Lifeline phone program needs FCC's closer oversight of TerraCom, YourTel America and other carriers

The well-intentioned federal Lifeline program, launched in 1985 under the Reagan administration, aims to provide subsidized phone service to low-income households, giving them access to emergency services and job communications.

But it is a truism of government that any federal program not subject to close, regular oversight will be ripe for questionable practices, sloppy management or worse. Issues such as lax phone distribution and improper subsidies have arisen with Lifeline over the years.

Now a Scripps News team has uncovered evidence of workers forging customer applications and heard allegations of double billing at two related companies -- Oklahoma-based TerraCom Inc. and affiliate YourTel America Inc. -- doing Lifeline business in 21 states.

RELATED STORY - Lifeline phone applications: TerraCom, YourTel contract agents claim signatures forged (http://bit.ly/15XBWnU)

Scripps learned of TerraCom and YourTel earlier this year after discovering Lifeline applications and related documentation posted online on an unprotected website affiliated with the phone companies. While investigating this privacy lapse -- involving more than 170,000 records of low-income Americans -- Scripps discovered other problems emblematic of lax oversight.

SPECIAL SECTION - More about the Scripps investigation into security breaches for the Lifeline cellphone program (www.kjrh.com/privacyontheline)

As a Texas man said when a Scripps reporter showed him a Lifeline application with his alleged signature, misspelled and in someone else's handwriting: "This is crazy. This is wrong."

Phone companies participating in Lifeline usually receive $9.25 a month for each household approved for service, and their sales agents typically receive one-time commissions of $3 to $5 per enrollment. The financial incentive rewards volume. TerraCom and YourTel, which share a chief executive and two primary owners, received combined Lifeline disbursements of almost $90 million from the federal government.

But there seem to be no great restraints on how that volume is generated. Scripps was unable to find clear guidelines set by the Federal Communications Commission, which has ultimate oversight. Nor did the FCC respond to Scripps' repeated requests for an interview.

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In late June, the FCC issued an advisory reminding all 2,000 phone companies participating in Lifeline that they were responsible for sales representatives' actions and could face penalties of "up to $1.5 million for each failure to comply" with Lifeline rules.

In July, after sparring with regulators in four states, TerraCom and YourTel blamed the companies' 700 sales workers for potentially exposing the companies to violations -- and terminated them all. Maybe the phone carriers' leadership had its reasons, but shouldn't the leaders themselves be held accountable?

TerraCom and YourTel's uncertain command of their sales force raises more questions of oversight -- by the companies and by the FCC itself.

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