TELECOMMUNICATIONS

FCC Should Evaluate 

the Efficiency and 

Effectiveness of the 

Lifeline Program

Report to the Chairman, Committee on 

Commerce, Science and 

Transportation, U.S. Senate

March 2015

GAO-15-335

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-15-335, a report to the 

Chairman, Committee on Commerce, Science

and Transportation, U.S. Senate

March 2015

TELECOMMUNICATIONS

FCC Should Evaluate the Efficiency and Effectiveness 

of the Lifeline Program

Why GAO Did This Study

Through FCC’s Lifeline program,

companies provide discounts to eligible 

low-income households for telephone 

service. Lifeline supports these 

companies through the Universal 

Service Fund (USF). Companies

generally pass their USF contribution 

obligation on to their customers, 

typically in the form of a line item on

their telephone bills. In 2012, FCC 

adopted reforms to address problems 

with duplicate and ineligible 

participants and to explore adding

broadband through a pilot program.

GAO was asked to review FCC’s 

reforms. This report examines (1) the 

status of reform efforts and the extent 

to which FCC has evaluated program 

effectiveness, (2) the extent to which 

households participate and challenges 

they face in accessing and retaining 

benefits, and (3) FCC’s plans to 

evaluate the broadband pilot program.

GAO reviewed FCC orders and other 

relevant documentation; analyzed 

2008–2012 Census Bureau data; and 

interviewed FCC officials, officials at 

four pilot projects selected based on 

features such as technology, and 

officials from 12 Lifeline providers and 

four states selected based on factors 

such as disbursements and 

participation.

What GAO Recommends

FCC should conduct a program 

evaluation to determine the extent to 

which the Lifeline program is efficiently 

and effectively reaching its 

performance goals. FCC agreed that it 

should evaluate the extent to which the 

program is efficiently and effectively 

reaching its performance goals and 

said that FCC staff will address GAO’s 

recommendation.

What GAO Found

The Federal Communications Commission (FCC) has made progress 

implementing reforms to the Lifeline Program (Lifeline), which reduces the cost of 

telephone service for eligible low-income households. In 2012, FCC adopted a

Reform Order with 11 key reforms that aimed to increase accountability and 

strengthen internal controls, among other things. FCC has implemented seven of 

the reforms and partially implemented four. In some cases, FCC needs to make 

a decision, and in other cases, additional time is needed to fully implement the 

reform. However, FCC has not evaluated Lifeline’s effectiveness in achieving its 

goals—to ensure the availability of voice service for low-income Americans and 

minimize the burden on consumers and businesses that fund the program. FCC 

attributes improvements in the level of low-income households’ subscribing to 

telephone service over the past 30 years to Lifeline, but other factors, such as 

lower prices, may play a role. FCC officials stated that Lifeline’s structure makes 

evaluation difficult, but referred GAO to academic studies that suggest that many 

low-income households would subscribe to telephone service without Lifeline. 

GAO has found that program evaluation can help agencies understand whether a 

program is addressing an intended problem. Without a program evaluation, FCC 

does not know whether Lifeline is effectively ensuring the availability of telephone 

service for low-income households while minimizing program costs. 

In 2014, over 12 million households participated in Lifeline, up from about 7 

million in 2008. At its peak enrollment in 2012, Lifeline served about 18 million 

households. The introduction of prepaid wireless service contributed to this 

growth. After the Reform Order, program disbursements declined from $2.2 

billion in 2012 to $1.7 billion in 2014, due in part to a reduction in the number of 

ineligible households receiving benefits. Based on interviews with stakeholders 

and providers, GAO identified challenges households may face in accessing and 

retaining benefits, including lack of awareness of the program and difficulty 

complying with new requirements, such as providing documentation of eligibility. 

Companies providing Lifeline service have taken steps, such as greater outreach

and in-person enrollment, to mitigate these challenges. 

The usefulness of information FCC gathered through its broadband pilot program 

may be limited due to the lack of an evaluation plan and other challenges. The 

pilot program included 14 projects to test an array of options and provide data on 

how Lifeline could be structured to promote broadband. According to FCC 

officials, the 14 projects enrolled about one-tenth of the 74,000 customers 

anticipated before ending subsidized service in October 2014. Although GAO

previously recommended in 2010 that FCC develop a needs assessment and 

implementation and evaluation plans for the pilot, FCC did not do so and now 

faces difficulties in evaluating the program without established benchmarks. 

Although enrollment was lower than anticipated, FCC officials believe information 

on the number of eligible consumers offered service can provide relevant 

information regarding the options’ effects on broadband adoption. However, FCC 

did not survey these consumers and does not know why eligible households did 

not enroll. The pilot projects are substantially complete, and FCC officials noted 

that the pilot program is one of many factors FCC will consider when deciding 

whether and how to incorporate broadband into Lifeline.

View GAO-15-335. For more information, 

contact Mark L. Goldstein at (202) 512-2834 

or goldsteinm@gao.gov.
Page i GAO-15-335 Lifeline

Letter 1

Background 4

FCC Has Made Progress Implementing Lifeline Reforms, but It 

Has Not Evaluated the Program’s Effectiveness 11

Carriers Generally Review Documentation to Verify Household 

Eligibility, and FCC Officials Believe That Program Rules Limit 

Privacy and Security Concerns 17

In 2014, Over 12 Million Households Participated in Lifeline, and 

Some Households Faced Challenges in Accessing and 

Retaining Benefits 24

Usefulness of Broadband Pilot Program May Be Limited by FCC’s 

Lack of Evaluation Plan and Other Challenges 31

Conclusions 35

Recommendation for Executive Action 35

Agency Comments 36

Appendix I Objectives, Scope, and Methodology 37

Appendix II Comments from the Federal Communications Commission 42

Appendix III GAO Contact and Staff Acknowledgments 44

Tables

Table 1: Key Reforms Contained in the Federal Communications

Commission (FCC) Lifeline Reform Order (2012) 9

Table 2: Challenges Faced by Lifeline-Eligible Households and 

Actions Taken by Eligible Telecommunications Carriers 

(ETC) That Can Mitigate These Challenges 27

Table 3: Selected Wireless Eligible Telecommunications Carriers 

(ETC) Interviewed by State 39

Figures

Figure 1: Household Telephone Penetration Rates by Income 

Level, 2013 16

Contents
Page ii GAO-15-335 Lifeline

Figure 2: Lifeline Program’s Quarterly Subscribers and Annual 

Disbursements, 2008 through 2014 25

Abbreviations

ETC eligible telecommunications carrier

FCC Federal Communications Commission 

NLAD National Lifeline Accountability Database

PARIS Public Assistance Reporting Information System 

SIPP Survey of Income and Program Participation 

SNAP Supplemental Nutrition Assistance Program 

TLS toll limitation service

USAC Universal Service Administrative Company 

USDA United States Department of Agriculture 

USF Universal Service Fund 

WIC Special Supplemental Nutrition Program for Women, 

Infants, and Children

This is a work of the U.S. government and is not subject to copyright protection in the 

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without further permission from GAO. However, because this work may contain 

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Page 1 GAO-15-335 Lifeline

441 G St. N.W.

Washington, DC 20548

March 24, 2015

The Honorable John Thune

Chairman

Committee on Commerce, Science

 and Transportation

United States Senate

Dear Mr. Chairman:

For many decades, federal policy has called for making affordable 

residential telephone service available to the greatest number of 

Americans—a policy known as “universal service.” The Federal 

Communications Commission (FCC) carries out this policy through four 

universal service programs, including the Lifeline program (Lifeline).1

Although the Lifeline program traditionally centered on wireline residential 

telephone service, in 2005 and 2008, FCC acted to pave the way for 

eligible households to receive prepaid wireless service from non-facilitiesbased wireless carriers.

This 

program was created in the mid-1980s to promote telephone 

subscribership among low-income households. As with all universal 

service programs, Lifeline is funded through mandatory fees that are 

usually passed along to consumers through a charge applied to their 

monthly telephone bills. In 2014, FCC’s universal service disbursements

totaled $7.9 billion, and the Lifeline program’s disbursements totaled 

approximately $1.7 billion.

2

 1

The other three programs are (1) the High-Cost Program, which assists 

telecommunications carriers serving high-cost, rural, or insular areas; (2) the Schools and 

Libraries Program, which assists eligible schools and libraries in procuring 

telecommunications services, internet access services, internal connections, and basic 

maintenance of internal connections; and (3) the Rural Health Care Program, which 

provides support to eligible health care providers through discounts for broadband and 

telecommunications services. 

Subsequent to these actions, the Lifeline 

2

Prepaid wireless service is a wireless telecommunications service that is activated in 

advance by payment for a finite dollar amount of service or for a finite number of minutes 

that terminate either upon use or within a certain period of time. Non-facilities-based 

carriers offer service through the resale of another carrier’s services and do not offer 

service using their own facilities. For example, TracFone is a non-facilities-based wireless 

provider offering prepaid Lifeline service known as SafeLink Wireless. 
Page 2 GAO-15-335 Lifeline

program experienced rapid growth in participation and disbursements. 

For example, in 2009, disbursements increased by 25 percent.3 In 

October 2010, we reported that the Lifeline program lacked some internal 

control features.4 For example, we found that the program had limited 

abilities to detect and prevent ineligible and duplicate subscribers from 

enrolling in the program. We recommended that FCC take actions to 

improve management and oversight, including conducting a robust risk 

assessment and implementing a systemic process for considering the 

results of ETC audits; FCC agreed with our recommendations. To 

comprehensively reform and modernize the Lifeline program, among 

other things, FCC adopted a Reform Order in January 2012 that sought to 

improve the program’s internal controls and that included a pilot program 

to evaluate inclusion of broadband into the program.5

You asked us to examine the progress FCC has made toward 

modernizing the Lifeline program. This report discusses (1) the status of 

Lifeline reform efforts and the extent to which FCC has evaluated the 

effectiveness of the program; (2) how the Lifeline program verifies 

household eligibility and addresses associated privacy and data security; 

(3) the extent to which households participate in Lifeline and the 

challenges, if any, they face in accessing and retaining program benefits; 

and (4) how FCC plans to evaluate the broadband pilot program and the 

extent to which the pilot program will enable FCC to decide whether and 

how to include broadband in the Lifeline program.

To address all of these objectives, we reviewed documents and 

interviewed representatives from FCC, the Universal Service 

Administrative Company (USAC),6

 3

GAO, Telecommunications: Improved Management Can Enhance FCC Decision Making 

for the Universal Service Fund Low-Income Program, 

and stakeholders from state and 

industry associations and consumer advocacy organizations. To answer 

GAO-11-11 (Washington, D.C.: Oct. 

28, 2010). 

4

GAO-11-11. 

