The FCC describes the program thusly: “Lifeline provides discounts on monthly telephone service (wireline or wireless) for eligible consumers. These discounts average $9.25 per month, and may be more depending on the state.” What's crucial to remember is that this discount is paid by customers who aren't getting the discount, using money from the Universal Service Fund, which is financed by fees added to telephone bills.
Oklahoma is ripe for the plucking because Lifeline offers “enhanced” benefits to low-income residents living on tribal lands or lands that were formerly part of an Indian reservation. Telecom providers actually make the Universal Service Fund payments, but they're allowed to pass the amount on to customers. Which of course they have a responsibility (to shareholders) to do.
Beginning in January 1998, the “Gore tax” added a fee to long-distance bills to help pay, first, for the $200,000 annual salary of the head of the Schools and Libraries Corporation. The rest of the money was used by that entity to pay for Internet service at schools and libraries.
Other federal subsidies have covered the cost of high-speed Internet for individual customers, even in locations where no help was needed. The FCC suspects that 40 percent of Lifeline subscribers served by the top carriers were either ineligible for the program or failed to establish their eligibility.
This is a mess, but it's not atypical of government programs stuffed with good intentions but empty of good sense.