Poorly Managed Government Assistance Program Wasting Our Money

The Universal Service Fund (USF) that you're paying into through your monthly home phone bill is being raided by many low-income families through the Lifeline and Link-up programs. It may be an insignificant amount relative to the size of the multi-billion dollar fund, but it's another example of how our money is wasted because of a poorly managed government program.

The fund was intended to be used to make telecommunications services available to all consumers, including those in low-income, rural and high cost areas. The USF fund consists of four programs which are High Cost, Low Income, Rural Health Care, and Schools & Libraries. The Low Income program consists of Lifeline and Link-up. The Lifeline program provides discounts to qualified home phone service subscribers of up to $10 per month. The Link-up program pays half of the subscriber's connection fees up to $30. To qualify for Lifeline and Link-up assistance under federal guidelines, you must be at or below 135% of the federal poverty guidelines, or be enrolled in other government assistance programs. It shouldn't be too hard to prove that you qualify for the program. If you are already enrolled in another assistance program like Food Stamps or Medicaid, you'd have your award letter or something that your case worker could provide. And, those assistance programs are run by the government so they should have your name and address in a database somewhere right?

The problem is that most states don't require any proof. The customer just needs to sign a Self Certification form. This is a form that the subscriber fills in with their name and address, puts a check mark next to the government programs that they are enrolled in (or claim to be enrolled in), then signs their name. The signature is stating "under penalty of perjury" that the information is correct. There is no checking going on to see if the customer really is enrolled in the benefit programs they've checked on the form. So, the customer gets the Lifeline discount and the carrier gets that money reimbursed to them out of the USF fund by the Universal Service Fund Administrative Company (USAC). The carrier doesn't have much incentive to be diligent in qualifying the new subscriber because in an audit, they'll just need to produce the signed self-certification form to put the responsibility back on the subscriber.

The Link-up discount is also being abused by subscribers jumping from one carrier to another. The Link-up program is supposed to be a "one-time" benefit to get the customer's line activated. But when the subscriber's home phone line is disconnected for non-payment, they just go to the next phone company in the book to get new service using the Link-up subsidy again. The phone company doesn't know that the subscriber received the benefit with their prior carrier and the consumer isn't too concerned about signing another self-certification form. Once again the new subscriber gets the discount and the carrier get's reimbursed by the USAC.

There is an answer and it seems relatively simple. In fact Texas is making an attempt at preventing the abuse of the Lifeline and Link-up programs. They've appointed a company to administer the program called the Low Income Discount Administration (LIDA). Consumers must go through the LIDA to qualify and that administrator then tells the phone carrier if the subscriber can get the benefit.

There's no telling how many unqualified people are receiving Lifeline benefits or how many times the same household has taken the Link-up subsidy. But as long as no one is looking, the it is not going to stop. Unfortunately, by the time something is done to prevent the fraud in the Lifeline / Link-up programs, millions of our dollars will be gone.

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