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

Scams

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.

Filed Under: ACP, Affordable Connectivity Program, digital divide, ebb, fcc, high speed internet, monopoly, subsidies, taxpayer fraud, telecom, telecom fraud