The federal subsidy known as the "Obamaphone" or "Obamanet" program could be losing nearly $500 million to fraud annually, according to a top Republican on the Federal Communications Commission.
Commissioner Ajit Pai made the accusation Wednesday in letter to the Universal Service Administrative Company, referring to the FCC's Universal Service Fund, which provides a monthly $9.95 subsidy for telecom service to low-income consumers.
The subsidy is limited to one per "independent economic household," or IEH, but telecom companies have the ability to override that restriction if applicants check a box stating they represent a separate household, even if they have the same address.
The Universal Service Administrative Company is a nonprofit organization designated by the FCC to administer the fund.
Pai wrote that data obtained by the FCC last month revealed carriers had enrolled nearly 4.3 million subscribers using the IEH override process between October 2014-April 2016, or 35.5 percent of total subscribers for the period. "It is alarming that over one-third of subscribers — costing taxpayers almost half a billion dollars a year — were registered through an IEH override.
"Just one year of service for these apparent duplicates costs taxpayers $476 million," added Pai, who now is asking the Universal Service Administrative Corporation for answers to several questions.
They include a list of any investigations or audits into the apparent fraud that USAC has conducted, and details about any process the company has in place to ensure that consumers who self-describe as being part of a separate household are being truthful.
They include a list of any investigations or audits into the apparent fraud that USAC has conducted, and details about any process the company has in place to ensure that consumers who self-describe as being part of a separate household are being truthful.
"Given the hundreds of millions in taxpayer funds apparently lost to unscrupulous behavior in the Lifeline program, I hope you will agree that USAC's paramount task must be to eliminate waste, fraud and abuse from the Lifeline program," Pai wrote.
The program was originally established to help low-income consumers in rural areas obtain access to 911 services. It was expanded to include cellular devices in more recent years, and expanded in March to include Internet service.
The program was originally established to help low-income consumers in rural areas obtain access to 911 services. It was expanded to include cellular devices in more recent years, and expanded in March to include Internet service.
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