5

See Lifeline and Link Up Reform and Modernization, Report and Order and Further 

Notice of Proposed Rulemaking (Lifeline Reform Order), 27 FCC Rcd. 6656 (2012). See 

also 47 C.F.R. §§ 54.400-54.422.

6

USAC is a not-for-profit corporation designated by FCC as the administrator of its 

universal service programs. In fiscal year 2014, USAC incurred administration expenses 

of $117 million, including about $17 million for the Lifeline program. 
Page 3 GAO-15-335 Lifeline

our first three objectives, we conducted four state case studies (Alabama, 

Arizona, New York, and Wisconsin); we selected the states to capture a 

range of Lifeline disbursement amounts and participation rates, and also 

considered other factors. In each state, we interviewed officials from the 

public utility commission and the state consumer advocate, where 

available,7 and we collected documentation and interviewed 

representatives from three prepaid wireless eligible telecommunications 

carriers (ETC), which are companies eligible to receive Lifeline support. 

We selected these ETCs based on their Lifeline market share in the state 

and their nationwide revenues.8 In addition to these nine wireless ETCs,9

To describe the extent to which eligible households participate in Lifeline, 

we analyzed USAC data on quarterly Lifeline participation counts from 

2008 through fourth quarter 2014 and yearly disbursements from 2008 

through 2014; we selected 2008 since it was the first year non-facilitieswe also interviewed representatives from the three largest nationwide 

wireline ETCs. Although using these criteria allowed us to obtain 

information from a variety of states and ETCs, the findings from our case 

studies cannot be generalized to all states and ETCs because case 

studies were selected as part of a nonprobability sample. To assess the 

extent to which FCC has evaluated the effectiveness of the Lifeline 

program, we compared information collected from FCC to criteria on 

program evaluation identified from our previous work. In addition, we 

reviewed two academic studies that examined the effect of the Lifeline 

program; we identified the studies through an interview with FCC. To 

assess the methodological quality of the studies, at least two GAO 

analysts and an economist reviewed the studies, and we discussed the 

methodologies with four economists involved with the studies; the studies 

met our criteria for methodological quality. To analyze how the Lifeline 

program verifies household eligibility and addresses privacy and data 

security, we reviewed documentation and interviewed officials from FCC, 

USAC, and a state association.

 7

We contacted but did not interview the Arizona Residential Utility Consumer Office and 

the Wisconsin Department of Agriculture, Trade, and Consumer Protection. In both cases, 

officials declined to participate and referred us to the state public utility commission.

8

Nexus Communications, a prepaid wireless ETC, provided written responses.

9

Although we interviewed three wireless ETCs in each of the four states we selected, in 

three instances, the ETC served two states. Therefore, we interviewed a total of nine 

wireless ETCs. 
Page 4 GAO-15-335 Lifeline

based wireless carriers offered Lifeline service. We also analyzed data 

from the Census Bureau’s Survey of Income and Program Participation 

(SIPP) and the United States Department of Agriculture’s (USDA) 

Supplemental Nutrition Assistance Program (SNAP) to estimate trends in 

the number of households that would satisfy the federal criteria to 

participate in Lifeline from 2008 through 2012. To assess the reliability of 

these data, we reviewed relevant USAC, SIPP, and SNAP documentation 

and interviewed USAC officials; we determined that the data were 

sufficiently reliable for our purposes of reporting trends. To identify the 

challenges, if any, eligible households face in accessing and retaining 

program benefits, we reviewed FCC, USAC, and ETC policies, 

processes, and practices that could influence participation in Lifeline. To 

determine how FCC plans to evaluate the broadband pilot program, we 

interviewed FCC officials and representatives from 4 case study pilot 

projects that we selected from a universe of 14 projects to include both 

wireline and wireless service, diverse locations (urban and rural), and 

based on other factors. We also reviewed documentation from USAC on 

each case study project and interviewed consumer advocates and 

representatives from broadband adoption programs. Appendix I describes 

our objectives, scope, and methodology in greater detail.

We conducted this performance audit from May 2014 to March 2015 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and

conclusions based on our audit objectives.

The idea that communication services should be available “so far as 

possible, to all the people of the United States” has been a goal of 

telecommunications policy since enactment of the Communications Act of 

1934.10

 10Communications Act of 1934, Act of June 19, 1934, ch. 652, title I, § 1, 48 Stat. 1064 

(1934), codified as amended at 47 U.S.C. § 151. 

To this end, FCC has established four universal service 

programs:

Background
Page 5 GAO-15-335 Lifeline

• High-Cost Program—Provides support to telecommunications carriers 

serving high-cost, rural, or insular areas.

• Schools and Libraries Program—Provides support to eligible schools 

and libraries in procuring telecommunications, telecommunications 

services, internet access services, internal connections, and basic 

maintenance of internal connections.

• Rural Health Care Program—Provides support to eligible health care 

providers through discounts for broadband and telecommunications 

services.

• Lifeline Program—Provides support to telecommunications carriers 

that in turn offer discounts on telecommunications services to eligible 

low-income households.

The Telecommunications Act of 1996 requires every telecommunications 

carrier providing interstate telecommunications services to contribute to 

federal universal service, unless exempted by FCC. The commission also 

has broad permissive authority to require other providers of 

telecommunications to contribute if the public interest so requires. 

Contributions are to be equitable and nondiscriminatory11 and are to be 

deposited into the Universal Service Fund (USF). Each quarter, FCC 

calculates a “contribution factor” based on the projected demands of the 

universal service programs and the projected contribution base. USAC 

then bills contributors based on this factor. In the fourth quarter of 2014, 

the contribution factor was 16.1 percent, down from a historic high of 17.9 

percent in the first quarter of 2012.12

FCC, USAC, states, and ETCs all have roles and responsibilities in the 

Lifeline program. At the federal level, FCC is responsible for setting 

policy, making and interpreting rules, providing oversight, and, in certain 

states, designating carriers as ETCs. Meanwhile, USAC, a not-for-profit 

Carriers generally pass their USF 

contribution obligation on to their customers, typically in the form of a line 

item on their monthly telephone bill.

 11Communications Act of 1934, § 254, as amended by Telecommunications Act of 1996, 

Pub. L. No. 104-104, 110 Stat. 56, § 101(a) (1996), codified as amended at 47 U.S.C. § 

254(d). 

12Carriers must pay a percentage (the contribution factor) of their projected, collected, enduser interstate and international telecommunications revenues. 
Page 6 GAO-15-335 Lifeline

corporation designated by FCC as the administrator of its universal 

service programs, manages the day-to-day operations of the Lifeline 

program, including collecting USF contributions, disbursing payments, 

auditing USF recipients, and reporting to FCC. At the state level, public 

utility commissions can increase the scope of Lifeline in their states by 

contributing additional financial support to Lifeline recipients, adding to 

the list of programs that households use to qualify for Lifeline, or both. For 

example, the Public Service Commission of Wisconsin contributes state 

funds to Lifeline recipients and adds programs such as Wisconsin Works, 

which provides employment preparation and other services to eligible 

low-income families, to the list of programs that households use to qualify 

for Lifeline. States can also play a role in Lifeline enrollment either by 

accepting applicants directly or providing ETCs access to information on 

enrollment in programs that households use to qualify for Lifeline for the 

purposes of verifying eligibility, since this information is generally housed 

at the state level. To receive Lifeline support, carriers must be designated 

as ETCs by state public utility commissions or FCC.13

Traditionally, Lifeline discounts only applied to wireline service and 

eligibility standards varied significantly by state. In addition to Lifeline, 

FCC’s efforts to promote phone service among the low-income population 

included Link Up, which discounted the connection charges associated 

with telephone service installation. In addition, carriers could receive 

support to offset certain costs for providing consumers with toll limitation 

service (TLS); TLS support subsidized carriers’ costs for blocking or 

restricting long-distance service for low-income consumers, thus allowing 

these consumers to specify a limit on the amount of toll charges that 

could be incurred per billing cycle. In the past, certain states, called 

“federal default states,” used FCC’s eligibility criteria, which included 

household participation in one of several public assistance programs or 

State public utility 

commissions have the primary responsibility for designating carriers as 

ETCs; however, in a situation where the telecommunications carrier is not 

subject to state jurisdiction, FCC may designate the carrier as an ETC. 

ETCs are generally responsible for advertising the availability of the 

program, submitting forms for reimbursement, and verifying applicants’ 

eligibility for Lifeline.

 13See 47 U.S.C. § 214(e); 47 C.F.R. § 54.201.
Page 7 GAO-15-335 Lifeline

income at or below 135 percent of the federal poverty guidelines.14 FCC 

also authorized states with their own Lifeline programs to develop their 

own eligibility criteria and eligibility thresholds.15

In 2005, FCC issued an order that allowed a non-facilities-based wireless 

service provider to apply as an ETC for purposes of offering Lifeline, if it 

met certain conditions. In particular, FCC granted TracFone forbearance 

from the requirement that a carrier designated as an ETC for the purpose 

of federal USF support provide services, at least in part, over its own 

facilities.

As a result, the ways in 

which households could become eligible varied significantly by state. 

However, in 2012, FCC reported that most consumers qualified for 

Lifeline through Medicaid, the Supplemental Nutrition Assistance Program 

(SNAP), and Supplemental Security Income.

16 But, FCC required TracFone to meet several conditions, such 

as obtaining self-certifications from subscribers that they will comply with 

program requirements and establishing safeguards to prevent customers 

from receiving multiple benefits.17

 14The qualifying programs are: Supplemental Nutrition Assistance Program, Medicaid, 

Supplemental Security Income, Temporary Assistance for Needy Families, National 

School Lunch Program’s free lunch program, Low-Income Home Energy Assistance 

Program, and Federal Public Housing Assistance or Section 8. In addition, households 

residing on Tribal lands may be eligible through additional programs. 

While FCC found that TracFone’s 

Lifeline offering would provide a variety of benefits to Lifeline-eligible 

consumers, including increased consumer choice, program participation, 

and mobility, FCC did not quantify or estimate potential increases in 

participation in the Lifeline program arising from its decision. In 2008, 

FCC approved TracFone as an ETC for the limited purpose of providing 

15Currently, states must base additional eligibility criteria solely on income or other factors 

directly related to income. 47 C.F.R. § 54.409(a)(3). 

16Forbearance is relief from applying to a telecommunications carrier any Communications 

Act provision or commission regulation if certain statutory criteria are met. 47 U.S.C. § 

160(a). An ETC is required to offer service using its own facilities or a combination of its 

own facilities and resale of another carrier’s service. 47 U.S.C. § 214(e). TracFone and 

many other prepaid wireless carriers are nonfacilities based, meaning they do not own 

their own facilities.

