Fox Continues Falsely Claiming Low-Income Phone Program Is Taxpayer Funded

Fox News falsely claimed that the Lifeline program to provide low-income Americans with cell phone access is funded by taxpayers. In fact, it's funded entirely by fees charged to phone providers and other telecommunications companies, some of which pass on the costs to customers' phone bills.

On Fox & Friends August 27, Gretchen Carlson interviewed Detroit News editorial page editor Nolan Finley about the Lifeline program, which according to the Federal Communications Commission (FCC) “provides discounts on monthly telephone service for eligible low-income consumers to help ensure they have the opportunities and security that telephone service affords, including being able to connect to jobs, family, and 911 services.” The program also pays for free cell phones for some low-income Americans.

During the segment, both Carlson and Finley falsely asserted that the Lifeline program is taxpayer-funded, referring to it as an “entitlement program.” On-screen text also pushed this false claim:

Lifeline on-screen text

Despite these claims, often repeated by Fox News, the Lifeline program is not funded by taxpayers or the U.S. Treasury. As noted in May 2012, “Lifeline is funded by telecom customers who pay a universal service fee as part of their phone bills. The fee technically is not a tax but a cross subsidy, the rules of which are determined by the Federal Communications Commission.” The article further noted that the U.S. Treasury “does not collect or handle the funds” collected by the universal service fee.

The Maine Department of Health and Human Services further explained how the fee is assessed:

All telecommunications service providers and certain other providers of telecommunications must contribute to the federal USF based on a percentage of their interstate and international end-user telecommunications revenues. These companies include wireline phone companies, wireless phone companies, paging service companies, and certain Voice over Internet Protocol (VoIP) providers.

Some consumers may notice a “Universal Service” line item on their telephone bills. This line item appears when a company chooses to recover its USF contributions directly from its customers by billing them this charge. The FCC does not require this charge to be passed on to customers. Each company makes a business decision about whether and how to assess charges to recover its Universal Service costs. These charges usually appear as a percentage of the consumer's phone bill. Companies that choose to collect Universal Service fees from their customers cannot collect an amount that exceeds their contribution to the USF. They also cannot collect any fees from a Lifeline program participant.

Carlson's disregard for the facts was in direct contrast to her insistence, less than an hour before on Fox & Friends, that it was her Fox colleagues' “responsibility as journalists to try and keep the bar up high on intelligence to try and inform people of what's going on in the world.”