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FCC Fines Obamaphone Providers

Millions to be collected from providers of free cell phones for violations

• October 2, 2013 10:04 am

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The Federal Communications Commission (FCC) announced Monday that it will charge millions of dollars in fines against violators of a federal program that provides free cell phones to low-income individuals.

The FCC touted the move as an effort to shore up the fraud-prone Lifeline program, frequently derided as "corporate welfare" by Republican critics. But observers say it vindicates those critics’ attacks on the program.

Politico reported on the fines on Wednesday, undertaken despite deep cuts to the FCC’s workforce due to the ongoing government shutdown.

Agency officials blasted out an announcement Monday night that proposed a fine on five service providers of Lifeline, a longtime phone subsidy program that has stoked congressional ire. The suggested penalties total more than $14.4 million for signing up ineligible customers and take aim at TracFone, the largest participant and a frequent target of attacks.

The FCC wants to show movement on reforms enacted last year, and this represents some of its most targeted efforts yet. But it also vindicates Lifeline critics, who question the success of the changes, liken the program to a federal handout and have launched a crusade to dismantle it.

"These companies are raking in corporate welfare from Lifeline," Sen. David Vitter (R-La.), who has introduced legislation to gut the program, told POLITICO in an email. The federal program was created to ensure low-income households had phone service, he said, but has become "an out-of-control fraud ridden entitlement program that spoils what should be a worthwhile helping hand."

Published under: Barack Obama, FCC