17Federal-State Joint Board on Universal Service, Petition of TracFone Wireless, Inc. for 

Forbearance from 47 U.S.C. § 214(e)(1)(A) and 47 C.F.R. § 54.201(i), Order, 20 FCC 

Rcd. 15095 (2005).
Page 8 GAO-15-335 Lifeline

Lifeline service.18

Following FCC’s actions on non-facilities-based wireless carriers offering 

prepaid service, participation in Lifeline as well as disbursements began 

to increase significantly. We previously reported that program 

participation and disbursements were stable from 2005 to 2008. 

Specifically, in 2005 the program had 6.9 million participants and 

disbursed $802 million, compared to 7.1 million participants and $823 

million disbursed in 2008. However, in 2009 Lifeline had 8.6 million 

participants and disbursed approximately $1 billion.

FCC’s TracFone orders paved the way for other nonfacilities-based wireless carriers to offer Lifeline service, and the first 

Lifeline offerings by these carriers began in 2008.

19 In 2010, we found 

that the Lifeline program lacked some features of internal controls, such 

as the ability to detect duplicate benefits across ETCs.20 In 2012, FCC 

noted that up to an estimated 15 percent of Lifeline subscribers could be 

ineligible for program benefits. In addition, in April 2014, the Department 

of Justice announced the indictment of three men for defrauding FCC of 

approximately $32 million by submitting false Lifeline claims between 

September 2009 and March 2011.21

In particular, FCC adopted the Lifeline Reform Order (the Order) in 2012 

to strengthen internal controls, improve accountability, and explore the 

inclusion of broadband in the program through a pilot program. Table 1 

describes the key reforms contained in the Order. Among other things, 

the Order required all states to use, at a minimum, the income and 

program eligibility criteria previously used by federal default states. To 

To improve management and 

oversight, in 2010, we recommended that FCC conduct a robust risk 

assessment and implement a systemic process for considering the results 

of ETC audits, among other things. FCC has taken some actions to 

address these recommendations, as noted below.

 18Federal-State Joint Board on Universal Service, TracFone Wireless, Inc. Petition for 

Designation as an Eligible Telecommunications Carrier in the State of New York, et al.,

Order, 23 FCC Rcd. 6206 (2008).

19GAO-11-11.

20GAO-11-11. 

21According to the indictment, the three men owned and operated Associated 

Telecommunications Management Services LLC, a holding company that owned and 

operated multiple subsidiary telephone companies that allegedly caused the submission of 

falsely inflated claims to the Lifeline Program.
Page 9 GAO-15-335 Lifeline

reduce the number of ineligible consumers in the program, the Order 

adopted measures to check consumers’ initial and ongoing eligibility for 

Lifeline. Further, in 2010, FCC began exploring the idea of modifying 

Lifeline to support broadband service (high-speed internet access) as part 

of FCC’s duty to periodically review its universal service programs in light 

of advances in telecommunications and information technologies and 

services.22

Table 1: Key Reforms Contained in the Federal Communications Commission (FCC) Lifeline Reform Order (2012)

To this end, the Order included a broadband pilot program to 

gather data on whether and how broadband could be incorporated into 

Lifeline.

Lifeline reform Description

One-per-household rule The Order limits Lifeline to a single subscription per household and defined a household as 

any individual or group of individuals who are living together at the same address and 

share income and expenses as one economic unit.

Elimination of Link-Up support on nonTribal lands and phase out support for 

toll limitation service

The Link Up program was originally designed to offset the activation charges wireline 

providers charged to install telephone service. The Order eliminated Link Up on non-Tribal 

lands, noting that many carriers no longer charged an activation fee. In addition, subsidies 

for toll limitation service, which allowed consumers to block or restrict long-distance 

telephone service, were phased out and eliminated beginning January 2014 since many 

carriers no longer distinguished between toll and non-toll calls.

Uniform eligibility criteria Requires all states to use, at a minimum, the income and program eligibility criteria used by 

federal default states. These criteria include: (1) household income at or below 135 percent 

of the federal poverty guidelines or (2) participation in at least one of a number of federal 

assistance programs. Previously, FCC did not have a minimum standard and eligibility 

requirements varied by state.

Non usage requirements Eligible telecommunications carriers (ETC) providing Lifeline service without a monthly bill 

(e.g., prepaid carriers) must notify and de-enroll subscribers that do not use the service 

after a specified period of time. When a subscriber fails to use Lifeline service for 60 

consecutive days, the ETC must provide the subscriber 30 days’ notice that he or she must 

use the service within the 30-day notice period or the Lifeline service will be terminated. 

Payments based upon actual support 

claims

Lifeline disbursements to ETCs are now based on the actual support claims. Before this, 

disbursements were based on projections that were “trued up” against actual claims. 

Independent and first year audit 

requirements

In addition to audits that were previously ongoing, ETCs that are receiving more than $5 

million in annual support are required to hire independent auditors to conduct an audit of 

their compliance with the Lifeline rules on a biennial basis. In addition, FCC directed the 

Universal Service Administrative Company (USAC) to audit all new Lifeline service 

providers within their first year of service. 

 22The Telecommunications Act of 1996 described universal service as an evolving level of 

telecommunications services that FCC should periodically review, taking into account 

advances in telecommunications and information technologies and services. See 47 

U.S.C. § 254(c).
Page 10 GAO-15-335 Lifeline

Lifeline reform Description

National Lifeline Accountability Database 

(NLAD)

FCC directed USAC to develop NLAD, which ETCs are required to query at enrollment to 

verify an applicant’s identity and to verify the individual is not already receiving Lifeline 

services. NLAD also checks applicants’ addresses against U.S. Postal Service software in 

part to ensure compliance with the one-per-household requirement. 

Flat-rate reimbursement The Order implemented an interim $9.25 flat rate on non-Tribal lands. Previously, Lifeline 

had a tiered structure of support, with average monthly non-Tribal support ranging from 

$4.25 to $10.00 per subscriber in September 2011. FCC reported that the tiered structure 

was administratively burdensome for both the ETCs and USAC.

Initial eligibility verification and annual 

recertification procedures

Effective June 2012, ETCs must verify a Lifeline applicant’s eligibility at enrollment and 

annually through recertification. In addition, to reduce the burden on consumers and ETCs, 

the Order directed FCC and USAC to establish an automated means for determining 

eligibility. 

Broadband pilot program The Order called for a pilot program to gather data on whether and how Lifeline could be 

structured to promote broadband. The Order called on FCC to select, fund, and gather data 

from a variety of pilot projects offering broadband to Lifeline-eligible consumers.

Performance goals and measures The Order specified three performance goals: (1) to ensure the availability of voice service 

for low-income Americans, (2) to ensure the availability of broadband for low-income 

Americans, and (3) to minimize the Universal Service Fund contribution burden on 

consumers and businesses. The Order directed FCC’s Wireline Competition Bureau to 

define performance measures to evaluate progress made towards these goals. 

Source: GAO summary of FCC Order. | GAO-15-335
Page 11 GAO-15-335 Lifeline

Although FCC has made progress implementing the reforms contained in 

the Order, four actions remain incomplete.23 FCC has eliminated Link-up 

on non-Tribal lands and support for TLS, and it has implemented the oneper-household rule, uniform eligibility criteria, non-usage requirements, 

payments based on actual claims, and the audit requirements. In addition, 

the National Lifeline Accountability Database (NLAD) is operational in 46 

states and the District of Columbia.24

• Flat-rate reimbursement: Lifeline reimbursements to ETCs from the 

USF are passed on to the subscriber in the form of a discount. To 

simplify administration of the Lifeline program, FCC established a 

uniform, interim flat rate of $9.25 per month for non-Tribal subscribers. 

In a Further Notice of Proposed Rulemaking accompanying the Order, 

FCC sought comment on the interim rate, but it has not issued a final 

However, FCC has not fully 

implemented four additional reform efforts. In some cases, FCC needs to 

make a decision, such as determining the permanent rate for Lifeline 

reimbursement claims. In other cases, FCC needs additional time to fully 

implement the reform, such as defining performance measures. We 

provide more information on the status of the partially implemented 

Lifeline reforms below.

 23We did not evaluate the effectiveness of these reform efforts. GAO has ongoing work 

assessing the internal controls of the Lifeline program. Results from this work will be 

available in fall 2015.

24California, Oregon, Texas, Vermont, and Puerto Rico opted out of participation in NLAD. 

States could have opted out by filing a request that met the standards specified by FCC in 

the Order. See ¶ 221 of Order.

FCC Has Made 

Progress 

Implementing Lifeline 

Reforms, but It Has 

Not Evaluated the 

Program’s 

Effectiveness

FCC Has Made Progress 

Implementing Lifeline 

Reforms, but Some 

Reform Efforts Remain 

Incomplete
Page 12 GAO-15-335 Lifeline

rule with a permanent reimbursement rate.25

• Initial eligibility verification and annual recertification procedures: To 

reduce the number of ineligible consumers receiving program 

benefits, the Order required that ETCs verify a Lifeline applicant’s 

eligibility at enrollment and annually through recertification; these 

requirements have gone into effect. In addition, to reduce the burden 

on consumers and ETCs, the Order directed FCC’s Wireline 

Competition Bureau and USAC to establish an automated means for 

determining eligibility for the top three programs through which 

households qualify for Lifeline as soon as possible and no later than 

the end of 2013.26 In a Further Notice of Proposed Rulemaking 

accompanying the Order, FCC sought comment on how to best 

achieve the automated means, such as through a state-specific or 

national eligibility database.27

• Broadband pilot program: FCC established the broadband pilot 

program to gather data about how Lifeline could be used to support 

broadband adoption. FCC announced the broadband pilot program in 

December 2012, and it authorized approximately $13.8 million for 14 

projects spanning 21 states and Puerto Rico. The pilot projects 

completed offering subsidized service at the end of October 2014, but 

data are still being collected from participants on how the service was 

used and retained after the pilot finished. FCC has not announced 

when or how it would share the results of the projects. We provide 

more information on the broadband pilot program below.

FCC has not met the timeframe 

established in the Order or revised any timeframes for when or how 

this automated means would be available. We provide more 

information on eligibility verification below.

• Performance goals and measures: The Order established 

performance goals for the Lifeline program to help FCC determine 

 25See ¶¶ 462-473 of Order. The FCC officials we spoke to were unsure when a decision 

would be made since FCC policy decisions, such as rulemakings, are made at the 

Commission, rather than staff, level of FCC. 

26See ¶ 97 of Order. As the Order notes, most consumers qualify for Lifeline through 

Medicaid, SNAP, and Supplemental Security Income. According to data provided by 

USAC, as of April 2014, about 80 percent of Lifeline consumers enroll through these 

programs.

