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Federal program buys cell phones for the poor By Scott Canon
http://www.JewishWorldReview.com | (MCT) A cell phone in every pocket. And for growing numbers, it's free. "It's a sign of the times," said "When does a luxury become an absolute bare necessity?" Roughly one in 10 American households qualifies for a direct phone subsidy. In a fast-growing number of states, that equates to a free cell phone. It is both news and history — the extension of long-standing telephone subsidies for the poor, and cell carriers taking advantage of virtually guaranteed profits. While cell companies see the federal Lifeline program as a way to scoop up hundreds of millions of dollars in business, the move has raised questions about the way Americans subsidize each other's phone service. More than 2 million poor people have been given free handsets and prepaid cell service — albeit on the simplest of phones, often with barely an hour's talk time per month — as wireless carriers scramble for a toehold with a new class of customers. Access to a cell phone appears to be drawing more low-income families to subsidized service, and to the marketplace of carriers TracFone and It has also driven up spending on a long-standing subsidy. Between 2008 and 2009, spending on the phone program grew by nearly Phone subsidies for low-income families are projected to rise Advocates of the program, including the Yet in an age in which pay phones are an endangered species and finding work or managing child care and health care increasingly demands an electronic tether, they contend handing out cell phones might merely be pragmatic.
"And maybe that shouldn't matter, but it does," Craig said. "It's hard for people to get past the idea that somebody is getting a free phone, but it can still be a practical solution." For generations, fees have been added to long-distance telephone bills under federal law to steer money to the In 1984, the For years, the mandated phone discounts to low-income households provided about Then came TracFone, the prepaid subsidiary of American Movil — the carrier owned by Mexican telecom mogul Give that The "We're able to create a profit off it. We created the business model off of the Eligibility is the same as it has been for discounts to the poor that have been around for the last quarter-century. Although the income limits vary slightly by state, they are roughly the same as those for food stamps. The program is also open to the blind or those receiving disabled veteran benefits. (The income levels vary between states and allow for certain deductions, but the phones are generally available to a single person earning Each eligible household is entitled to one free phone and service. TracFone's SafeLink accounts allow unused minutes to carry over indefinitely. If the minutes are used up, the phone is still good for 911 calls, and customers can purchase more time in advance at The family cannot take both the cell service and a discount on its landline. After a year, the family must requalify for the service. If, say, mom has a job and the family earns too much to remain eligible for the service, it is free to keep the phone. That leaves TracFone — which provides the service by buying access to
Assurance is available in nine states. It aims to operate in all 50. Once approved by state utility commissions across the country, the "That is a good market and we think it has real promise," said Telecom analysts say that although profit margins won't approach what carriers can make off pricey, data-hungry smartphones, they still represent steady income. "There will be very little marketing costs. Customer care issues probably aren't that big," said Even as the free cell offers have gained quick popularity, their cost remains dwarfed by the money passed out to smaller phone companies to subsidize service in rural areas. In 2009, for instance, the Yet it is the cell phones that have begun to renew debate about money doled out from the fund. At the libertarian "People get these fees on their bills and don't really understand where it's going," he said. "At the same time they're now subsidizing the cell phone industry. You could also subsidize everything that a low-income family does — their computers, cars, everything." At the conservative "Is this really a role the government needs to be playing?" he said. "Why not just let the market take care of this?" The Those who work with the poor say a cell phone may be the difference between landing a job or not, hearing from a child's teacher, or being able to call for an ambulance. "When somebody is trying to get a job and keep their life together," said Every weekday JewishWorldReview.com publishes what many in the media and Washington consider "must-reading". Sign up for the daily JWR update. It's free. Just click here.
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Arnold Ahlert | |||||||||||
