My husband, for several weeks, had been trying to tell me about a program for free wireless service that he heard about on the radio while he was driving around town in the pickup truck. I did my best to ignore him, for as long as I could, thinking that it was just another gimmick. I finally paid attention to what he was saying after he put that sweet crease in the side of the truck at the feed store, and I was actually worried as to what extremes he would go to get me to listen. I asked him for the details and did a little search on the web. Maybe I’m late to this rodeo, but I was astounded by my own ignorance regarding something that has been around for a very long time, and what I, just as ignorantly, have been underwriting for just as long.
In 1985, the FCC implemented a program known as the Lifeline Assistance Program. It’s purpose, originally was to offer discounted land-line service for low-income Americans. In order to qualify, the guidelines required that the income for a family of four could not exceed $30,000. It was a good program, with noble beginnings, but, like most things run by the government, it turned into a whole different beast.
In 1997, the FCC expanded the service and the Universal Service Order began, and as an offshoot, so did the Linkup program. By more than just coincidence, the Statistical Abstract which collects information from the Census Bureau, reflected that wireless services in the United States had approximately 55 million customers. Although the Census Bureau will swear up and down that they do not share their information with anyone, those clever telecommunications folks became aware of these numbers and saw some real opportunities.
The Universal Service program is one in which wireless companies are reimbursed for the costs of providing service to low income residents. This subsidy is paid for by the Universal Service fee which is included in the bills of everyone who subscribes to a land-line service, wireless service or both. If you are anything like me, and can’t figure out what half of those charges, fees and taxes are about, well, that explains one of them.
The lack of oversight, combined with the profits being realized, made this program ripe for abuse. No one was paying attention until Senator Claire McCaskill (D – MO) received an invitation to signup for the program. This particular invitation came from one of the subsidiaries of America Movil, one of the largest wireless providers in Latin America, the United States and the Caribbean. It is also owned by a man who has been named by Forbes magazine as the richest in the world, Carlos Slim. The company promised her up to 250 free minutes per month, and it also said that she only had to check a few boxes to receive the service. I took a look at the application and there isn’t very much to fill in. Simply check what type of government assistance you receive and verify that you, or any of you family, are not already receiving Lifeline from any other provider. Now you fill in some personal information, pick what plan you want, and if the particular provider finds you meet the requirements, your cellphone will be in the mail.
The problem with the program reared its’ ugly head by accident – Senator McCaskill just happens to head a subcommittee – under the Homeland Security and Governmental Affairs Committee – which is Contracting Oversight. That was a lucky thing for us – not so much for the wireless industry. Her investigation into the program uncovered a number of interesting details. It seems, while nobody was watching, that the number of these subsidized wireless accounts had grown to an astonishing 12.5 million, and that some of the account holders had more than two of them to their names – so much for the honor system and checking those boxes. The cost of the program had risen from $772 million in 2008 to $1.6 billion in 2011.
The good senator has decided that, perhaps, some changes needed to be made, particularly given the recent rhetoric about government’s wasteful spending and has now issued the Universal Service Reform Order. These changes, in part, will include:
- The creation of a National Lifeline Accountability Database. This database will keep a record of all customers of the Lifeline Program, so that customers cannot apply under separate carriers to obtain additional phones.
- The creation of eligibility databases with data supplied from federal benefit programs. This database will allow the wireless companies operating under the Lifeline program to automatically determine initial and ongoing eligibility of their customers. Previously, customers in some states were told to certify annually whether they were still eligible for the program.
- Establishing and enforcing a one-per-household rule. This will not apply to separate families living at the same address. Customers with more than one account will be subject to civil and/or criminal penalties.
- Companies will also be required to close the accounts of Lifeline customers which have been inactive for 60 days.
Senator McCaskill and her fellow subcommittee members are claiming savings of up to $33 million since they began their investigation. They are projecting that further oversight, together with full implementation of the suggested changes will reduce costs to the program by $200 million in 2012 and $2 billion over the next three 3 years. Before we get our hopes up, however, cable companies are now offering subsidized broadband for low income families. I guess I have had my own light bulb moment as to why Atlantic Broadband has been working 7 days a week, stringing cable out here and sticking fliers in front doors, offering all sorts of discounted bundles. It looks like those savings have already found a new home, and maybe that wireless invitation wasn’t a coincidence after all.
I’m going to look at the rest of my utility bills. Then, maybe, I’ll do some reading – by candlelight.