27See ¶ 404 of Order.
Page 13 GAO-15-335 Lifeline

whether Lifeline is being used for its intended purposes and is 

accomplishing its objectives. These goals were: (1) to ensure the 

availability of voice service for low-income Americans, (2) to ensure 

the availability of broadband for low-income Americans, and (3) to 

minimize the Universal Service Fund contribution burden on 

consumers and businesses. FCC identified performance measures it 

will use to evaluate progress toward these goals, but it has not yet 

fully defined them. For example, the Order stated that the goal of 

ensuring the availability of voice service will be measured by 

comparing telephone penetration levels (the percentage of 

households with telephone service) among low-income households to

households with the next highest level of income,28 but FCC officials 

note that they are working on defining these measures using the 

Census Bureau’s American Community Survey data, which was made 

available in late 2014.

In the Order, FCC established outcome-based goals and noted that the 

gap in penetration rates for telephone service between low-income and 

higher-income households has narrowed. We previously concluded that 

outcome-based performance goals and measures will help illustrate to 

what extent, if any, the Lifeline program is fulfilling the guiding principles 

set forth by the Congress.29

 28FCC defines its telephone penetration rate as the percentage of households with 

telephone service. In the Order, FCC stated that it intends to compare the penetration rate 

of low-income households to the next highest income group.

Once adopted, performance measures can 

help FCC track progress toward reaching its goals. However, 

performance measures alone will not fully explain the contribution of 

Lifeline toward reaching the program goals, because performance 

measurement does not assess what would have occurred in the absence 

of the program. According to FCC, Lifeline has been instrumental in 

narrowing the penetration gap between low-income and non-low income 

households. In particular, FCC noted that since the inception of Lifeline, 

the gap between telephone penetration rates for low-income and non-low 

income households has narrowed from about 12 percent in 1984 to 4 

percent in 2011. Although FCC attributes the penetration rate 

improvement to Lifeline, several factors could play a role. For example, 

changes to income levels and prices have increased the affordability of 

29GAO-11-11.

FCC Has Not Evaluated 

the Effectiveness of the 

Lifeline Program, Which 

Could Hinder Its Ability to 

Efficiently Achieve 

Program Goals
Page 14 GAO-15-335 Lifeline

telephone service, and technological improvements, such as mobility of 

service, have increased the value of telephone service to households.30

According to FCC officials, the commission has not evaluated the extent 

to which Lifeline has contributed to the narrowing of the gap in 

penetration rates and at what cost. As a result, FCC does not know the 

extent to which the narrowing of the penetration rate is attributable to the 

Lifeline program. FCC officials stated that the structure of the program 

has made it difficult for the commission to determine causal connections 

between the program and the penetration rate. In particular, FCC officials 

noted that because Lifeline has existed since the 1980s, it is difficult to 

compare results from the program to results in the absence of the 

program. However, FCC officials noted that two academic studies have 

assessed the program, including the impact of the Lifeline program on 

household decisions to subscribe to telephone service.31

The studies that FCC referred us to suggest that household demand for 

telephone service—even among low-income households—is relatively 

insensitive to changes in the price of the service and household income. 

This suggests that many low-income households would choose to 

subscribe to telephone service in the absence of the Lifeline subsidy. For 

example, one study found that many households receiving the Lifeline 

subsidy would chose to subscribe to telephone service in the absence of 

the subsidy.32

 30FCC reported Bureau of Labor Statistics data illustrating that the price index for wireless 

telephone services declined 4.6 percent from January 2011 through July 2014. In contrast, 

the price index for all goods and services increased 8.3 percent during the same period. 

As such, the Lifeline program, as currently structured, may 

be a rather inefficient and costly mechanism to increase telephone 

subscribership among low-income households, because several 

households receive the subsidy for every additional household that 

subscribes to telephone service due to the subsidy. FCC officials said that 

this view does not take into account the Lifeline program’s purpose of 

making telephone service affordable for low-income households. 

However, in the Order, the commission did not adopt affordability as one 

31Olga Ukhaneva, “Universal Service in a Wireless World” (Paper presented at The 42nd 

Research Conference on Communication, Information and Internet Policy, Washington, 

D.C., September 2014). Daniel A. Ackerberg, David R. DeRemer, Michael H. Riordan, 

Gregory L. Rosston, and Bradley S. Wimmer, Estimating the Impact of Low-Income 

Universal Service Programs, Center for Economic Studies, CES-13-33 (2013). 

32Olga Ukhaneva, “Universal Service in a Wireless World” (2013). 
Page 15 GAO-15-335 Lifeline

of the program’s performance goals; rather, it adopted availability of voice 

service for low-income Americans, measured by the penetration rate.33

These research findings raise questions about the design of Lifeline and 

FCC’s actions to expand the pool of eligible households. We estimated 

approximately 40 million households were eligible for Lifeline in 2012.34

The Order established minimum Lifeline eligibility, which expanded 

eligibility in some states that had more limited eligibility criteria. Further, 

FCC proposed adding qualifying programs, such as the Special 

Supplemental Nutrition Program for Women, Infants, and Children (WIC) 

program, and increasing income eligibility to 150 percent of the federal 

poverty guidelines. These actions, if taken, would expand the pool of 

eligible households. For example, we estimated that over 2 million 

additional households would have been eligible for Lifeline in 2012 if WIC 

were included in the list of qualifying programs. These proposed changes 

would add households with higher income levels than current Lifelineeligible households,35

 33FCC officials noted that voice service is only available to low-income consumers to the 

extent it is affordable. In the Order, FCC found that affordability is a component of the goal 

of ensuring the availability of voice service. See ¶ 28 of Order.

although the telephone penetration rate increases 

with income (see fig. 1). Thus, although making additional households 

with higher incomes eligible for Lifeline might increase telephone 

penetration somewhat, it may be at a high effective cost, because a 

substantial majority of these households likely already purchase 

telephone service. This raises questions about expanding eligibility and 

the balance between Lifeline’s goals of increasing penetration rates while 

minimizing the USF contribution burden.

34We estimated the number of Lifeline-eligible households using Census Bureau data. The 

Census data approximate, but do not completely align with, Lifeline eligibility. For 

example, the Census data do not reflect state Lifeline eligibility that extends beyond the 

FCC minimum requirements or qualifying programs specific to Tribal areas.

35For example, GAO previously found that about 2 percent of WIC participants in 2010 had 

incomes over the federal WIC limit of 185 percent of federal poverty guidelines. See GAO, 

WIC Program: Improved Oversight of Income Eligibility Determination Needed, 

GAO-13-290 (Washington, D.C.: Feb. 28, 2013). As mentioned previously, the income 

requirement for Lifeline eligibility is generally 135 percent of the federal poverty guidelines.
Page 16 GAO-15-335 Lifeline

Figure 1: Household Telephone Penetration Rates by Income Level, 2013

a

In 2013, 135 percent of the federal poverty guidelines for a family of four was $31,793.

Note: FCC defines its telephone penetration rate as the percentage of households with telephone 

service.

Our prior work on federal agencies that have used program evaluation for 

decision making has shown that it can allow agencies to understand 

whether a program is addressing the problem it is intended to and assess 

the value or effectiveness of the program.36

 36GAO, Program Evaluation: Strategies to Facilitate Agencies’ Use of Evaluation in 

Program Management and Policy Making, 

The results of an evaluation 

could be used to clarify FCC’s and others’ understanding of how the 

Lifeline program does or does not address the problem of interest—

subscription to telephone service among low-income households—and to 

assist FCC in making changes to improve the design or management of 

the program. For example, a program evaluation might reveal that FCC 

could reduce the eligible population, while better meeting its dual goals of 

increasing subscribership and reducing the contribution burden. Without 

such an evaluation, it will be difficult for FCC to determine whether the 

GAO-13-570 (Washington, D.C.: June 26, 

2013). This report found that 80 percent of federal managers who had recent program 

evaluations reported that the evaluations contributed to assessing the program’s 

effectiveness or value.
Page 17 GAO-15-335 Lifeline

Lifeline program is increasing the telephone penetration rate among lowincome consumers, while minimizing the burden on those who contribute 

to the USF. While we recognize the importance of FCC developing 

performance goals and measures for the program, program evaluations 

typically examine a broader range of information on program performance 

and can help inform the commission’s performance measures.

Carriers must verify an applicant’s eligibility for Lifeline and generally do 

so by reviewing documentation provided by consumers. To increase 

consistency and reduce the number of ineligible participants in the 

program, the Order required that ETCs verify consumer eligibility at 

enrollment using one of three methods:

• rely on confirmation of eligibility from a state agency or state Lifeline 

administrator;

• query a state or federal database;37

• review applicants’ qualifying documentation, such as a program 

benefit card.

or

 37According to FCC, currently no federal database is available for the purposes of 

determining Lifeline eligibility. 

Carriers Generally 

Review 

Documentation to 

Verify Household 

Eligibility, and FCC 

Officials Believe That 

Program Rules Limit 

Privacy and Security 

Concerns

Carriers Generally Verify 

Household Eligibility by 

Reviewing Consumers’ 

Documentation
Page 18 GAO-15-335 Lifeline

We found that ETCs generally review qualifying documentation. In 

particular, we estimated approximately 8 states have a state agency or 

state Lifeline administrator that verifies eligibility, approximately 17 states 

have eligibility databases that ETCs can potentially use to verify eligibility, 

and ETCs in the remaining states review consumer-provided 

documentation.38 However, even in states with eligibility databases, ETCs 

may review consumer-provided documentation, either because the 

database does not cover all qualifying programs or because the ETC 

does not participate in the database.39

To reduce the burden on applicants and ETCs, the Order set a goal for 

developing an automated means for verifying Lifeline eligibility; however, 

as mentioned previously, FCC has not met the time frame defined in the 

Order or established any revised time frames for when, how, or if this 

automated means would be available. According to FCC officials, no 

national database is currently available to check for Lifeline eligibility, as 

nearly all qualifying program enrollment data are maintained at the state 

level. The Order noted efforts among federal agencies to facilitate 

eligibility determinations in various government programs. For example, 

the federal Public Assistance Reporting Information System (PARIS) is 

maintained by an intergovernmental board and permits states to check for 

duplicative claims for several government programs across states, 

including Medicaid. However, according to FCC officials, PARIS is not 

designed for or updated regularly enough for the purpose of real-time 

Lifeline eligibility checks. FCC officials also noted that PARIS officials 

raised concerns about privacy and third party access. According to FCC 

officials, there are many development challenges to creating a national 

eligibility database, including the ability and willingness of other federal 

agencies to share consumer information. FCC officials told us they 

For example, according to state 

officials in New York, only two ETCs currently use the state database, 

despite over 50 ETCs providing Lifeline in the state.

 38There is no single source with information on state databases. To estimate the number 

of states with an eligibility database, we reviewed lists from FCC and a state association 

and information from two ETCs on the states in which they use a database. 

