FCC warns of fraud in telephone subsidy

Federal Communications Commission (FCC) Chairman Julius Genachowski wrote to state telecom commissions on Monday, urging them to crack down on waste and fraud in the FCC's Lifeline subsidy.

The Lifeline program is part of the agency's Universal Service Fund and helps low-income Americans afford landline or wireless telephone service. The state commissions help to administer the $1.3 billion program.

 The FCC issued an advisory last week that it had launched multiple investigations into allegations that companies receiving program funds were violating the agency's rules. 

For example, companies cannot receive a subsidy to provide cellphone service to a customer who is already receiving subsidized landline service.

"Preventing waste, fraud, and abuse in universal service programs, including the Lifeline program, is a paramount objective of the Commission, and the Enforcement Bureau will take all necessary steps to ensure that this vital program is protected," the FCC said in the advisory.

The FCC reached a $1.5 million settlement with one company earlier this year over charges it improperly enrolled subscribers into the program.

"I encourage all of you to join the FCC in our efforts to reform the Lifeline program by closely scrutinizing the requests for [eligible telecommunication carrier] designation pending before you, to be on guard for abuse... and to take swift and strong action when necessary to protect the program," Genachowski wrote.

He also sent the letter to the Justice Department and state attorneys general.

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