WASHINGTON — 

U.S. Sen. John Thune (R-S.D.), chairman of the Senate Committee on Commerce, Science, and Transportation, today led a hearing titled, “Risk of Waste, Fraud, and Abuse in the Federal Communications Commission’s Lifeline Program.” The Lifeline program, which subsidizes telephone and broadband service for low-income consumers, was the subject of a recent study by the independent Government Accountability Office (GAO). In its report, GAO describes recurring failures of evaluation and oversight creating persistent risk of waste, fraud, and abuse and threatening the ability of Lifeline to serve its intended purpose.

At the invitation of Thune, South Dakota Public Utilities Commissioner Chris Nelson testified at the hearing and emphasized that “states must remain involved in Lifeline oversight.”

Excerpt from Thune’s opening statement:

“There is substantial evidence to indicate that, even without the well-documented fraud, duplication, and unverified payments that have plagued the program, the Lifeline program could be an ineffective means of increasing telephone subscribership among low-income consumers.

“As it is currently designed, for example, the Lifeline program appears to do a poor job of directing support to those who truly need it—namely, those who would not get service without a Lifeline subsidy. 

“One study estimated that, because most Lifeline subscribers would have purchased telecommunications services even without the subsidy, it costs the program $1100 annually for each truly new subscriber and over $2800 annually for each new prepaid wireless subscriber.

“That would mean Lifeline is costing American consumers between eight and twenty times the benefit amount actually received by program participants for each new low-income subscriber.

“The FCC’s long-standing failure to make performance goals a priority is a failure to meet its obligations to American consumers.

“Let me put it another way – I have no doubt that the Lifeline program provides a critical service for many low-income Americans, including my constituents, but I think we need an honest assessment of how best to deliver such services to those who need them the most.”