‘Dozens’ Of Broadband Providers Ripped Off Low Income COVID Relief Program, FCC Says

from the ethics-optional dept

During the COVID crisis, the FCC launched the Emergency Broadband Benefit (EBB program), which gives lower income Americans a $50 ($75 for those in tribal lands) discount off of their broadband bill. Under the program, the government gave money to ISPs, which then doled out discounts to users if they qualified.

But (and I’m sure this will be a surprise to readers), reports are that big ISPs erected cumbersome barriers to actually getting the service, or worse, actively exploited the sign up process to force struggling low-income applicants on to more expensive plans once the initial contract ended. Very on brand.

The EBB brand was rebranded the Affordable Connectivity Program (ACP) as part of the Infrastructure Bill (the payout to the general public was dropped to $30 a month). And, once again, not at all surprisingly, the FCC has discovered that “dozens” of U.S. broadband providers were ripping the program off to the tune of millions of dollars across Alabama, Ohio, Oklahoma and Texas.

In several instances, the FCC Office of Inspector General (OIG) found that these ISPs repeatedly used a single four year old applicant on Medicaid to fraudulently enroll thousands of times in the program, helping them nab millions in taxpayer bucks. From Nicole Ferraro at Light Reading:

The most “egregious” example occurred in Oklahoma, it says, where “more than one thousand Oklahoma households were enrolled based on the eligibility of a single BQP [Benefit Qualifying Person], a 4-year old child who receives Medicaid benefits.” As a result, three providers “claimed more than $365,000 in program reimbursements in connection with the 1000+ enrollments based on the 4-year old BQP.”

The full report doesn’t specifically mention which ISPs engaged in this behavior.

Trump appointed FCC Commissioner Brendan Carr immediately used the findings to grandstand about the perils of government programs, and pat himself on the back for his stellar record on policing subsidy fraud (it should be noted that Carr routinely ignores any and all telecom industry fraud if it’s a giant company like AT&T doing it).

I’ve spent much of the last year talking to various communities, utilities, cooperatives, and municipalities, and they all tell be the ACP program has been hugely beneficial. Many communities are planning to use the massive infrastructure broadband funds to build fiber networks, and then provide discounted rates (in some cases close to $0 a month) to the most vulnerable members of their communities.

So the program is well intentioned, and it’s good that the FCC is actually policing this kind of fraud.

That said, the program is also a temporary band aid. Broadband affordability issues are caused primarily by corruption, regional monopolization, and a lack of competition. The best way to drive down broadband prices is, thereby, to challenge the dominance of entrenched monopolies by intensely supporting small business, utility, cooperative, and community broadband competition.

We don’t do that at any meaningful scale (under either party, really) because it would make hugely influential giants like AT&T, Verizon, T-Mobile, and Comcast/NBC angry.

So, what we did instead is develop a low-income program that throws millions of dollars at telecom companies with an extremely long history of subsidy fraud, hoping that money winds up in the pockets of low income Americans. Of course, you’re to ignore that these are, by and large, the exact same companies responsible for driving up costs by lobbying against competition at every conceivable opportunity.

The other problem: while the ACP was advertised as being “long term” or permanent by the Infrastructure Bill, that’s definitely not the case. Analysis by the Institute For Local Self Reliance finds that the program only has enough funds to run for another few years.

At which point guys like Carr will proclaim it shouldn’t be renewed because of fraud. At the same time, guys like Carr will refuse to do any of the real work necessary to drive down high U.S. broadband costs. Like oh, say, actually standing up to AT&T on any subject of note. In fact, it’s impossible to get pro-monopolists like Carr to even admit broadband competition and high prices are even a problem.

Recall, 82 percent of Americans live under a broadband monopoly. So when low income users are directed to an ISP, they’re usually directed to just one ISP (usually Comcast, AT&T, Verizon, or Charter). When the ACP doesn’t get renewed, these users face paying more money than ever to get broadband service. Again, guys like Carr won’t care; he can’t even admit there’s a competition problem that needs fixing.

