Opinion

Local Editorial: Cellphone giveaway riddled with fraud

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Opinion,Science and Technology,Local Editorial

Maryland is one of the nation's most generous purveyors of taxpayer-funded freebies, so it should come as no surprise that the state also has the highest rate of growth of any of the 50 states in a controversial federal program that provides "free" cellphone service to low-income residents. Of course, the cellphones aren't really free. Everybody with a cellphone pays a $1 to $2 universal service surcharge each month.

More than 10 million cellphones have been handed out as part of the fraud-riddled $2.2 billion Lifeline program, which initially began in the 1980s as a $819 million subsidy to help low-income families maintain landline phone service in case of an emergency. But, as happens with all such well-intentioned programs, this one grew like crazy — with perverse incentives for cell phone companies that directly profited from the subsidy, and no real way to screen out ineligible recipients, who signed up for multiple phones and sold them on eBay.

Subsidized cellphones were handed out to anybody who "self-certified" that they qualified by earning less than 135 percent of the federal poverty level: less than $31,790 for a family of four.

Lifeline subscribers in Maryland surged from 5,821 in 2008 to nearly 509,000 in 2012, according to the Baltimore Sun. That 90 percent growth rate was nearly 40 times greater than the national average, but apparently did not raise any eyebrows until late last year, when the program came under increased scrutiny and more than half — or some 230,000 Marylanders — were belatedly found to be ineligible.

In her April 25 testimony before the House Energy and Commerce Subcommittee on Communications and Technology, Federal Communications Commission Wireless Competition Bureau Chief Julie Veach admitted that "adequate protections were not put in place" at the outset and that Lifeline "became a target for waste and abuse."

Veach told Congress that the FCC plans to save $2 billion by the end of 2014 by requiring proof of eligibility, limiting phones to just one per household, and by requiring all recipients to recertify their eligibility every year.

But all of these common-sense measures should have been done before a half-million Marylanders were given "free" cellphones in the first place.

If the government can't prevent fraud and abuse in a simple program like Lifeline, how can it possibly prevent waste when it spends $1.1 trillion over the next decade on Obamacare?

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