Researcher to Hill: GAO Data Does Not Support "Waste, Fraud and Abuse" Rhetoric from FCC Targeting Wireless Resellers in Lifeline Program

PEMBROKE, Mass., Sept. 10, 2018 /PRNewswire/ -- Repeated assertions by senior Federal Communications Commission (FCC) officials that there is extensive "waste, fraud and abuse" tied to wireless resellers participating in the Lifeline program for low-income Americans are not supported by a review of a 2017 U.S. Government Accountability Office (GAO) report, according to Susan M. Gately, a telecommunications expert with 35 years of experience. 

In a letter to key U.S. Senate and House offices offering assistance in evaluating the FCC claims made about Lifeline, Gately writes that "wireless resellers participating in the Lifeline program have often been characterized as 'unscrupulous actors' that are solely responsible for waste, fraud, and abuse in the current program.  That characterization is a key basis for the FCC's proposal to exclude resellers from the Lifeline program in its latest Lifeline reform proposals adopted on November 16, 2017." But, Gately notes, such claims are "severely flawed."

Gately states: "The GAO report, however, in no way supports the Commission's assertions regarding the scale of waste, fraud and abuse within the program, let alone its allegations of 'unscrupulous' behavior by resellers."

In her letter, Gately reaches the following conclusion: "… reliance on the GAO report to portray the Lifeline program as fraught with 'unscrupulous carriers' and waste, fraud, and abuse is a misreading of that report.  I am concerned the FCC's misinterpretation of the GAO data is distorting the focus of legitimate reform efforts.  There is still time for Congress to work with the FCC to ensure that the Commission does not disconnect millions of veterans, elderly, disabled and many other Lifeline subscribers based on outdated data and inaccurate inferences.  Protecting your vulnerable constituents does not need to conflict with the FCC's important mission to carry out important reforms such as the National Verifier to better protect universal service dollars. The Commission should re-dedicate its existing enforcement authority toward weeding out actual bad actors, rather than relying on flawed analyses of the GAO report to exclusively attack resellers."

The Gately letter – which was sent to Sen. John Thune, chair, and Sen. Bill Nelson, ranking member, Committee on Commerce, Science and Transportation, and Rep. Greg Walden, chair, and Rep. Frank Pallone, ranking member, Committee on Energy and Commerce, and Rep. Frank Pallone – is available online at https://smgcllc.wordpress.com/representative-work-product/.

In her letter, Gately notes the following:

• The GAO data is within the statistical error range. In fact, the widely publicized discussion of "deceased" subscribers found by the GAO represent 6/100ths of 1 percent or 0.06 percent) of the data analyzed – well below standard data error rates (which could have occurred in either the Lifeline data set or Social Security Death Index or both). As Gately notes: "In short, we don't know if this is a minor issue or if it is a data glitch."

• The GAO report contains no "smoking gun" in relation to wireless sellers. In fact, the GAO expressed concern with the number of carriers participating in the Lifeline program, known as Eligible Telecommunications Carriers (ETCs). The vast majority of Lifeline providers are wireline incumbent local exchange carriers – specifically the same rural carriers that comprise most of the participants in the high cost portion of the Universal Service Fund – not wireless carriers and not resellers. As Gately notes: "There is thus no basis for using the GAO report to single out legitimate resellers as 'unscrupulous actors.'"

• GAO relied on data set intended for other purposes. The Lifeline database GAO used for its analysis was not constructed or intended to be used as part of the Lifeline eligibility verification process; the information in that database was also not the basis for payments to Lifeline providers. Gately writes: "… the GAO data snapshot cannot be used to judge any supposed waste, fraud or abuse in Lifeline."

• GAO used flawed methodology to verify eligibility. GAO attempted to cross-match different fields within the Lifeline database against a dozen different state and federal government-maintained data sets that were being maintained for uses distinct from the Lifeline eligibility verification process. Gately points out: "Most of the instances in which GAO could not 'confirm' subscriber eligibility, are explainable by the process used, not by subscriber ineligibility."

Gately also notes that enrollment in the Lifeline program has dropped by more than 40 percent (more than seven million) since its peak in 2012, when program changes directed by the FCC were first put in place.

SOURCE S. M. Gately Consulting LLC (Pembroke, MA)