This week, after a number of news programs ran stories about free cell phones being distributed to welfare recipients, I received a bunch of inquiries asking whether it was true. Specifically, I was asked whether there were free “Obama phones” being distributed on the taxpayers’ nickel.
Here’s the scoop:
Yes, there is a law in place to help low-income customers have access to basic telephone service. It’s divided into two programs: Link-Up America and Lifeline.
Link-Up assists consumers with the installation costs of phone service. The program pays up to $30 of the cost of installation and up to $200 in the form of a one year, interest-free loan for additional installation costs.
Lifeline provides discounts on basic monthly service at a primary residence for qualified telephone customers. These discounts can be up to $10.00 per month or more for certain Native Americans. Generally, to qualify, your income must be at or below 135% of the federal poverty guidelines (these vary by location and size of family but for comparison, rings in at $22,350 for a family of four in the lower 48).
In some instances, coverage may include discounts for cell phone service instead of landlines at primary residences because realistically, cell phone service is less expensive in some areas than traditional service. Eligibility and type of program may vary from state to state – and this is why there is a flurry of confusion about the program being a product of the Obama administration. In Florida, for example, cell phone service was added to the existing program – in 2008, the year that Obama was elected to office. The conclusion from many folks was that it was a new federal program. It was not. It was an expansion of the existing program and implemented on a state by state basis.
The federal program dates back to 1996; it was part of the Telecommunications Act of 1996. The Act did a number of things, including increasing internet access to doctors and patients in rural hospitals (for consults with specialists); subsidizing internet and phone coverage for schools and libraries and providing free or subsidized coverage for families who can’t afford it so that they have links to emergency and government services. The Act was not taxpayer-funded… exactly. Taxpayers do pay for coverage but not via federal income taxes. Instead, the Act “mandated the creation of the universal service fund (USF) into which all telecommunications providers are required to contribute a percentage of their interstate and international end-user telecommunications revenues.” So that little fee on your phone bill labeled USF? That’s what you’re paying for.
As you can imagine, not everyone supports this idea. And yes, there has been abuse – you can read about efforts to curb abuse here (downloads as a pdf).
As a result, there is a bill in place to put an end to the practice. Introduced on November 18, 2011, by Rep. Tim Griffin (R-AR), the Stop Taxpayer Funded Cell Phones Act of 2011, has three co-sponsors, Rep. Rodney Alexander (R-LA), Rep. Bill Posey (R-FL) and Rep. Dennis Ross (R-FL). The text is as follows:
Prohibits a provider of commercial mobile communications service from receiving universal service support under specified provisions of the Communications Act of 1934 for the provision of such service through the Federal Communications Commission’s (FCC) Lifeline program (a program that provides discounts on monthly telephone service to qualifying low-income consumers).
The bill now sits in the House Committee on Energy and Commerce. I’m guessing it will sit awhile.
So there you have it. Yes, the program exists. No, it’s not an Obama administration program. Yes, taxpayers support it but no, not through federal income taxes.
What’s your take?
