Coming soon to California is a program that will furnish free cell phone service to the poor and the homeless.
Approved by the California Public Utilities Commission (PUC) in December, the program is an extension of the existing Lifeline program that subsidizes phone service for the poor.
Seeking to extend that service, the new program, which is still not operational, will include a free cell phone, 250 minutes of free voice minutes and 250 free text messages per month. Those who want additional minutes or texts can pay for them.
Assurance Wireless has been authorized by the PUC to offer the federal Lifeline plan in California. The company, which is owned by Sprint, already manages federal Lifeline programs in 36 states and serves over 17.6 million clients. In California, they estimate an additional 4.6 million residents could be eligible for the program.
Jayne Wallace, Director of Corporate Communications for Sprint, said they expect the free cell phone program to be up and running by late February or March of 2013.
She said those eligible for the program will include those with incomes below $15,000 or those receiving other kinds of assistance such as SSI, Medicaid, or food stamps. “The vast majority of people taking advantage of the program in other states are also part of an assistance plan,” she said.
Initiating the program in California
Wallace said that while the PUC has granted the company permission to offer the program in California, there are still some details to be worked out because the rules for Lifeline eligibility in California are different.
In other states, the company was able to give out free cell phones and start service immediately once a person was deemed eligible for the program. But in California, a person has to be a phone customer before applying for Lifeline.
She said the company has spent the last two years working with California officials on a compromise. They received some assistance over the summer when the FCC (Federal Communications Commission) changed the rule that requires people to have a residential address before they can get Lifeline. The new rule allows those who are homeless to use the address of a local shelter. The FCC also approved allowing multiple accounts at the same address such as a shelter or nursing home.
The California PUC has since adopted these changes but has continued the rule that people must be a phone customer before they can receive the free cell phone service. Wallace said they are now in the process of changing their business model to make the program work in California.
Their plan, at present, is to ask participants to pay $20 upfront for a basic cell phone. If the person is deemed eligible for the program, they will receive a $20 credit which they can use towards purchasing additional minutes or texts. On the other hand if the person is deemed ineligible for the program, they will keep the phone but will have to pay for the service.
The company also has to work out a distribution system for the phones. Wallace said they are talking to certain retail outlets, nonprofits, and social service agencies about making make a stock of phones available for those applying for the program.
Lifeline phone service
The Lifeline program — whether landline or wireless — is subsidized by fees assessed on a quarterly basis by the FCC on all telecommunications carriers and paid into a Universal Service Fund. As of end of third quarter of 2012, Wallace said the Universal Service Fee was 15.7 percent of a telecom’s interstate and end-user revenue. Some of that money goes into the federal fund and a portion goes to each state’s PUC.
Aside from what telecommunication carriers contribute, the public also pays to subsidize service to the poor via a surcharge on their monthly phone bills. In California, that surcharge is broken out into two amounts that are listed separately on the phone bill. One is a Federal Universal Service Fee and the second is a Universal Lifeline Telephone Service Surcharge that is the state charge.
California has been subsidizing the phone service for poor residents since 1985 which serves approximately 1.5 million people. But until now it has only covered landline phone service.
Wallace said Assurance Wireless will be tapping into the federal fund to subsidize the program but that, “there is a lot of money sitting in the California PUC fund” that could also be used to help pay for the program.
The company expects to earn $10 a month per user to offset the cost of providing cell phone service with the average cost of the program estimated at $100 per year per subscriber. The cost will all be paid for by the Universal Service Fund.
Wallace said other carriers may come into the market and offer wireless service to the poor now that the PUC has approved Assurance Wireless. Wallace mentioned Reachout Wireless and TracFone Wireless as possibilities but said that so far neither carrier has been approved by the PUC.
Candy bar phones
Wallace said there has been some criticism of the program after stories appeared of homeless and poor people receiving so-called “Obamaphones.”
“But our phones are the most basic phones you’ll find,” she said. “It’s a candy bar phone, not a smart phone. It doesn’t have all the bells and whistles.
“Sometimes you’ll hear people say we’re just giving drug dealers free phones. Believe me, they probably have much better phones nor would they go through the application process.”
She said companies like hers and proponents of the program see it merely as an extension of the Lifeline program.
“Not having a phone makes it very difficult in these days and times,” she said. “It’s not a luxury to have a basic cell phone to make calls and stay in touch with health care providers, housing and social service agencies, employers, and families in case of an emergency.”
People who want more information or who want to apply once the program is operational, can visit Assurance Wireless’s Website at assurancewireless.com/Public/Welcome.aspx
Contact Dawn Hodson at 530-344-5071 or [email protected] Follow @DHodsonMtDemo on Twitter.