Mobile lifeline fraud will only get worse

by Steve Blum • , , , ,

No carrier left behind.

An FCC commissioner wants Californian regulators, along with their counterparts in Oregon, Vermont and Texas, to answer questions about how eligibility for lifeline telephone service subsidies is managed. All four states have their own process for determining whether a subsidised lifeline customer meets income eligibility standards and verifying that any given household only receives one subsidy.

Republican commissioner Ajit Pai sent largely identical letters to the heads of the four public utilities commissions, including California Public Utilities Commission president Michael Picker, asking, among other things how they “determine whether the one-per-household rule is being enforced?”

In his letter – which largely tracks with earlier ones sent to the company that handles verifications for the other 46 states – Pai points to “waste, fraud, and abuse that has riddled the Universal Service Fund’s Lifeline program since wireless resellers began participating in this program” and claims that 5.9 million subsidised wireless phones were given out using poorly supervised eligibility overrides, at an annual cost of $650 million.

How many of those overrides met the strict standard of the rules is an open question. But regardless, it points to a disconnect between the FCC’s one-subsidy-per-household rule and the realities of mobile service. Does anyone at the FCC – or the CPUC – really think that a mobile lifeline customer will leave his cellphone hanging on the wall, so the whole family can use it?

That’s an increasingly urgent question as the FCC implements its plan to include broadband in subsidised lifeline service. Mobile carriers are eligible for subsidies too but, unlike with voice service, have dramatically lower standards to meet – 500 megabytes of data per month at “3G” speeds (whatever that means), versus 150 gigabytes at 10 Mbps down/1 Mbps up for wireline providers.

The marquee goal of the broadband lifeline program is to make it possible for students to do their homework. Slow and often spotty service capped at 500 megabytes a month won’t cut it for one kid, let alone a whole family, even assuming the phone is around when it’s needed or isn’t being used to make a voice call. Whatever the actual level of fraud, the FCC’s poorly provisioned broadband lifeline program will only increase the pressure to illegally double and triple up on subscriptions.