USAC, the group that administers the Universal Service Funds, has started testing a program that is designed to stop people from requesting multiple subsidies from the Lifeline program.

The lifeline program provides a discount of $9.95 from telephone bills for low-income consumers. A consumer is eligible for Lifeline if they a earn less than 135% of the federal poverty level or if somebody in the household participates in any of a number of assistance programs such as Medicaid, Food Stamps, Section 8 housing, low income home-energy assistance, Head Start and various tribal and state programs.

The way this works is that the telephone company providing the service gives the discount to the consumer and then collects the funds from USAC out of the Universal Service Fund.

A consumer can elect to get the discount from either a home telephone or a cellular phone account, but cannot collect from both. Apparently there is a lot of concern in Washington that people are collecting the discounts for both a landline and a cell phone, because the FCC has instructed USAC to put together a program to make certain that people don’t collect multiple benefits.

And so USAC is currently implementing the National Lifeline Accountability Database (NLAD). Carriers who participate in the lifeline program are required to input data about each lifeline customer including the last four digits of their social security number or their tribal ID and their date of birth. The carrier also has to provide the full address for each customer and this address will then be verified by USAC using the USPS database of valid addresses. Expect big problems in this area because rural addresses are often very erratic in the USPS databases.

As you might imagine, many carriers don’t ask for things like the date of birth when somebody gets telephone service, so they are now scrambling to get the needed information from their customers.

States are being added to the NLAD in groups. The first group of states now entering data includes Arkansas, Maryland, Louisiana, Oklahoma and Washington. Already some states have opted out of the NLAD database including Puerto Rico, Oregon, Texas, California and Vermont. Those states are going to have to come up with some version of this database of their own or else carriers in those states will lose Lifeline funding.

There is no fee to use the database, but use of it is mandatory if a carrier wants to collect from the Lifeline fund. The real cost is in the effort of each carrier to implement and keep this database current – another unfunded mandate.

I suppose that this process will turn up some cheaters and they will be asked to pare back to just one Lifeline subsidy. But one has to wonder how many customers might have been given the discount by multiple carriers without even knowing that this is not allowed? And one might suspect that there are somewhat shady carriers who are collecting the payments from the Lifeline fund without giving the discount to a customer, or possibly even having a customer. I would not be surprised to find some carriers collecting Lifeline for customers who died years ago.

I hope the FCC publishes the result of what they find through this database. As much as I hate waste and fraud, one has to wonder of the cost of implementing this kind of red-tape process is worth it compared to any savings that will be achieved through eliminating duplicate payments. These kind of processes end up becoming permanent new requirements for carriers and make it just that much harder to do business.