$2 Billion Free Cell Phone Program - Life Line

[Daan]

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$2 Billion Free Cell Phone Program

Watch the beginning of this video.

http://www.youtube.com/watch?v=lRtrKeyMo_0

The proud young lady is bragging that she has about 30 free cell phones.

She claims she can come back tomorrow to the same van and get another free phone.


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[Buford]

Wow!!
But I'm not suprised...

[ybnormal]

Whoa, now there's a shock! And this is just one case of "entitlement" fraud. Here's another take:

http://online.wsj.com/article/SB1000...368122888.html

"A review of five top recipients of Lifeline support conducted by the FCC for the Journal showed that 41% of their more than six million subscribers either couldn't demonstrate their eligibility or didn't respond to requests for certification."

41%

Uh, Mr. Obama, you listening to this chit?


Definition of "free": funded by the hard-working taxpayers (a concept many can't seem to grasp)

QUESTION: Do they teach "how to get ova on 'da system" in school these days, or is it just passed down from generation to generation?

[sigmalady]

The FCC said it is investigating allegations that some Lifeline providers violated the rules, though it declined to comment on that probe. Carriers that don't properly confirm eligibility can be fined up to $150,000 for each violation for each day of a continuing violation, up to a maximum of $1.5 million. In egregious cases, a carrier could lose its ability to participate in the program.

Lifeline users have been a source of subscriber growth in the otherwise saturated U.S. market and helped fuel the expansion of companies like TracFone, now the fifth-largest U.S. wireless carrier.

The FCC until last year allowed consumers to self-certify, without requiring documentation, that they met federal poverty guidelines. Subscribers didn't have to recertify once they were enrolled in the program, and there were few checks on whether households signed up for more than one cellphone."The program rules we inherited were designed for the age of the rotary phone and failed to protect the program from abuse," FCC Chairman Julius Genachowski said.

Is it any surprise that the carriers wouldn't be eager to verify eligibility?

[bmorepunk]

Definition of "free": funded by the hard-working taxpayers (a concept many can't seem to grasp)

This is not taxpayer funded, it's a cross-subsidy.

I don't have to pay it, nor do I have to pay any taxes or fees on my cell phone.

[Daan]

This is not taxpayer funded, it's a cross-subsidy.

I don't have to pay it, nor do I have to pay any taxes or fees on my cell phone.

About 38 seconds into the video it's claimed that the "universal access" or "universal service" fee on each cell phone bill is the source of funds for this program.

Not true? Then where does the 2 $billion come from?

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[bmorepunk]

The Universal Service Fund is a mandatory program levied against eligible telecommunications providers to provide subsidies to high cost, low income, rural health care, and schools/libraries programs. The telecommunications providers are allowed to charge a direct fee, but are not required to (they could simply build the cost into the price without putting it as a separate line item on the bill).

This money is not collected and controlled by the government. The FCC sets rules on what the required percentage of revenue is and a government corporation oversees disbursements. This is why it's a cross subsidy and not a tax.

You don't have to pay it.

[Daan]

The Universal Service Fund is a mandatory program levied against eligible telecommunications providers to provide subsidies to high cost, low income, rural health care, and schools/libraries programs. The telecommunications providers are allowed to charge a direct fee, but are not required to (they could simply build the cost into the price without putting it as a separate line item on the bill).

This money is not collected and controlled by the government. The FCC sets rules on what the required percentage of revenue is and a government corporation oversees disbursements. This is why it's a cross subsidy and not a tax.

You don't have to pay it.

Just checked my monthly T-Mobile bill and each of our cell phone numbers has a "Universal Service Fee". I don't see anything on my bill that says it's optional and I can deduct it from the monthly payment.

I don't have to pay it? Says who?

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[Daan]

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The video describes the program as free cell phones and free minutes that the Government mandates be provided to people who can document that they can't afford.

The cost to the telecom companies, it is claimed, is recovered through that "Universal Service Fee" they are allowed to charge their paying customers.

Apparently the program is so poorly monitored that dishonest people can get many free phones they are not "entitled" to and the cost rising into the $billions per year is actually paid by you and me.

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[bmorepunk]

Paid for by you, but not me.

[Daan]

Paid for by you, but not me.

Cute. Do you have a free cell phone?

So which telecom companies are not charging the "Universal Service Fee"?

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[bmorepunk]

The major cell phone providers don't if you use their prepaid service. Maryland subscribers who use postpaid pay roughly a 20% premium in taxes and fees (typical of most states) every month that I don't have to because I use prepaid. For example, Virgin Mobile has a $35 a month plan that gives you unlimited data, unlimited texts, and 300 minutes of talk. That's $35 straight up in Maryland if you buy the prepaid cards out of state (you can even get them at a discount and actually pay closer to $33).

First people think they are getting a "great deal" because their phones are "discounted" on a 2-year contract. If they actually ran the numbers, they could buy the phone at full retail (even a $700 iPhone), go on a prepaid plan that's comparable to their postpaid plan, and save money on the whole deal. Then they get hammered with a 20% premium on top of that for taxes and fees.

