On July 11, 2017, FCC Chairman Ajit Pai sent a letter to USAC requesting that it implement various audit mechanisms and safeguards to protect the Lifeline program from waste, fraud, and abuse. This letter comes on the heels of a GAO Report which, upon release, generated multiple statements that waste, fraud, and abuse are “prevalent” in the Lifeline program. Unfortunately, the report was largely based on 2014 data, and therefore, necessarily fails to take into account multiple program reforms implemented in the intervening years. Undeterred, the opening sentence of the letter then uses this old data to target a particular type of Lifeline provider—wireless resellers. Prior to the entry of wireless resellers into the Lifeline program, the Lifeline-eligible population was chronically underserved. The success of wireless resellers in deploying services to low income individuals has unfortunately been viewed as a negative by many.
Chairman Pai directs USAC to implement a number of remedial actions, such as increased audits. While participants in the program are already heavily audited, the letter directs USAC to conduct more targeted audits to further investigate findings made in the GAO report. What is unclear, however, is whether USAC is to examine the ETC’s current or more recent subscriber base or whether USAC will continue to grind on 2014 data. Examining more current data seems less relevant to safeguarding the program today. On the other hand, it may be difficult for USAC to audit more current data as set forth in the letter. For example, many of the targeted audit techniques listed in the letter depend on other government databases being up-to-date, such as Medicaid databases. The GAO report itself noted that states may take up to three years to update data in Medicaid databases, so auditing 2017 data against a Medicaid database may skew the results, and indeed, may have skewed the findings in the GAO report itself.
Regardless of the vintage of the data to be audited, the letter is a clear signal that Chairman Pai’s focus on rooting out the “waste, fraud and abuse” in the Lifeline program has only sharpened, and that the GAO report may be used as a justification of enforcement actions or possibly even further reforms to the program.