petition, and all but one commenter supported the proposed
amendment. The Commission has not acted on TracFone’s petition seeking to end
the existing inconsistencies between the rules regarding review requirements
and document retention, but it should. Doing so would further promote
accountability and transparency in the Lifeline program eligibility
determination process.
The Commission commendably has taken
some positive steps toward decreasing fraud and abuse of the Lifeline program
under the Lifeline Reform Order. The Commission developed the National Lifeline
Accountability Database (“NLAD”), which will be available for ETCs to verify applicants’
Lifeline eligibility for Maryland on February 13, 2014 and for additional
states on a rolling basis. This database will help identify duplicate claims
for Lifeline service. But if the database fails to identify such instances,
ETCs may have to initiate a redundant inquiry concerning an applicant’s
eligibility, because the current rules prohibit ETCs from retaining eligibility
documentation from the original application review process. As such, while the
NLAD should constitute an improvement for the Lifeline program, the Commission needs
to do more.
At the end of 2013, the FCC’s Office of
the Managing Director announced that the
universal service contribution factor for the first quarter of 2014 is 16.4%.
This is even higher than the 15.6% contribution factor for the fourth quarter
of 2013. In contrast, at the end of 2000, the contribution factor was not even 6%. In
effect, the 16.4% fee constitutes a tax paid by every consumer of interstate
and international telecommunications services, including the low-income persons
the Lifeline program is designed to benefit. The dramatic increase in the size
of the USF fund since 2000 – and the concomitant increase in the size of the
USF fee – largely has been driven by the increase in the size of the high cost
fund. As FSF’s Randolph May and Seth Cooper stated in their comments filed in August 2011 and June 2013, “the end game for the Commission's comprehensive USF reforms should
be the eventual elimination, say, in ten years, of all high-cost fund
subsidies." Then, the Commission should aim to limit USF support to
targeted and explicit subsidy programs, such as Lifeline.
From its
inception in 1985, the Lifeline program has provided much-needed resources for
low-income persons. The program has helped narrow the connectivity gap between
low-income and non-low income households. As Chairwoman Clyburn stated in her address to the New America Foundation on September
12, 2013, 80 percent of low-income households had telephone service in 1984,
compared with 95 percent of non-low-income households. That 15 percent gap
shrunk to approximately 4 percent in 2012. A well-run Lifeline program can meet
its intended purpose of giving access to low-income consumers. This would mitigate
the need for broader, more indiscriminate subsidies, such as the high-cost fund
subsidies. However, positive aspects of the program, like many programs that
provide government subsidies, can easily be overshadowed if the programs turn
out to be riddled with waste, fraud, and abuse. The Lifeline program will
suffer loss of public support unless the Commission continues to reform it.
While the Commission has taken positive steps to reduce abuse, there
is still much work to be done to ensure that the Lifeline program is run efficiently
and effectively if it is to fulfill its mission to give
low-income Americans access to the vital communications tools of the digital
age. That's why the proposals contained TracFone's latest petition, and similar
ones, should be given prompt consideration by the Commission.
Posts