39The Order requires all ETCs to access state or federal eligibility databases when such 

databases are available. See ¶ 98 of the Order. FCC and USAC officials say ETCs’ 

compliance with this and other requirements is tested as part of program audits. In 

addition, FCC officials note that such audit findings can result in monetary recovery or be 

referred to FCC’s Enforcement Bureau for further action. 
Page 19 GAO-15-335 Lifeline

continue to investigate options for an automated means of eligibility 

verification and promote the development of state databases.

An FCC Commissioner, along with some stakeholders with whom we 

spoke, have questioned the appropriateness of ETCs, generally private 

companies, being required to determine Lifeline eligibility, which requires 

them to collect and analyze personal information about consumers that 

they would not otherwise obtain. In a November 2014 speech, FCC 

Commissioner Mignon Clyburn stated that ETCs should not be 

responsible for determining Lifeline eligibility, noting that absolving ETCs 

of this responsibility would improve program integrity and reduce privacy 

concerns. This view is shared by representatives from both industry 

associations, one consumer advocate, and 3 of the 12 ETCs we 

interviewed. Commissioner Clyburn and these stakeholders suggest that 

Lifeline should follow a similar arrangement as other low-income 

assistance programs, such as SNAP or Medicaid, where the government 

determines who is eligible for the benefit, while private companies, such 

as grocery stores or health care providers, provide goods and services to 

eligible beneficiaries. Meanwhile, in the Lifeline program, governmental 

entities, such as states, FCC, and USAC, are not required to determine 

an applicant’s initial eligibility,40 while ETCs are required to both 

determine consumer eligibility and provide service to beneficiaries. 

According to FCC officials, FCC has considered but has not reached a 

decision on establishing a central administrator to determine consumer 

eligibility for Lifeline.41

The risk to consumer information security in the Lifeline program was 

highlighted by a recent security breach and associated FCC enforcement 

action. According to FCC, from September 2012 through April 2013, two 

ETCs stored sensitive information collected from consumers to determine 

Lifeline eligibility in a format readily accessible via the internet, exposing 

up to 300,000 consumers’ information to public view and to identity theft 

and fraud. This information included Social Security numbers, names, 

 40If they elect to do so, states may take on the role of determining an applicant’s Lifeline 

eligibility. In addition, for annual recertification of consumer eligibility, carriers may elect to 

have USAC conduct the recertification on their behalf. 

41For example, in a Further Notice of Proposed Rulemaking accompanying the Order, 

FCC sought comment on the costs and benefits of a third-party administrator checking 

program eligibility, including the cost of implementing such a solution on a nationwide 

basis.
Page 20 GAO-15-335 Lifeline

addresses, and other sensitive information. In October 2014, FCC issued 

a notice of apparent liability of $10 million. This proposed fine shows the 

risks associated with ETCs improperly protecting sensitive information 

they are required to collect to determine eligibility.

Each of the approaches ETCs can use to verify eligibility include 

measures to protect consumer privacy; however, these measures vary on 

where sensitive information is stored and who is responsible for 

protecting it.42 Since ETCs, generally private companies, collect personal 

information from consumers to meet Lifeline program requirements, 

security measures are necessary to prevent that information from being 

disclosed to unauthorized individuals or accessed for unauthorized 

purposes. Such controls can include establishing firewalls and other 

boundary protections to prevent unauthorized access to systems, 

requiring users to authenticate themselves to ensure unauthorized 

individuals do not access sensitive information, and setting usage 

restrictions to ensure that even authorized individuals do not access 

information inappropriately.43

 42We did not independently evaluate the effectiveness of ETCs’ implementation of these 

measures. 

FCC officials said that security concerns 

associated with ETCs’ accessing a database and reviewing 

documentation can be mitigated through implementation of appropriate 

controls. However, the documentation review method places a much 

greater burden on the ETCs to appropriately protect sensitive information 

than the other two options, which put the burden on the states. For 

example, in cases where eligibility is determined by a state agency or 

where an ETC queries a state database, the state is responsible for 

implementing security and privacy controls and ETCs do not directly 

access sensitive consumer information.

43GAO, Federal Information System Controls Audit Manual (FISCAM), GAO-09-232G 

(Washington, D.C.: February 2009). 

FCC Officials Said That 

Consumer Information 

Can Be Protected through 

Databases or 

Documentation
Page 21 GAO-15-335 Lifeline

Although FCC promotes state databases to reduce the burden on ETCs 

and applicants, ETCs and states face challenges to developing 

databases, including implementing appropriate privacy protections.44

FCC has noted that concerns with data privacy can be overcome by 

limiting ETC access to personally identifiable information. For example, 

according to state officials in New York and Wisconsin, in those states, 

ETCs input a minimal amount of identifying information into the state 

database about an applicant—such as name and last four digits of a 

Social Security number—and in response, the database returns a yes or 

no response indicating whether a match exists with an eligible individual 

enrolled in a qualifying program. This arrangement releases no additional 

personally identifiable information to the ETC that may be contained in 

the database, such as the specific program in which the applicant 

participates. FCC officials note that they have encouraged state 

According to FCC and representatives from 2 of the 12 ETCs we 

interviewed, state agencies are often hesitant to grant ETCs direct access 

to their databases because of concerns about protecting the privacy of 

the personal information they contain. For example, representatives from 

TracFone noted that states are often concerned about data privacy and 

how to release information to ETCs while meeting privacy controls of the 

applicable federal program that governs the data. For example, if a state 

database grants an ETC access to Medicaid enrollment information, this 

access must meet Medicaid federal privacy standards. In addition, 

representatives from 3 of the 12 ETCs and two of the four state public 

utility commissions we spoke to noted that negotiating with and 

coordinating among agencies also presents a challenge to database 

development. Coordination is important because enrollment information 

for qualifying programs can be housed in numerous agencies within a 

single state, requiring coordination among these agencies and the public 

utility commission, which oversees the Lifeline program. Other challenges 

noted by officials in one state we interviewed include waiting for 

clarification from FCC on whether a national automated means of 

verification will be developed, which, if developed, may eliminate the need 

for state-level databases, and limited state resources for developing and 

maintaining a database.

 44GAO has previously reported on the challenge of balancing greater data sharing among 

human services programs with privacy protections. See GAO, Human Services: Sustained 

and Coordinated Efforts Could Facilitate Data Sharing While Protecting Privacy, 

GAO-13-106 (Washington, D.C.: Feb. 8, 2013). 

FCC Promotes State 

Databases to Mitigate Privacy 

Concerns; However, 

Development Challenges Are a 

Potential Barrier
Page 22 GAO-15-335 Lifeline

databases through a June 13, 2014, joint letter with the United States 

Department of Agriculture (USDA) to SNAP state agencies. In this letter, 

FCC and USDA notified SNAP state agencies that they can release 

limited information to ETCs for the purpose of determining eligibility, 

should return only a yes or no response, and should have agreements in 

place with ETCs that outline what SNAP information will be disclosed, 

how the information will be used, and how ETCs shall safeguard such 

information. These agreements must include information on how both 

ETCs and the SNAP agencies will prevent unauthorized disclosure of 

consumer information. FCC officials told us they do not establish privacy 

and data security requirements for state databases, as the information is 

subject to the requirements of the federal agencies that govern the 

qualifying programs.

As mentioned earlier, ETCs generally determine applicants’ eligibility by 

reviewing qualifying documentation, such as a program benefit card. This 

transaction of an applicant’s producing and the ETC’s reviewing 

documentation often occurs in person, as part of the enrollment process. 

In particular, of the nine prepaid wireless ETCs we spoke to, six stated 

that they enroll most of their customers in person, either at a store 

location or mobile event, with several noting they enroll 90 percent or 

more of their customers this way.45 These enrollments often involve 

agents entering application information and capturing electronic copies of 

eligibility documentation using a tablet computer. When asked about the 

privacy and data security provisions for this process, representatives from 

three ETCs told us this information is stored in a secure software 

application rather than on the tablet itself and is transmitted to an off-site 

back office for review,46

FCC rules prohibit ETCs from retaining copies of the documentation that 

applicants provide to verify eligibility; however, many ETCs we spoke to 

after which the electronic copy of the 

documentation is deleted. However, as noted above, a recent security 

breach and associated FCC enforcement action highlights the risk 

involved when ETCs improperly handle sensitive information.

 45One of the three wireline ETCs we spoke to allows Lifeline applicants to apply in person. 

In contrast, consumers generally apply to wireline ETCs through means such as 

downloading an application online and mailing or faxing it to the ETC. 

46We did not independently review the implementation of technical security controls at any 

of the ETCs. 

FCC Officials Believe Program 

Rules Prohibiting Document 

Retention Limit Security 

Concerns; However, ETCs 

Have Requested to Weaken 

These Policies
Page 23 GAO-15-335 Lifeline

said they would like to retain this documentation indefinitely. Although 

Lifeline rules require ETCs to keep accurate records on how each 

consumer demonstrated his or her eligibility, FCC rules prohibit ETCs 

from retaining any documentation provided by a consumer to 

demonstrate eligibility after an eligibility determination has been made.47

FCC officials say the requirement that prohibits ETCs from retaining 

documentation provides privacy protection against unauthorized access 

to or release of the information.48 According to FCC officials, FCC’s 

Enforcement Bureau is charged with enforcing FCC and Lifeline privacy 

rules, such as the recent notice of apparent liability against the two 

carriers mentioned above. In addition, USAC officials said they review 

ETCs’ document retention procedures as part of their audits of ETCs. 

Representatives from 9 of the 12 ETCs we spoke to said that they comply 

with program rules and destroy copies of customer documentation 

regularly. Despite this, 7 of the 12 ETCs we spoke to support FCC 

modifying its rules to allow ETCs to retain this documentation indefinitely. 

Some of these ETCs state that they can use this documentation during 

audits to demonstrate how they determined the applicant’s eligibility. In 

addition, these ETCs argue that retaining documentation will better 

enable the Lifeline program to detect waste, fraud, and abuse. For 

example, TracFone noted that without a requirement to retain 

documentation, ETCs have the ability and the economic incentive to claim 

that they reviewed documentation without being required to retain 

documentation that FCC and USAC can use to verify the claim. However, 

because FCC relies on this rule to provide protection against 

unauthorized access to or release of the information, dropping the rule 

could also raise privacy and security risks.

 47See 47 C.F.R. 54.410(b)(1)(B)(ii) and 47 C.F.R. 54.410(c)(1)(B)(ii).

48This does not apply to the Lifeline application, which ETCs must retain and which 

contains information such as the applicant’s name, address, and date of birth. 
Page 24 GAO-15-335 Lifeline

Lifeline participation and disbursements increased rapidly from 2008 

through mid-2012 and declined after FCC’s reform Order in 2012 (see fig. 

