Free Cell Phones if You’re On Government Assistance?

Apparently, the marketers for “Reachout Wireless” didn’t do their homework.

Sending an application to see if one qualifies for a government assisted cellular service to a free-market think tank is either a sign of real chutzpah or sloppiness. We’re not sure which, but the Buckeye Institute received just such a solicitation.

Basically, the company is seeking out people on government assistance to put them on a program that offers a free cell phone and free monthly minutes.

Needless to say, this was a surprise to us. The very slick document with that promotes the word “FREE” everywhere it can.

After a quick bit of research, we found out it is all part of the Lifeline and Link Up programs that are administered by the Federal Communications Commission (FCC) through the Universal Service Fund (USF). The goal is to essentially offer universal phone access and applies to old-school wired phones as well. To qualify one must be at or below 135% of the Federal Poverty Guidelines or participate in one of several programs like Medicaid or Food Stamps.

The number of free minutes a person receives depends on what state they live in, though one can purchase additional minutes or services on top of the basic, subsidized package.

Now, here is the really interesting part.

According to Reachout Wireless, the USF:

“…is not a tax paid by U.S. taxpayers. The Universal Service Fund program is funded from contributions by telecommunications carriers collected in part from the Universal Service Charge applicable to all forms of interstate telecommunication services.”

Ok, so at least taxpayers aren’t on the hook paying for this subsidized service, right? Well, not so fast. According to the FCC,

“All telecommunications service providers and certain other providers of telecommunications must contribute to the federal USF based on a percentage of their end-user telecommunications revenues…

Some consumers may notice a “Universal Service” line item on their telephone bills. This line item appears when a company chooses to recover its USF contributions directly from its customers by billing them this charge. The FCC does not require this charge to be passed on to customers. Each company makes a business decision about whether and how to assess charges to recover its Universal Service costs.”

All phone providers have to pay into the USF and though they are not mandated by the FCC to pass this cost along to the consumer, how many people think that they don’t? While it is technically accurate that taxpayers aren’t paying for the USF through taxes, they are still paying for it in fees.

The Reachout Wireless materials try to make it sound like they are simply trying to help disadvantaged people get a job. On their mailer, it says,

“We believe the availability of a mobile telephone is crucial to the efforts of the unemployed seeking unemployment. Low-income consumers, without access to wireless phones are at a strategic disadvantage in comparison to mobile and connected higher income job applicants.”

In a sense this has some merit. An argument can certainly be made that making cell service available at a discounted rate is a good idea to help people stay connected and competitive in the workforce. But this raises a big question- is this the government’s responsibility?

Isn’t this why charity exists? Before the rise of the full-blown welfare state, a charity would probably come along and refurbish old cell phones while raising the money to help offset costs to those in need. That voluntary, charitable spirit is not exactly missing; but it becomes hard to keep it alive when the government rushes in and tries to play the knight in shining armor for everyone.

The bottom line here is that we should be looking to the private sector to respond to these kinds of needs. Government can’t do it all and it should certainly not let glossy marketers ride along while looking to feed at the trough.

Greg R. Lawson

About Greg R. Lawson

Greg R. Lawson is the Statehouse Liaison and Policy Analyst with the Buckeye Institute
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One comment on “Free Cell Phones if You’re On Government Assistance?

  1. Mark Henry on said:

    Thanks for the well-balanced article on the free cell phone program (Lifeline Assistance). There is one source all the info you could want on this program at our site:

    http://www.freegovernmentcellphones.net

    The government’s sites are, of course, confusing. So we try and clear it up for people. I think you’d find it informative.

    Another thing coming down the pike is $10 a month high-speed broadband for those who have a child on the National School Lunch program. But this is not subsidized by the government:

    http://www.freegovernmentcellphones.net/free-internet

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