NEWS RELEASE ISSUED BY THE OFFICE OF U.S. SENATOR CLAIRE MCCASKILL
McCaskill To FCC Nominee: If Lifeline Companies BrokeLaws, They Should be Barred From Program
Under questioning from former State Auditor, nomineeacknowledges ‘problems still do exist in the Lifeline program'
WASHINGTON – U.S. Senator Claire McCaskill, who hasled the effort to eliminate waste and fraud within the Lifeline governmentphone subsidy program, today blasted two companies accused of fraud in signingup Lifeline customers without their knowledge—asking Federal CommunicationCommittee nominee Michael O'Rielly if he agreed that those companies should bebarred from participation in the program is those accusations are found to betrue. O'Rielly agreed that action should be on the table, adding that a"top-to-bottom review" of the Lifeline program is necessary.
The Lifeline program is funded by the Universal Service Fund(USF), which receives its resources from a fee telephone users pay on theirphone bills. The FCC oversees the USF and, accordingly, the Lifelineprogram. USF contributions have been identified as the likely source of fundingfor ConnectED.
"Lifeline has got to be one of the most fraud-infestedprograms ever conceived in the federal government," said McCaskill, formerMissouri State Auditor and Chairman of the Senate Subcommittee on Financial& Contracting Oversight. "The goal here is wonderful, and I support it—butthis program was flawed from its inception in terms of oversight."
A recentnews report alleged that TerraCom Inc. and YourTel America Inc. had hiredsales agents on commission who had signed up individuals for the programwithout their knowledge—and that they engaged in this practice on instructionfrom their superiors.
O'Rielly agreed that, if the allegations against those companiesare found to be true, barring them from participation in the program should beon the table, saying, "Problems still do exist in Lifeline program."
"As an Auditor, something that really offends me is that theFCC prohibits companies from maintaining records for eligibility," McCaskilladded, asking O'Rielly to commit to reexamining those rules. O'Rielly agreed todo so, and also agreed to take a hard look at what McCaskill called "backwardsincentives" for companies that make a profit on each telephone sold under theprogram.
McCaskill recentlycalled on the Federal Communications Commission (FCC) to shift Lifelinefunds into the recently-announced "ConnectED" initiative, which aims to connect99 percent of America's students to the Internet through high-speed broadbandin schools and libraries over the next five years. In2011, McCaskill urged theFCC to provide stronger oversight of thelittle-scrutinized federal program—which provides subsidies to phonecompanies—after she received a solicitation at her home for a free cell phonefrom a participating provider in the Lifeline program. The mailer did not requiredocumentation for proof of eligibility. McCaskill is not eligible for theprogram.
Following those demands, the FCC issued neworders aimed at addressing waste, fraud, and abuse in the program..
Last year, in a letter to theFCC, McCaskill requested detailed information on the program's contracts,including documents related to the agreement between the FCC and the companiesresponsible for managing Lifeline and the number, value and scope of contracts. McCaskillalso offered anamendment to the recent Senate Budget resolution aimed at ending thecontroversial program—in addition to recentlyrequesting a forensic audit of the entire Lifeline program.
Read more about McCaskill's fightfor stronger accountability in Washington, HERE.
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