2). From mid-2008 to mid-2012, Lifeline enrollment increased from 6.8 

million households to 18.1 million households, a 166 percent increase.49

 49Since the Lifeline program experienced duplicate and ineligible subscribers prior to the 

Order, subscribership numbers cannot be interpreted as the number of unique and eligible 

Lifeline subscribers. 

In addition, annual disbursements increased from $820 million in 2008 to 

$2.2 billion in 2012, a 167 percent increase. After FCC began 

implementing the Order in mid-2012, Lifeline participation declined to 12.4 

million households by the end of 2014, while disbursements declined to 

approximately $1.7 billion in 2014.

In 2014, Over 12 

Million Households 

Participated in 

Lifeline, and Some 

Households Faced 

Challenges in 

Accessing and 

Retaining Benefits

Lifeline Participation Was 

18.1 Million Households in 

2012 and Declined to 12.4 

Million by 2014
Page 25 GAO-15-335 Lifeline

Figure 2: Lifeline Program’s Quarterly Subscribers and Annual Disbursements, 

2008 through 2014

We identified several factors that contributed to the Lifeline program’s 

growth that began in 2008, including the following:

• Prepaid wireless services: ETCs offering prepaid wireless service 

attracted eligible consumers by offering greater mobility and lower 

prices than traditional wireline ETCs. In 2010, we found that growth in 

the program was primarily due to the introduction of prepaid wireless 

as an eligible service.50

 50

ETCs offering prepaid wireless typically 

provide consumers with a free handset and 250 free monthly minutes, 

rather than providing a discount on a monthly telephone bill like 

traditional wireline ETCs. Since 2008, the Lifeline program shifted 

from wireline ETCs, which received at least 82 percent of Lifeline 

disbursements in 2008, to wireless ETCs, which received 85 percent

of disbursements in the third quarter of 2014.

GAO-11-11. 
Page 26 GAO-15-335 Lifeline

• Duplicate or ineligible enrollment: Duplicate enrollments and ineligible 

subscribers may have contributed to the growth in the Lifeline 

program. The transition to wireless removed the connection between 

Lifeline service and a physical address, increasing the likelihood that 

a household could receive more than one Lifeline-supported service. 

As noted earlier, weak controls resulted in ineligible and duplicate 

benefits. For example, USAC undertook an in-depth data validation 

process to identify and remove duplicate subscribers, and reported 

that it eliminated 2.2 million duplicate subscribers and yielded savings 

of over $260 million from 2011 through 2013.

• Increase in eligible households: The growth in Lifeline may also have 

been partially due to an increase in the number of households eligible 

for the benefit. Using Census data, we found the number of 

households eligible for Lifeline grew from approximately 35 million in 

2008 to 40 million in 2012, a 15 percent increase.51

Lifeline enrollment and disbursements have declined since their peak in 

2012 when FCC issued the Order. FCC’s reform efforts, such as initial 

eligibility verification and recertification, resulted in declines in enrollment 

and disbursements. For example, FCC reported that disbursements fell 

by nearly $40 million in one month after the eligibility verification 

requirements went into effect in June 2012, and projected that the 2012 

recertification process could de-enroll up to 4 million subscribers and 

save as much as $400 million in 2013. However, as noted earlier, some 

FCC reforms are still in progress and therefore the full impact of the 

reforms is not known. In addition, some Lifeline reforms may have 

inadvertently reduced participation by eligible households as well as 

ineligible households.

In addition, 

enrollment in SNAP, one of the primary programs through which 

consumers become eligible for Lifeline, increased 64 percent from 

2008 to 2012, according to USDA.

 51We estimated the number of households eligible for Lifeline by adding the number of 

unique households participating in federal qualifying programs or earning incomes at or 

below 135 percent of the federal poverty guidelines. As stated earlier, prior to the Order, 

Lifeline eligibility did not have a minimum standard and varied by state. 
Page 27 GAO-15-335 Lifeline

Although some Lifeline-eligible households face challenges in accessing 

and retaining benefits, ETCs, particularly prepaid wireless ETCs, have 

taken actions to help mitigate these challenges (see table 2).

Table 2: Challenges Faced by Lifeline-Eligible Households and Actions Taken by Eligible Telecommunications Carriers (ETC) 

That Can Mitigate These Challenges

Challenge Means of mitigating 

Lack of knowledge about the program • In-person and community-based outreach and events to raise awareness of the 

program.

Accessing and submitting applications • In-person enrollment to assist consumers in submitting applications.

Providing documentation of eligibility • Electronic capture of copies of consumers’ documentation during in-person enrollment.

• Use of state eligibility databases, where available, to reduce the need for applicants to 

submit documentation.

Recertification may de-enroll eligible 

households

• Increased outreach to notify consumers of the requirement and more options for reply, 

such as interactive voice response.

• Use of state eligibility databases, where available, to eliminate the need to contact 

consumers to recertify.

Source: GAO. | GAO-15-335

Some eligible households may face a variety of challenges enrolling in 

Lifeline and retaining benefits over time. Some challenges stem from 

eligible households’ unawareness of or difficulty in applying for the 

program. Other challenges stem from FCC reforms, such as initial 

eligibility verification and annual recertification, which may inadvertently 

hinder participation by some eligible households while attempting to 

prevent participation by ineligible households. We identified the following 

challenges:

• Knowledge about the program: Eligible households may be unaware 

of the program. FCC requires ETCs to publicize the availability of 

Lifeline in a manner reasonably designed to reach those likely to 

qualify. In a 2010 recommended decision, the Federal-State Joint 

Some Eligible Households 

Face Challenges in 

Accessing and Retaining 

Lifeline Benefits, and 

Some Actions Have Been 

Taken to Mitigate These 

Challenges

Some Eligible Households May 

Face Challenges in Accessing 

and Retaining Lifeline Benefits
Page 28 GAO-15-335 Lifeline

Board on Universal Service52

• Accessing and submitting applications: Eligible households may have 

difficulty accessing or submitting Lifeline applications. For example, 

representatives from two of the three wireline ETCs we interviewed 

said applicants can access the application online and submit the 

application by mail or fax. However, applicants may be challenged to 

access or submit applications through such methods because they 

may lack access to the Internet or fax machines. In addition, two 

stakeholders we interviewed said that eligible consumers may 

struggle to complete an application due to a lack of literacy or 

language skills given the complexity of the form. For example, 

representatives from one ETC noted that some applicants may not 

understand statements such as “One Lifeline service is available per 

household, and that, to the best of my knowledge, no other person in 

my household is receiving a Lifeline service. For purposes of Lifeline, 

a household is any individual or group of individuals who live together 

at the same address and share income and expenses.”

observed that ETCs’ outreach efforts 

may not reach some eligible households and that insufficient outreach 

efforts by some ETCs may have contributed to low Lifeline 

participation rates. The consumer advocacy organizations we 

interviewed agreed that consumers’ lack of knowledge about Lifeline 

remains a concern for the program.

• Providing documentation of eligibility: Some households may be 

unable to submit copies of their eligibility documentation such as a 

SNAP benefit card with their applications. As mentioned earlier, ETCs 

are now required to verify eligibility, which is often done by reviewing 

documentation. Consumers submitting applications need to send 

copies of documentation, but may be unable to do so due to a lack of 

access to equipment such as scanners or photocopiers. According to 

representatives from one ETC, this may result in consumers failing to 

complete the application. In addition, some consumers may have 

difficulty providing required documentation to prove eligibility, such as 

tax returns or Social Security statement of benefits.

 52The Federal-State Joint Board on Universal Service comprises FCC Commissioners, 

state utility commissioners, and a consumer advocate representative, and makes 

recommendations to implement the universal service provisions of the 

Telecommunications Act of 1996.
Page 29 GAO-15-335 Lifeline

• Recertification: FCC requires ETCs to annually recertify the eligibility 

of all of their Lifeline customers and de-enroll those who do not reply 

to recertification attempts,53 which stakeholders we interviewed said 

may result in eligible households de-enrolled from the program. In 

order to verify eligibility, ETCs often contact customers directly 

through a variety of means, such as mail, telephone, and text 

message. Customers must then reply to affirm their ongoing eligibility 

for Lifeline. Representatives from all 12 ETCs we interviewed noted 

that it is a challenge to get customers to respond.54 In the two 

completed recertification rounds to date, 2012 and 2013, USAC 

reports that many households were de-enrolled due to nonresponse.55

ETCs and some states have taken actions to mitigate the challenges 

eligible households face in accessing and retaining Lifeline benefits. 

ETCs, particularly prepaid wireless ETCs, have developed methods of 

marketing to low-income consumers. In addition, some states have 

developed eligibility databases that reduce the challenges associated with 

submitting documentation and recertifying eligibility.

According to representatives from 3 of the 12 ETCs we 

interviewed, eligible households may not respond because they have 

moved and did not receive mailed notices or may not respond to 

telephone calls from unknown callers. In addition, representatives 

from ETCs, public utility commissions, and consumer advocates we 

spoke to said that subscribers may have difficulty understanding the 

recertification process or the language used on recertification forms. 

For example, households responding to recertification must agree to 

the same attestations included in the Lifeline application.

 53ETCs must also de-enroll subscribers who respond that they are no longer eligible or are 

determined to be ineligible by a state administrator, USAC, or a database query.

54Eligibility verification also imposes burdens on ETCs and USAC. FCC’s Paperwork 

Reduction Act filing with the Office of Management and Budget stated that the annual 

costs of initial eligibility data collection and recertification would be $175,820,000 and 

$419,300,000 respectively.

55FCC requires that ETCs report their recertification results, including the number of 

customers de-enrolled due to non-response, through FCC Form 555. We attempted to 

analyze these results for 2012 and 2013. However, we found variation in how ETCs 

reported those data and determined the results were not reliable for our purposes. FCC 

has since revised Form 555 and its guidance for ETCs. According to FCC officials, the 

revisions should improve the quality of the data.

Some Actions Have Been 

Taken to Mitigate the 

Challenges Households Face
Page 30 GAO-15-335 Lifeline

• Outreach and in-person enrollment: Prepaid wireless ETCs conduct 

outreach, including in-person outreach and enrollment, to overcome 

challenges such as lack of customer knowledge about the program, 

inability to submit applications, and recertification. FCC and USAC 

officials report that states with more ETCs offering prepaid wireless 

service tend to have higher Lifeline participation rates due to greater 

outreach. Representatives from seven of the nine wireless ETCs we 

spoke to reported that they use mobile in-person enrollment events 

outside community locations such as thrift stores or food banks to 

effectively target the eligible low-income population. Some wireless 

ETCs noted that in-person enrollment agents can assist applicants by 

translating the application’s legal language into layman terms, 

explaining program requirements, or verifying eligibility. These agents 

may verify eligibility by taking images of applicants’ eligibility 

documentation with handheld tablet computers for review by ETC 

employees. Representatives from all nine of the prepaid wireless 

ETCs we interviewed also reported using a variety of channels to 

contact and solicit responses from customers during recertification, 

such as interactive voice response telephone systems. Some of these 

wireless ETCs noted that increased outreach can overcome the 

challenge of getting customers to respond to recertification.

