Millions of Americans Who Didn't Qualify Claimed U.S. Lifeline Phones
February 13, 2013 9:53 AM
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Carriers say most people drop simply didn't respond to requests
The United States government has collected a tax on phone lines under the Lifeline program that began back in 1984. The purpose of this tax was to provide phone service for people who were unable to afford it on their own to ensure that these people weren't cut off from emergency services, jobs, or family. Every American citizen who has a phone line has paid into this Lifeline program.
Payouts in the program in 2008 amounted to $819 million. In 2012, the U.S. government spent $2.2 billion providing free phone service to low-income Americans.
In an effort to squash government waste, the FCC believed that many of the Americans who were claiming the free phone service were not eligible so it tightened the rules last year forcing carriers to verify that existing subscribers were in fact eligible.
Wall Street Journal
reports that far more subscribers to the program were dropped than expected. A review has shown that the top five carrier recipients of Lifeline support had a total of 41% of over 6 million subscribers that couldn't demonstrate their eligibility or simply didn't respond to requests for certification.
These top five carriers were AT&T, Telrite Corp, Tag Mobile USA, Verizon, and Virgin Mobile. Together these carriers account for 34% of all Lifeline subscribers as of May 2012. The Lifeline program is open to subscribers that meet the federal poverty guidelines, are on food stamps, Medicaid, or other assistance programs.
Previous program rules allowed consumers to certify themselves for free phone service without having to prove they met federal poverty guidelines.
Wall Street Journal
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2/13/2013 2:38:45 PM
Rukkian is okay with limited minutes, but has an issue with internet and texting. The minutes part I agree with. The internet part is false, AFAICS. The texting part is basically free. I therefore addressed his entire comment, not one part.
The point of my post is that if you're okay with 150 min, then I don't see why you're not okay with one extra minute equivalent (if even that) for the couple hundred free texts or whatever.
Suppose they get 300 free texts/mo, which is maybe 100kb after overhead. That's what, $0.10-0.20 of wireless bandwidth on low-use data plans (which in turn have rates 100x as high as monthly plans)?
2/13/2013 8:08:00 PM
Text messages are carried over the same signals cell phones use to maintain contact with local towers, which is why there's a fairly small character limit. It doesn't cost anything other than the usual overhead of maintaining cell phone coverage.
Of course, I don't blame anybody for not knowing that, because it used to be that they'd charge you for texts, which is a total rip-off (see "doesn't cost anything other than the usual overhead").
2/14/2013 9:46:27 AM
The texting part is basically free.
I think what you mean is the texting part should be free. It is an insignificant amount of data and is piggybacked on the tower maintenance signals. However, the truth is that it is not free. Lets take a look at two of the top five carriers involved in lifeline support: AT&T and Verizon (because they are well known).
AT&T offers two plans $20 unlimited and $.20 per message.
Verizon's lowest cost plan is $10 for 500 out of network texts.
While 300 free texts/mo may cost almost nothing to the carrier, the cheapest way to get there on Verizon is $10. On AT&T you're looking at at least $20.
Now I'm not sure exactly where these two rank on the list as there is no given ranking, but that's pretty expensive for two of the top five. If for some reason the government gets this for free or near so, then they should really be launching investigations to find out how these companies justify charging these prices to regular customers and end the pricing collusion.
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