Republicans try to take cheap phones and broadband away from poor people

$9.25 monthly subsidy for mobile service would be eliminated by Republican bill.

Nineteen Republican lawmakers are trying to eliminate subsidies that help poor people purchase cell phone service and broadband.

The legislation filed on Friday targets Lifeline, which is a Universal Service Fund program paid for by surcharges on phone bills. If the bill passes, low-income Americans would no longer be able to use $9.25 monthly subsidies toward cellular phone service or mobile broadband. The subsidies would still be available for landline phone service.

"Hardworking American taxpayers are already overburdened and should not be forced to pay for a program that has vastly expanded beyond its intended scope and is riddled with waste, fraud, and abuse," US Rep. Austin Scott (R-Ga.) said in an announcement of his legislation. "My bill will reform the Lifeline Program and restore it to its original purpose of providing landline services and prohibit Universal Service support for mobile services. In order to promote government accountability, cut government fraud and waste, and protect consumers from further increases to their phone bills, the Lifeline Program’s free cell phone plans should end."

Bill won’t stop phone surcharges

Scott's bill is titled the "End Taxpayer Funded Cell Phones Act," although Lifeline is funded by phone bill surcharges rather than taxes. The bill would not return those surcharges to consumers directly.

While the bill would prohibit mobile phone providers and mobile data providers from receiving Lifeline funds, it wouldn't change the amount of money that is collected from carriers in 2018. The bill says the excess collections that would no longer subsidize mobile service "shall be deposited in the general fund of the Treasury of the United States, for the sole purpose of deficit reduction." Taxpayer dollars are used to pay the national debt, so reducing the debt could benefit taxpayers.

Scott's bill has 18 co-sponsors, all Republicans. After being introduced on Friday, it was referred to the House Committee on Energy and Commerce. Scott introduced the same bill in previous years, but it failed to pass the House.

The bill "would undercut an essential anti-poverty program that connects families to emergency services, children to educational opportunities and parents to jobs," the National Consumer Law Center said before a vote in June 2016.

Lifeline was created under President Reagan in 1985 to subsidize landline phone service, and it expanded to cover cell phone service in 2005 under President George W. Bush. Lifeline grew during the Obama administration, and critics took to calling it the "Obama phone" program. Scott's announcement said he intends to end the "Obama-era free cell phone program."

The Federal Communications Commission added broadband to the list of covered Lifeline services in 2016 under then-Chairman Tom Wheeler. Wheeler's decision allowed Lifeline to be used for either mobile or home Internet services, such as cable broadband. But the Scott bill only prohibits Lifeline payments for mobile services, a possible oversight since Scott seemingly intends to restrict Lifeline to the services it covered in 1985.

"Today’s bill would end the subsidized cell phone option, leaving in place Lifeline’s original purpose to provide landline services to Americans," Scott's announcement said. We asked Scott's spokesperson if he wants Lifeline to keep providing home broadband services and will update this story if we get an answer.

Lifeline fraud drives concerns about cost

Telecommunications companies pay a percentage of revenue into the Universal Service Fund and are allowed to pass the cost on to consumers in the form of surcharges. The Wheeler FCC set the Lifeline budget at $2.25 billion a year, indexed to inflation, while creating an independent entity to verify subscriber eligibility in order to reduce fraud. The $2.25 billion is a cap—actual spending in 2017 is projected to be $1.32 billion.

Fraud has not been eliminated, however. The US Government Accountability Office reviewed records of 3.5 million subscribers and was unable to confirm whether 1.2 million of them "participated in a qualifying benefit program, such as Medicaid, as stated on their Lifeline enrollment application," according to a report the GAO released in June. (The sample of 3.5 million is a subset of all subscribers; there were 10.9 million total in Q1 2017). Scott referenced the GAO report in his announcement last week, describing the problem as "ever-increasing fraud and ballooning cost to the taxpayer."

FCC Chairman Ajit Pai, a Republican who was elevated to the chairmanship by President Donald Trump, has already taken steps to limit Lifeline's broadband expansion. Pai said the GAO report shows the FCC must "crack down on the unscrupulous providers that abuse the program so that the dollars we spend support affordable, high-speed broadband Internet access for our nation’s poorest families."

But unlike Scott, even Pai hasn't proposed eliminating the broadband subsidies entirely.