House plans hearing on abuse of phone subsidy program

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"Since the American people ultimately pay for the program through a surcharge on their phone bills, and because many of those footing the bill face their own challenges in this economy, we want to make sure ratepayer funds are being spent wisely," the Republicans wrote. "And since waste and abuse will divert funds from helping those who truly need it, we want to make sure the funds are being appropriately targeted.”

Full Committee Chairman Fred Upton (R-Mich.), Communications and Technology subcommittee Chairman Greg Walden (R-Ore.) and other Republican leaders asked what additional steps the FCC could take to reduce the program.

The hearing is scheduled for April 25 in the Communications subcommittee. Genachowski recently announced that he will step down sometime in the coming weeks, and it is unclear whether he will resign before the hearing.

Congress first enacted the Lifeline program in 1985, during the Reagan administration. In 2005, under former President George W. Bush, the FCC expanded the program to cover cellphone service.

The program pays for phone service, not the phones themselves. But many companies that receive funding through the program offer free and low-cost phones to their subscribers. The program is funded through fees that the telephone companies pass on to consumers on their monthly bills.

Lifeline gained more attention last year when conservatives seized on a viral video of a woman saying she would vote for Obama because he gave her a free phone.

Genachowski has acknowledged that Lifeline has "created perverse incentives for some carriers" and "invited fraud and abuse."

The FCC last year toughened its eligibility standards and created a database to ensure that multiple companies were not receiving subsidies to provide service to the same customer.

Senate Republicans pushed a nonbinding amendment to a budget resolution last week to end the cellphone portion of Lifeline, but Democrats defeated the proposal in a mostly party-line vote.

Genachowski and Democratic Commissioner Mignon Clyburn, a likely choice for acting chairman after Genachowski steps down, issued statements firing back at the supporters of the Senate amendment.

“The amendments being offered today in the Senate fail to take into account how vital a program Lifeline is for low income families to stay connected, help secure and maintain jobs, and reach law enforcement in case of emergencies," Clyburn said last week.