Wednesday, April 16, 2014

Government phone abuse

From page A4 | January 04, 2013 | 2 Comments

If the state and federal governments would get out of our phone bills, phones would be so much more affordable that there wouldn’t be a need to collect for Lifeline service. Charges added onto the basic phone bill can easily add more than 50 percent to the cost of phone service.

At the top of our list is the federal tax, which was added on as a “luxury” tax in 1898 during the Spanish-American War and has gone on and off the phone bill at various times since, rising as high as 25 percent but going down to 2.74 percent at last report in 1983. This is just another sneaky money grab by the folks who, on New Year’s day just gave away tax credits for windmills, Hollywood filmmakers and cellulosic ethanol to continue to run automotive engines inefficiently. And that was a “bare bones” tax bill.

We would feel better about the federal tax if it were used only for emergency phone service restoration after hurricanes and earthquakes.

Another state and federal phone tax that is higher than it should be is for Lifeline service for the poor. The Federal Universal Service Fee is 69 cents and the California Universal Lifeline Telephone Surcharge is 29 cents.

As noted by a spokeswoman for a cell phone service, the California Public Utilities Commission has “a lot of money sitting” in its Lifeline Fund. That just indicates to us the state is collecting more money than it needs. More money than it can use. The state has had a rule that a person must have phone service to qualify for the Lifeline rate. And the Federal Communications Commission has up until now required that Lifeline service users have a residential address.

That made perfect sense. The subsidsized phone service was to insure a person had a “lifeline” to the outside – doctors, ambulance, police, nearby relatives.

But now Obamaphones are coming to California. The extra hefty federal lifeline charge will be used to give cell phones to those earning less than $15,000, those on Supplemental Social Security, Medicaid or food stamps. Oh, and free phones for the homeless.

To start the service there is a $20 charge that can be applied toward extra minutes. The free service allows 250 free cell phone minutes and 250 text messages a month. That’s a lot of air time that the rest of us are paying for.

There are 1.5 million people on Lifeline service in California. Adding Obamaphones to the mix will potentially bring another 4.6 million. Already 17.5 million people in 36 states have Obamaphones. There seemed to be a noticeable increase in Lifeline cell phones in the runup to the election. Recipients of these phones dubbed them Obamaphones.

Giving free cell phones to the homeless is a plan fraught with potential pitfalls — losss, theft, trading for liquor or drugs. We see only a small portion of the homeless actually using the phones to line up jobs or welfare department interviews.

This looks like another government abuse of the phones bills the rest of us pay.

Some additional charges include a State Regulatory Fee to fund the PUC, California High Cost Fund Surcharge A, which subsidizes phone service in 14 rural areas; California High Cost Fund B and California Advanced Services Fund, which subsidizes other high cost rural areas and provides Internet Service. So, how come so much of El Dorado County doesn’t have high-speed Internet? Finally, there is California Interconnect Fund Surcharge, which subsidizes phone service for schools, public hospitals and libraries. The third most expensive California tax is for the 911 emergency dispatch system, probably the best item on the whole phone bill.

The rest of the charges are just ripping us off.

Mountain Democrat


Discussion | 2 comments

  • arnold langeJanuary 03, 2013 - 11:25 am

    "Since the day Barack Obama was inaugurated, the term “The Obama Phone” has persisted. People say Obama is redistributing the wealth by starting a program that gives free cell phones – Obama phones – to the poor. Detractors of both President Obama and of the government’s long-standing phone assistance program have fought over this claim since 2009 with each side mudslinging “facts” at each other. " "Is the government giving out free cell phones? Yes. This part is true. They fund low end cell phones plans, and offset some of the cost of landline phones. The programs that authorize the phone distribution program are called Lifeline Assistance and Lifeline Link-Up. Lifeline Assistance helps pay monthly phone bills and Lifeline Link-Up helps pay the initial outlay for the phone and installation. The two programs are often lumped together and simply called Lifeline. These Lifeline cell phones are delivered through relatively new, government-approved cell phone companies like Safelink Wireless, Assurance Wireless and Reachout Wireless, among others. These companies were spun of off larger prepaid cell phone companies to specialize in the Lifeline program. Did Obama start the free phones program? The cell phone distribution program did begin in 2008, the year Obama was elected president, but that is a coincidence. Let’s look more closely at the facts. Notice that earlier we said Link-Up helps fund “installation.” What installation does a cell phone have? None. So why is installation part of Link-Up, which is under the Lifeline program umbrella? Because, the whole thing began back in 1996 when the Federal Communications Commission authorized the programs for landline phones. At that time it provided discounts on landline phones only, for obvious reasons. To this day the government provides discounts on landline phones for financially disadvantaged people in the United States and U.S. territories. The Link-Up portion helps with the installation and the Lifeline Assistance part helps with the monthly bills, to the tune of roughly ten dollars a month. So, the subsidization of phones began under President Clinton, and has continued under Presidents Bush and Obama. Over that time, the usage of cell phones rose and the costs came down. Assuming one believes in the Lifeline program in the first place, and remembering that the FCC has mandated the program, it only makes sense to expand the phone assistance program to include cell phones. So, in 2008 the first application of this program for mobile phones began when a company called Tracfone started their Safelink Wireless service in Tennessee. Aha, some say, that’s the same year Obama was elected! Well, that’s true. But the service in Tennessee was launched three months prior to Obama being elected. And that means the discussion and approval of the extension of the program occurred under President Bush’s watch. The Bush Phone, anyone?"

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  • JasonKJanuary 12, 2013 - 2:02 am

    While California's approval will increase the amount of phones that the Lifeline Assistance Plan provides, the state has arranged for a mitigant for fraud. With the $20 activation fee, it will reduce the amount of phones that are requested by the homeless and others who are truly down and out.

    Reply | Report abusive comment


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