The Federal Communications Commission will introduce a national database next month in an effort to stop fraud by preventing duplicate subscribers in its phone-subsidy program.
Arkansas was one of the first states to have its subscribers’ data included in the database.
The phone program, called Lifeline, provides low-income Americans with a discount of $9.25 a month for land line and prepaid wireless services.
Lifeline has been criticized in recent years for abuse by subscribers and providers, and especially for households with more than one subsidized phone - a violation of the program’s guidelines.
In 2012, the FCC began cleaning up the program and tightening eligibility, including the creation of the national database.
“When the commission changed the rules to let in prepaid phones, they didn’t consider how different it would be,” to identify subscribers, said FCC spokesman Mark Wigfield.
He said some wireless providers were pricing their service in a way that essentially made it free and competing for subscribers.
In Arkansas, there are about 173,000 people who use Lifeline and there are 44 authorized providers, including AT&T Inc. and Windstream Communications.
Of the carriers in the state, 27 of them offer land-line service, and the others include wireless service, said John Bethel, executive director of the Arkansas Public Service Commission.
The FCC allocated $1.85 billion to the program in 2013, down from $2.1 billion in 2012, Wigfield said.
He said the money for the program comes from the Universal Service Fund, financed from fees assessed on telephone companies. Most carriers pass on the charges to consumers in their telephone bills, Wigfield said.
U.S. Rep. Tim Griffin, RArk., is one of Lifeline’s critics and in 2011 introduced a bill to end the cellphone portion of the program.
“A lot of people work hard to save up their money to pay for their cellphones, and we are giving them away to a pretty wide range of people, a lot of people who certainly have cars and homes but they get free cellphones,” he said.
Griffin said there is not as much abuse with the landline portion of the program because people don’t want more than one land line. He said it’s possible to buy cheap cellphone service without assistance.
“It just seems to me like there is a lot of waste and a lot of people are getting the phones that don’t need” them, Griffin said. “The federal government should not be in the business of providing every material item.”
Windstream now has to reverify its customers in the program each year because of the changes implemented by the FCC, said Tim Loken, the company’s director of regulatory reporting.
He said that the company, which only offers land-line service, has about 1,300 customers in Arkansas who participate in the Lifeline program and that the cost of their service depends on which plan they have.
“Regardless of what service they get, they only get the $9.25 [discount],” Loken said.
The changes are excepted to save the FCC more than $2 billion by the end of the year, Wigfield said.
“The overall intent of it is that phone service with cells is critical for staying in touch with family and work,” Wigfield said. “We all rely on our phones, so it would be a way for phone consumers to do things that they may not otherwise be able to do. That purpose remains, but we did have to focus, once we found out about these problems, quite a bit on the rules and eliminating the problem.”
Business, Pages 23 on 02/04/2014