• Eligibility databases: Databases used by ETCs to verify household 

eligibility could eliminate the need for applicants to provide eligibility 

documentation and the need for ETCs to contact customers during 

the recertification process. Some ETCs, public utility commissions, 

and other stakeholders we spoke to said that databases could 

increase participation by eligible households. For example, 

representatives from one state public utility commission we spoke to 

reported that ETCs that contacted customers during recertification 

experienced a 30 to 40 percent drop in participation, while ETCs that 

queried the state eligibility database experienced a 10 percent drop. 

However, as discussed above, FCC has not created a national 

database, most states lack databases, and ETCs may not use the 

databases that states have created.
Page 31 GAO-15-335 Lifeline

FCC’s broadband pilot program includes 14 pilot projects that test an 

array of options and will generate information that FCC intends to use to 

decide whether and how to incorporate broadband into Lifeline. According 

to FCC, the projects are expected to provide high-quality data on how the 

Lifeline program could be structured to promote broadband adoption by 

low-income households. FCC noted the diversity of the 14 projects, which 

differed by geography (e.g., urban, rural, Tribal); types of technologies 

(e.g., fixed and mobile); and discount amounts. Projects were also 

designed to test variables such as digital literacy training and equipment 

discounts.56

We found that FCC did not conduct a needs assessment or develop 

implementation and evaluation plans for the broadband pilot program, as 

FCC selected projects that were designed as field 

experiments and offered randomized variation to consumers. For 

example, one project we reviewed offered customers three different 

discount levels and a choice of four different broadband speeds, thereby 

testing 12 different program options. FCC officials said they aimed to test 

and reveal “causal effects” of variables. FCC officials said this approach, 

for example, would test how effective a $20 monthly subsidy was relative 

to a $10 subsidy, which would help FCC evaluate the relative costs and 

benefits of different subsidy amounts. However, FCC officials noted that 

there was a lack of FCC or third party oversight of the program, meaning 

that pilot projects themselves were largely responsible for administration 

of the program.

 56FCC reimbursements to ETCs only discounted the price of monthly broadband service 

and non-recurring fees such as broadband service activation fees, and did not subsidize 

discounted equipment or digital literacy training. However, FCC encouraged projects to 

partner with organizations to offer discounted equipment and digital literacy training. 

Usefulness of 

Broadband Pilot 

Program May Be 

Limited by FCC’s 

Lack of Evaluation 

Plan and Other 

Challenges

FCC Designed the 

Broadband Pilot Program 

to Test a Variety of 

Factors, but Did Not 

Conduct a Needs 

Assessment or Develop 

an Evaluation Plan
Page 32 GAO-15-335 Lifeline

we had previously recommended. In October 2010, we recommended 

that if FCC conducted a broadband pilot program, it should conduct a 

needs assessment and develop implementation and evaluation plans, 

which we noted are critical elements for the proper development of pilot 

programs.57

• well-defined, clear, and measurable objectives;

We noted that a needs assessment could provide information 

on the telecommunications needs of low-income households and the 

most cost-effective means to meet those needs. Although FCC did not 

publish a needs assessment, FCC officials said they consulted with 

stakeholders and reviewed research on low-income broadband adoption 

when designing the program. Well-developed plans for implementing and 

evaluating pilot programs include key features such as:

• criteria or standards for determining pilot program performance;

• clearly articulated methodology, including sound sampling methods, 

determination of appropriate sample size for the evaluation design, 

and a strategy for comparing the pilot results with other efforts;

• benchmarks to assess pilot success; and

• detailed evaluation time frames, roles, and responsibilities.58

We noted in our October 2010 report that such evaluation plans help 

ensure that evaluations will yield methodologically sound results and 

support effective program and policy decisions. FCC officials said they did 

not set out with an evaluation plan because they did not want to prejudge 

the results by setting benchmark targets ahead of time. FCC officials said 

they are optimistic that the information gathered from the pilot projects will 

enable FCC to make recommendations regarding how broadband could 

be incorporated in Lifeline.59

 57

However, FCC officials said they do not have 

GAO-11-11.

58GAO-11-11 and GAO, Tax Administration: IRS Needs to Strengthen Its Approach for 

Evaluating the SRFMI Data-Sharing Pilot Program, GAO-09-45 (Washington, D.C.: Nov. 

7, 2008).

59Under the Administrative Procedure Act, the law that governs agency rulemakings, FCC 

must give notice and seek public comment on any proposed regulations prior to their 

enactment through a Notice of Proposed Rulemaking. See 5 U.S.C. § 553. FCC officials 

noted that the commission may draw on many sources of information in crafting its final 

rule, such as outside studies. 
Page 33 GAO-15-335 Lifeline

set milestones, time frames, or specific deliverables for their evaluation of 

the program. In particular, according to FCC officials, the pilot projects 

completed offering subsidized service in October 2014, but FCC has not 

announced when or how it would share the results of the projects.

The pilot projects enrolled approximately one-tenth of the 74,000 lowincome consumers that FCC indicated would receive broadband through 

the pilot projects. According to FCC officials, at the peak of enrollment in 

October 2013, projects reported serving 7,425 consumers. FCC officials 

said that the 74,000 consumers noted in the December 2012 order 

adopting the pilot program was an estimate of consumers who could be 

served through the program given the available funding and was not a 

reliable number and should not be interpreted as a goal for the program. 

FCC officials said they calculated this figure by adding together the 

enrollment estimates provided by projects, which varied in their 

methodologies. For example, some projects estimated serving all eligible 

consumers, while others predicted that only a fraction of eligible 

consumers would enroll. Due to the low enrollment in the pilot program, a 

small fraction of the total money FCC authorized for the program was 

spent. Specifically, FCC officials report that about $1.7 million of the 

$13.8 million authorized was disbursed to projects.

FCC officials told us they do not view the pilot’s low enrollment as a 

problem, as the program sought variation and the data collected will still 

enable FCC to make comparisons across different treatments. In addition, 

FCC officials noted that although insufficient sample size could be a 

problem for some projects, most projects offered service to a sizable 

number of consumers, even if a relatively small portion of those offered 

service subsequently enrolled in the service. FCC officials believe 

information on the number of consumers offered service can provide 

relevant information regarding the subsidy’s effect on broadband 

adoption. However, the program did not survey consumers who were 

offered but did not enroll in the service and will not generate information 

on why these consumers did not enroll.

FCC and pilot project officials we spoke to noted that a preliminary finding 

from the pilot was that service offered at deeply discounted or free 

monthly rates had high participation. FCC officials and representatives 

from the four pilot projects we interviewed noted that broadband offered 

at no or the lowest cost per month resulted in the highest participation. 

For example, according to USAC data, one project that offered service at 

no monthly cost to the customer reported 100 percent of its 709 enrollees 

Broadband Pilot Projects 

Experienced Challenges, 

Including Lower-thanAnticipated Enrollment
Page 34 GAO-15-335 Lifeline

were enrolled in plans with no monthly cost as of October 2013, with no 

customers enrolled in its plans with a $20 monthly fee.60

In addition, representatives from the projects we interviewed noted other 

challenges, such as difficulties with marketing the program and getting 

customers to pay their bills. Representatives from all four pilot projects we 

interviewed noted they had difficulty marketing the program. For example, 

representatives from one pilot project we interviewed noted that without a 

coordinated national brand, it was difficult to overcome the perception 

among eligible consumers that the carrier was trying to sell a product. 

Further, representatives from three of the four projects we spoke to noted 

that eligible customers they contacted were unaware of or did not see the 

benefits of broadband. In addition, officials from three of the four pilot 

projects we interviewed noted the difficulty of getting customers to pay 

their monthly bills. For example, at one project, an official noted that all 

enrolled customers in the pilot lost service during the course of the project 

due to inability to pay. FCC officials noted that understanding these 

challenges faced by pilot projects will help the commission as it considers

whether and how to incorporate broadband into the Lifeline program.

This information 

raises questions about the feasibility of including broadband service in the 

Lifeline program, since on a nationwide scale, offering broadband service 

at no monthly cost would require significant resources and may conflict 

with FCC’s goal to minimize the contribution burden.

For the reasons noted above, FCC’s broadband pilot program 

experienced challenges. In particular, FCC did not adopt our previous 

recommendation to conduct a needs assessment or develop 

implementation and evaluation plans prior to establishing the program. 

Without such planning, FCC now faces difficulties in evaluating the 

program without established benchmarks for success. Further, FCC does 

not know why large numbers of eligible households did not enroll in the 

pilot projects. As noted earlier, FCC approved the introduction of nonfacilities-based wireless service into the Lifeline program without 

quantifying or estimating the potential cost increases, which contributed to 

a 167 percent increase in disbursements from 2008 to 2012. The risk of 

significant costs to the program are even greater given that FCC notes 

that a lesson learned from the broadband pilot program is that higher 

 60Although the monthly service cost was free for this plan, consumers had to pay an upfront cost. According to FCC officials, none of the pilot project plans offered completely 

free broadband service. 
Page 35 GAO-15-335 Lifeline

subsidies have the highest participation rates. However, the pilot projects 

are now substantially complete. Further, FCC officials noted that the pilot 

program is one of many factors the commission will consider when 

deciding whether and how to incorporate broadband into Lifeline, and to 

the extent the pilot program had flaws, those flaws will be taken into 

consideration.

Although FCC is establishing performance measures for the Lifeline 

program, these measures will not fully explain the program’s contribution 

toward its performance goals, including ensuring voice service for lowincome Americans and minimizing the contribution burden on consumers 

and businesses. FCC attributes the narrowing of the gap between lowincome and higher-income households’ telephone penetration rates over 

the past 30 years to the Lifeline program. However, several factors could 

play a role in this change, such as a reduction in the price of service over 

time. Program evaluation is a critical strategy that can allow agencies to 

assess the value or effectiveness of a program, among other things. 

Officials report that FCC has not conducted a program evaluation of 

Lifeline, noting that the program’s structure makes it difficult to determine 

a causal connection between the program and the penetration rate. 

However, FCC officials referenced academic studies that evaluated the 

impact of Lifeline and suggest that the program may be a rather inefficient 

and costly mechanism to increase telephone subscribership. This 

suggested lack of efficiency is a concern, particularly since FCC has 

proposed expanding the pool of households eligible for Lifeline. Such 

actions may increase overall penetration, but might do so at a high cost 

because households may enroll that already have phone service. Without 

evaluating the program, FCC does not have information on which to base 

program changes, such as expanding eligibility requirements. Taking 

such actions without evaluating the program raises concerns about the 

Lifeline program’s ability to meet its goals to increase telephone 

penetration rates among low-income households and to minimize the 

contribution burden.