There's a stigma that prepaid phones are for poor people. This stigma saves me a lot of money, because if people were using prepaid in large numbers taxes and fees would start showing up.

[Daan]

The major cell phone providers don't if you use their prepaid service. Maryland subscribers who use postpaid pay roughly a 20% premium in taxes and fees (typical of most states) every month that I don't have to because I use prepaid. For example, Virgin Mobile has a $35 a month plan that gives you unlimited data, unlimited texts, and 300 minutes of talk. That's $35 straight up in Maryland if you buy the prepaid cards out of state (you can even get them at a discount and actually pay closer to $33).

First people think they are getting a "great deal" because their phones are "discounted" on a 2-year contract. If they actually ran the numbers, they could buy the phone at full retail (even a $700 iPhone), go on a prepaid plan that's comparable to their postpaid plan, and save money on the whole deal. Then they get hammered with a 20% premium on top of that for taxes and fees.

There's a stigma that prepaid phones are for poor people. This stigma saves me a lot of money, because if people were using prepaid in large numbers taxes and fees would start showing up.

This thread is about the abuse of the mandated government program to provide the so-called "Life Line" of free cell phone and free minutes to people who can't afford to pay for it.

The telecom companies are recovering their cost with the "Universal Service Fee" charge. Call it a fee or a tax but the reality is that it is another welfare program that is being abused by people who can and should be paying for their cell phone and service.

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[Morgan208]

It's the same story over and over. A well meaning program ends up riddled with fraud.

[bmorepunk]

This thread is about the abuse of the mandated government program to provide the so-called "Life Line" of free cell phone and free minutes to people who can't afford to pay for it.

The telecom companies are recovering their cost with the "Universal Service Fee" charge. Call it a fee or a tax but the reality is that it is another welfare program that is being abused by people who can and should be paying for their cell phone and service.

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Did you notice that this video is a year old? Congressman Griffin's bill was introduced in November 2011. He stated that he wanted to "reform" the setup but the bill clearly stated that it was going to eliminate the program entirely by stripping out the cross-subsidy mechanism.

Ever since this started to be a big news item about a year and a half ago, the FCC has been putting in new requirements and oversight in order to substantially reduce fraud. For example, the FCC now requires that anyone in the program who hasn't certified their eligibility to be de-enrolled. The FCC found last year that nearly 1/3 of the Lifeline subscribers did not re-certify under these requirements.

[sigmalady]

This thread is about the abuse of the mandated government program to provide the so-called "Life Line" of free cell phone and free minutes to people who can't afford to pay for it.

The telecom companies are recovering their cost with the "Universal Service Fee" charge. Call it a fee or a tax but the reality is that it is another welfare program that is being abused by people who can and should be paying for their cell phone and service.

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I don't disagree with you. Dishonest people abuse the program with the complicity of the telecom companies.

[Daan]

Did you notice that this video is a year old? Congressman Griffin's bill was introduced in November 2011. He stated that he wanted to "reform" the setup but the bill clearly stated that it was going to eliminate the program entirely by stripping out the cross-subsidy mechanism.

Ever since this started to be a big news item about a year and a half ago, the FCC has been putting in new requirements and oversight in order to substantially reduce fraud. For example, the FCC now requires that anyone in the program who hasn't certified their eligibility to be de-enrolled. The FCC found last year that nearly 1/3 of the Lifeline subscribers did not re-certify under these requirements.

This article is dated June of 2012:

Free Phones Costing Taxpayers $2.1 Billion Per Year
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You're probably familiar with the food stamp program which grew from $35 billion in 2008 to $75 billion last year.

A program called Lifeline provides free phones and free monthly minutes to anyone on food stamps, WIC, Medicaid, Head Start, and several other government programs. And just like food stamps, Lifeline (aka "phone stamps") has been growing by leaps and bounds since 2008, at significant cost to taxpayers.

Lifeline was started in the mid-'80s to reduce the cost of phone service to rural and needy customers. The program's costs are covered by a tax included on every monthly phone bill called the Universal Service Charge. The program eventually grew to include discounted cell service but took off in 2009, partly because TracFone announced a new program whereby eligible individuals could get a free phone and free monthly minutes.

And the freebies won't end with basic calling service. As part of the effort to extend broadband, the FCC has been discussing making broadband service part of the Lifeline program. In other words, taxpayers could soon be paying for smartphone features on these free government phones.

End Quote


I have little faith in the Government's ability to cure waste, fraud, and abuse.

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[Daan]

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Here's another article by the WSJ dated 2/11/2013.

http://online.wsj.com/article/SB1000...368122888.html

It does say that the FCC has new verification procedures that would save $2 billion over the next three years.

Is that government speak for the rate of increase would be less by that amount?

Sorry, but the government has a reputation of telling us that slower rates of increase are "cuts".

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[Internet]

AT&T Universal fee: $4.30!

Thanks Obama.

[bmorepunk]

Thanks Obama.

Regardless of abuse of the fund, it's not a program started or expanded by the Obama Administration.