GAO: Additional Action Needed to Address Significant Risks in FCC's Lifeline Program

June 2017

Created in the mid-1980s, FCC's Lifeline provides discounts to eligible low-income households for home or wireless telephone and, as of December 2016, broadband service. Lifeline reimburses telephone companies that offer discounts through the USF, which in turn is generally supported by consumers by means of a fee charged on their telephone bills. In 2016, Lifeline disbursed about $1.5 billion in subsidies to 12.3 million households.

GAO found weaknesses in several areas. For example, Lifeline's structure relies on over 2,000 Eligible Telecommunication Carriers that are Lifeline providers to implement key program functions, such as verifying subscriber eligibility. This complex internal control environment is susceptible to risk of fraud, waste, and abuse as companies may have financial incentives to enroll as many customers as possible. Based on its matching of subscriber to benefit data, GAO was unable to confirm whether about 1.2 million individuals of the 3.5 million it reviewed, or 36 percent, participated in a qualifying benefit program, such as Medicaid, as stated on their Lifeline enrollment application. FCC's 2016 Order calls for the creation of a third-party national eligibility verifier by 2019 to determine subscriber eligibility. Further, FCC maintains the Universal Service Fund (USF)—with net assets exceeding $9 billion, as of September 2016—outside the Department of the Treasury in a private bank account. Report

News Coverage 

Washington Times: ‘Obamaphone’ program stashes $9 billion in private bank accounts

The Hill: Watchdog: Deceased individuals getting money from FCC's Lifeline program




DOC OIG: Excess Equipment, Weaknesses in Inventory Management, and Other Issues in BTOP Infrastructure Projects 

June 2014

The American Recovery and Re- investment Act of 2009 provided the National Telecommunications and Information Administration (NTIA) approximately $4.7 billion to establish the Broadband Tech- nology Opportunities Program (BTOP). 

Of the $4.7 billion, NTIA issued 232 BTOP grant awards repre- senting approximately $3.9 billion. The bulk of BTOP dollars, totaling $3.5 billion, went toward 123 in- frastructure grants. 

The OIG audit found excess equipment, deficient inventory management controls, and a lack of written agreements addressing the federal interest in the equipment. In addition, three of the six recipients we reviewed may not be able to sustain network service beyond the grant period. These projects, in which approximately $154 million in federal grant dollars have been invested, were incurring monthly losses because their expenses exceeded revenues. Report.