FCC warns companies not to skip income check for ‘Obama phones’

by Julian Hattem - 07/08/13 4:18 PM ET

The Obama administration is urging companies to thoroughly check a person’s eligibility before providing cellphone service that is subsidized by the government.

The FCC expressed concerns that wireless companies might be
activating phones for the program, known as Lifeline, “prior to fully verifying
the eligibility of such consumers.”

{mosads}”[Companies] must verify the eligibility of a
low-income consumer prior to providing Lifeline service to that
consumer, and may not provide an activated device intended to enable
access to Lifeline service to a consumer until that consumer’s
eligibility is fully verified and all other necessary enrollment steps
are completed,” the FCC wrote in a notice.

The Lifeline program subsidizes phone service for
low-income Americans to use for emergencies and to connect with jobs and
family. Participants in the program receive an average of about $9.25
per month in discounted service, according to the agency.

Critics deride Lifeline as providing “Obama phones,” though program
was started in 1985 and was expanded to cover cellphone service in
2005 under then-President George W. Bush.

Many of the companies that receive money under the Lifeline service offer free or cheap phones to consumers who participate.

The notice from the FCC comes a few weeks after Project Veritas, a conservative organization led by activist James
O’Keefe, released a video that shows distributors giving free Lifeline phones to people who said they planned to resell them. One of the recipients said he planned to use it for drug money.

An FCC official denied that the Project Veritas video or any other specific event triggered the notice.

“We want to make sure providers are following our new rules and we are continuing to look for ways to improve the program and reduce waste and abuse,” the official said.

To be eligible for Lifeline, a person cannot earn more than 135 percent of the federal poverty level — about $31,700 for a family of four — or take part in other federal assistance services.

The program costs almost $2 billion a year, and is funded by fees from telephone companies that are passed on to consumers.

Republicans have criticized the program as a wasteful entitlement and say it is used to curry political favor.

The program gained notoriety last year after a video appeared online that featured a woman saying she would vote for President Obama because of the free phones.