We recommend that FCC conduct a program evaluation to determine the 

extent to which the Lifeline program is efficiently and effectively reaching 

its performance goals of ensuring the availability of voice service for lowincome Americans while minimizing the contribution burden on 

consumers and businesses.

Conclusions

Recommendation for 

Executive Action
Page 36 GAO-15-335 Lifeline

We provided a draft of this report to FCC and USAC for review and 

comment. In written comments, reproduced in appendix II, FCC agreed 

that it should evaluate the extent to which the program is efficiently and 

effectively reaching its performance goals, and said that FCC staff will 

address our recommendation. In addition, both FCC and USAC provided 

technical comments that we incorporated as appropriate. 

We are sending copies of this report to the Chairman of the Federal 

Communications Commission, the Chief Executive Officer of the 

Universal Service Administrative Company, and appropriate 

congressional committees. We will make copies available to others on 

request. In addition, the report will be available at no charge on the GAO 

website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact 

me at (202) 512-2834 or goldsteinm@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff that made major contributions to 

this report are listed in appendix III.

Sincerely yours,

Mark L. Goldstein

Director, Physical Infrastructure Issues

Agency Comments
Appendix I: Objectives, Scope, and 

Methodology

Page 37 GAO-15-335 Lifeline

The objectives of this report were to examine (1) the status of Lifeline 

reform efforts and the extent to which the Federal Communications 

Commission (FCC) has evaluated the effectiveness of the program; (2) 

how the Lifeline program verifies household eligibility and addresses 

associated privacy and data security; (3) the extent to which households 

participate in Lifeline and the challenges, if any, they face in accessing 

and retaining program benefits; and (4) how FCC plans to evaluate the 

broadband pilot program and the extent to which the pilot program will 

enable FCC to decide whether and how to include broadband in the 

Lifeline program.

To examine the status of Lifeline reforms, we reviewed documents and 

interviewed officials from FCC and the Universal Service Administrative 

Company (USAC). In particular, we reviewed the Lifeline Reform Order 

and other key guidance. To determine the extent to which FCC has 

evaluated the effectiveness of the program, we compared information 

collected from FCC to criteria on program evaluation identified from our 

previous work.1

 1

GAO, Program Evaluation: Strategies to Facilitate Agencies’ Use of Evaluation in 

Program Management and Policy Making, 

We also gained the perspective of a range of 

stakeholders through interviews with representatives from industry 

associations (CTIA-The Wireless Association and the United States 

Telecom Association), state associations (the National Association of 

State Utility Consumer Advocates and the National Association of 

Regulatory Utility Commissioners), and consumer advocates (AARP and 

the National Consumer Law Center). To analyze the extent to which the 

Lifeline-eligible population subscribes to telephone service and how this 

differs from higher income groups, we analyzed 2013 telephone service 

penetration rates reported by FCC from the Census Bureau’s Current 

Population Survey. To assess the reliability of the penetration data, we 

reviewed documentation from FCC; we determined that the data from 

these sources were sufficiently reliable for our purposes of comparing 

penetration rates across income levels. Lastly, we reviewed two 

academic studies that evaluated the impact of the Lifeline program and 

interviewed four economists involved with the studies regarding the 

studies’ methodologies and findings; we identified these studies through 

an interview with FCC. At least two GAO analysts and an economist 

GAO-13-570 (Washington, D.C.: June 26, 

2013). This report found that 80 percent of federal managers who had recent program 

evaluations reported that the evaluations contributed to assessing the program’s 

effectiveness or value.

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 38 GAO-15-335 Lifeline

reviewed the studies we cite in this report for methodological adequacy; 

the studies met our criteria for methodological quality.

To analyze how the Lifeline program verifies household eligibility, we 

reviewed documentation from FCC and a state association and 

conducted four state case studies—Alabama, Arizona, New York, and 

Wisconsin. We selected states to capture a range of Lifeline 

disbursement amounts and Lifeline participation rates, which we 

estimated as the number of Supplemental Nutrition Assistance Program 

(SNAP) subscribers in the state relative to the number of Lifeline 

subscribers. We also selected states that varied on whether or not the 

state had an eligibility database and geography in terms of number of 

urbanized areas. Within each selected state, we interviewed 

representatives from the public utility commission, the state consumer 

advocate, where available,2 and three wireless eligible 

telecommunications carriers (ETC), and collected supporting 

documentation such as comments filed to FCC. We selected the wireless 

ETCs based on the carrier’s market share of Lifeline participation in the 

state and the overall size of the company. See table 3 for the case study 

wireless ETCs we interviewed. In addition to these nine wireless ETCs, in 

order to gain the perspective of wireline ETCs, we collected 

documentation and interviewed representatives from the three largest 

nationwide providers: AT&T, Verizon, and CenturyLink. Although using 

these criteria allowed us to obtain information from a variety of states and 

ETCs, the findings from our case studies cannot be generalized to all 

states and ETCs because they were selected as part of a nonprobability 

sample. 

 2

We contacted but did not interview the Arizona Residential Utility Consumer Office and 

the Wisconsin Department of Agriculture, Trade, and Consumer Protection. In both cases, 

officials declined to participate and referred us to the state public utility commission.
Appendix I: Objectives, Scope, and 

Methodology

Page 39 GAO-15-335 Lifeline

Table 3: Selected Wireless Eligible Telecommunications Carriers (ETC) Interviewed 

by State

State Selected ETCs

Alabama I-Wireless

Virgin Mobile (Sprint)

TracFone Wireless

Arizona Boomerang Wireless

Smith Bagley 

Telrite Corporation

New York Cricket Wireless (AT&T)

I-Wireless

Virgin Mobile (Sprint)

Wisconsin Budget Prepay 

Nexus Communicationsa

TracFone Wireless

Source: GAO | GAO-15-335

a

Nexus Communications provided written responses to our interview questions.

To examine how the Lifeline program addresses privacy and data security 

associated with eligibility verification, we reviewed documentation and 

interviewed officials from FCC and USAC, including relevant 

requirements, policies, and guidance. We interviewed case study state 

officials and representatives from ETCs on the methods used to protect 

personal consumer information. In addition, we interviewed stakeholders 

about their views on data security and privacy.

To describe the extent to which eligible households participate in Lifeline, 

we analyzed data on Lifeline participation and disbursements. In 

particular, we collected data from USAC on Lifeline participation by 

quarter from 2008 through fourth quarter 2014 and disbursements by year 

from 2008 through 2014; we selected 2008 since it was the first year nonfacilities based wireless carriers offered Lifeline service. Using data from 

the Census Bureau’s Survey of Income and Program Participation (SIPP), 

we estimated the number of households that would satisfy the federal 

criteria to participate in Lifeline by calculating the number of households 

participating in Lifeline qualifying programs and the number of households 

at or below 135 percent of the federal poverty guidelines from 2008 

through 2012. We also used SIPP data to estimate the number of 

additional households that would be added if the Special Supplemental 

Nutrition Program for Women, Infants, and Children were added as a 

Lifeline qualifying program. In addition, we used SIPP data along with 
Appendix I: Objectives, Scope, and 

Methodology

Page 40 GAO-15-335 Lifeline

SNAP participation data reported by the United States Department of 

Agriculture (USDA) to analyze participation trends in the Lifelinequalifying programs from 2009 through 2013. To assess the reliability of 

the SIPP, SNAP, and USAC data, we reviewed documentation and 

interviewed officials from USAC and reviewed documentation from the 

Census Bureau and USDA; we determined that the data from these 

sources were sufficiently reliable for our purposes of reporting trends. In 

addition, we interviewed state officials, representatives from ETCs, 

consumer advocates, and other stakeholders on the causes for Lifeline 

participation trends.

To identify the challenges, if any, eligible households face in accessing 

and retaining program benefits, we interviewed stakeholders and 

representatives from the case-study states and ETCs. In addition, we 

reviewed FCC and USAC policies and processes that could influence 

household participation in Lifeline, including outreach, initial enrollment, 

and annual recertification. We reviewed data ETCs reported to FCC 

regarding the results of their recertification efforts.3

To determine how FCC plans to evaluate the broadband pilot program 

and the extent to which the pilot will enable FCC to promote adoption by 

eligible households, we reviewed policies and interviewed FCC officials 

regarding the pilot program, including the solicitation for applications and 

the December 2012 Order announcing the projects. We also selected four 

case studies—Nexus Communications, XChange Telecom Corporation, 

Virgin Mobile (an affiliate of Sprint), and Troy CableVision—from the 

universe of 14 broadband pilot projects. We selected these projects 

based on the technology types they used (wireline, wireless, or both); 

whether they offered digital literacy training or equipment discounts; and 

To analyze the 

challenge posed by annual recertification, we interviewed officials from 

FCC, representatives from USAC, and representatives from selected 

ETCs regarding practices and approaches to overcome challenges to 

participation, such as the relative merits of various enrollment and 

recertification methods.

 3

FCC requires that ETCs report their recertification results, including the number of 

customers de-enrolled due to non-response, through FCC Form 555. We attempted to 

analyze these results for 2012 and 2013. However, we found variation in how ETCs 

reported those data and determined the results were not reliable for our purposes. FCC 

has since revised Form 555 and its guidance for ETCs. According to FCC officials, the 

revisions should improve the quality of the data.
Appendix I: Objectives, Scope, and 

Methodology

Page 41 GAO-15-335 Lifeline

geographic diversity, including whether they offered service in urban or 

rural areas. For each case study project, we interviewed representatives4

We conducted this performance audit from May 2014 to March 2015 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

regarding the project’s expectations, results, and lessons learned. We 

also reviewed documentation from USAC on each case study project, 

including the application and preliminary results, such as number of 

participants. In addition, we interviewed consumer advocates and 

representatives from broadband adoption programs, such as Comcast’s 

Internet Essentials and CenturyLink’s Internet Basics, on best practices to 

promote broadband adoption among the low-income population.

 4

In the case of Nexus Communications, we received written responses.
Appendix II: Comments from the Federal 

Communications Commission

Page 42 GAO-15-335 Lifeline

Appendix II: Comments from the Federal 

Communications Commission
Appendix II: Comments from the Federal 

Communications Commission

Page 43 GAO-15-335 Lifeline
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 44 GAO-15-335 Lifeline

Mark L. Goldstein, (202) 512-2834 or goldsteinm@gao.gov

In addition to the contact named above, Michael Clements (Assistant 

Director), Amy Abramowitz, Melissa Bodeau, Antoine Clark, Tobias 

Gillett, Bert Japikse, Emily Larson, Grant Mallie, Joshua Ormond, Cheryl 

Peterson, and Kelly Rubin made key contributions to this report.

Appendix III: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(543343)
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