Fraud could drag down Biden’s broadband ambitions – report

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Fraud could drag down Biden's broadband ambitions - report

President Biden earlier this month signed a bill that would allocate as much as $ 65 billion to broadband services in the United States. And about $ 14.2 billion of that money will be used to create a permanent $ 30-a-month subsidy program to help low-income Americans afford broadband services.

However, a new report from the FCC Inspector General warns of “inappropriate and abusive” fraud that could ultimately jeopardize a potentially significant portion of these expenses.

“Providers who defraud FCC programs by violating program registration rules and demanding support for these households will be held liable and may be subject to civil or criminal penalties,” the report warned.

Some FCC commissioners already use the report as a rallying point for stricter spending rules. “The FCC must not only act immediately to stop these fraudulent practices and hold those involved in them accountable, it must move forward,” Republican FCC Commissioner Brendan Carr said in a statement. “The FCC needs to put tighter controls in place to ensure that bad actors like these can no longer deceive the American public. After all, every dollar that is illegally removed from this program is a dollar that can not go to connect households that still lack a broadband connection. ”

Inclusion of EBB costs

This is the $ 3.2 billion Emergency Broadband Benefit (EBB) program set up by the FCC in the early days of the COVID-19 pandemic to help low-income Americans afford broadband connections. After all, pandemic lockdown orders made work and schooling online a necessity for millions around the world.

More than 5 million Americans have subsequently signed up for the EBB program, which provides up to $ 50 a month for broadband service along with up to $ 100 for a computer or tablet.

However, according to the new report from the FCC’s Office of Inspector General (OIG), an unknown but potentially large number of “sales agents” are cheating EBB’s verification system.

As OIG explained, a mechanism that ISPs can use to verify potential EBB customers is the USDA National School Lunch Program’s Community Eligibility Provision (CEP). If a student is eligible for a free or discounted school lunch or breakfast, then their household may also qualify for EBB grants.

“EBB enrollment data clearly shows that a number of CEP schools are grossly overrepresented in EBB household enrollments compared to the actual student enrollment at these schools,” OIG wrote. “In short, there are many more EBB-enrolled households who claimed to have a dependent child in certain CEP schools than students who are actually enrolled in those schools.”

For example, the OIG reported that an unnamed school in Florida only counts 200 students ?? but was used to enroll nearly 2,000 EBB households for broadband service. The report also highlighted similar situations at schools in locations ranging from Alaska to New York.

“Evidence shows that this is not consumer-driven fraud – sign-up data directly links certain providers and their sales agents to these sign-ups,” the IOG wrote. However, the report did not identify the providers or sales agents involved in the problem.

Broadly speaking, the IOG used its report to warn ISPs and others that it might come after them. “Providers are responsible for breaches of the program rules and the Commission has a clear history of finding ‘their liability extends to breaches of their agents, contractors or representatives’,” the OIG wrote.

Here we go again

Perhaps not surprisingly, this is not the first time federal inspectors have reported quarrels in federal spending programs, including in the broadband industry. For example, a 2017 report from the Government Accountability Office (GAO) found significant evidence of fraud in the FCC’s Lifeline program.

Specifically, a three-year audit of Lifeline showed that more than a third of the customers in the program could not be confirmed as actually eligible for Lifeline grants, and that telephone companies approved Lifeline applicants with false personal information almost two-thirds of the time. The report also counted $ 1.2 million annually to fictitious identities or recipients who had died.

Lifeline traces its origins to a 1980s effort by the Reagan administration to help poor Americans pay for telephone service.

In response to GAO results, the FCC introduced in 2019 a “National Verifier” database designed to verify subscriber eligibility, check for duplicate benefits, and calculate support payments.

As the FCC begins to prepare to spend billions of additional dollars allocated by Biden’s infrastructure bill, should it consider similar ?? or potentially more significant ?? provisions, according to some FCC commissioners.

“Acting now is all the more important as the FCC was recently granted $ 14.2 billion by Congress to support the next phase of the EBB program, which will now be known as the Affordable Connectivity Program,” argued the FCC Commissioner Carr. “As the FCC seeks to implement this new program, we must ensure that it includes adequate safeguards to prevent” not inviting “these and other abuses.”

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?? Mike Dano, Editor-in-Chief, 5G & Mobile Strategies, Light Reading | @mikeddano

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