So while the program might provide temporary relief, you haven’t actually fixed the underlying cause of high prices in the first place. In fact, you’ve effectively just run a marketing program for ISPs that will now be free to rip these users off thanks to a lack of competition we do too little about.

We’ve earmarked $50+ billion in broadband infrastructure over the next decade, and whether that money gets where it’s truly needed will depend entirely on how willing we are to stand up to telecom monopolies. The historical trajectory so far doesn’t exactly leave one brimming with confidence.

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Comments on “‘Dozens’ Of Broadband Providers Ripped Off Low Income COVID Relief Program, FCC Says”

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15 Comments
James Burkhardt (profile) says:

Re: Re:

Corporate dictatorship =/= Capitalist dictatorship.

Beyond that I struggle to determinhe what the point of your comment is, and what strawman you’ve read into dave’s comment, but I assume it likely to do with the conflation of corporations (entities who existence is establish by law and contract) and capitalism (an economic system).

Anonymous Coward says:

Re: Re: Re:

Beyond that I struggle to determinhe what the point of your comment is…

You obviously have little to no reading comprehension ability, or you’d have seen Autie’s point summed up in the final sentence of their comment. To whit, their country has few problems with capitalism because they didn’t have to suffer from four years of Trump deliberately deregulating various sectors.

Rich (profile) says:

Consequences?

Why is nobody ever held accountable? Thousands of households signed up with one account? Fraudulently obtaining Medicaid/Medicare benefits is a fucking crime. Somebody filled out the applications, so how about some prison time?

Speaking on behalf of the love of my life, a person who legitimately depends on various benefits from Medicare/Medicaid due to several ever worsening major health issues, who must routinely refile all of her documentation, along with written letters from her doctors in order to be recertified as a legitimate recipient of these benefits, and who is regularly stymied by the random changes of the recertification procedure which are seemingly designed to make the process far more painful than it needs to be (partly in response to fraud), these fucking people make everything worse for those who need and rely on Medicare/Medicaid, and should be dragged into the street and publicly beheaded.

Cattress (profile) says:

Re:

You might be a little confused over how this scam worked. The ISP took one approved Medicaid beneficiary, and then replicated the child’s information in connection with roughly 1000 real or fictional customer households, in order to submit claims for subsidy. Doesn’t say, but seems unlikely that they actually reduced those customers- if they were even real customers- bills,
Yes, those ISPs should be investigated and charged with fraud in both criminal & civil court.
Its super shitty that so much supposed “fraud prevention” effort is expended on applicants rather than the service providers. There’s always some moron suggesting drug tests for food stamps & Medicaid. Like one person is out using up all the wellness check ups, getting more than their fair share of insulin, or living large off steak & lobster. But it’s scam businesses claiming the cash with fraudulent claims, run by programs that have no effective oversight.

GB Clark says:

Re: Re: Re:

If I had to guess, it’s not the ISP’s at fault, but a sales “agency”.
From what I can tell these were all Telco CoOp’s and so would have known the kind of scrutiny they might come under. It really would not have been worth their while to chance getting popped like they did. They are getting punished for not having better control over their sales agents.
On the other hand this really sounds like the kind of thing the a sales “agency” would do. You see them doing the lifeline phones(aka Obama phone),AND that broadband subside here in Phoenix under tents outside of DES offices and supermarkets in low income areas.
Since they are paid commission, well….

GB Clark says:

They are still at it!!!

They are still at it. My ex-wife qualifies for the current subside and has Cox in Phoenix.
She was paying $51 a month for their Internet Anywhere. So she should have had a bill somewhere near $20. Nope!
What they did was take her off the Internet Anywhere, and signed her up for a more expensive option, where she has to pay about $30 a month after the subside.
And this has been going on from the start, so around six months.
I told her to check how much the local telephone company would charge….

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