Cell phone bill fee offers free phone to others

Most people qualify for Lifeline because they are already enrolled in government assistance, but anyone who makes 135% or lower of the federal poverty level also qualifies.
Most people qualify for Lifeline because they are already enrolled in government assistance, but anyone who makes 135% or lower of the federal poverty level also qualifies.

MYRTLE BEACH, SC (WMBF) These days almost everyone has a cell phone or a land line, or both, which means everyone, including those with pre-paid plans, is paying a Universal Service Fee (USF) on the monthly bill. That fee is easy to overlook, but it adds up to nearly $2 billion a year going to the U.S. government's Lifeline program, which helps the poor get phone service.

Lifeline is a program that some people say is understandable assistance, while others debate the program has gotten too big and out of control.

"I would probably have to spend over 200 and some dollars on a regular cell phone each month, and I don't have 200 and some dollars," commented Lifeline user Melanie Rockwell.

Lifeline started in the mid 80s as a discount to people who could not afford a landline phone. Since 2005, the program has expanded to provide free cell phones with free or discounted monthly plans. It has become more widespread in recent years, which may explain why some people associate the program with President Barack Obama. South Carolina began Lifeline's cell phone service in 2010.

"Because I can't afford to get a cell phone, it's very useful with my daughter being in school," Rockwell said. "If I'm out and about her teachers can call me on it. Her doctor can call me. My mother can call me if she needs me. If I have an emergency it always has 911 for free. Even if you're out of minutes you can always call 911."

Rockwell said just recently her daughter fell on the school playground and needed stitches. Teachers called her on her cell phone so she could take her daughter to the hospital.

As with most Lifeline participants, Rockwell qualifies because she is already in another federal assistance program, such as food stamps. Anyone who makes 135% or lower of the federal poverty level also qualifies. This year nearly 140,000 South Carolinians are using Lifeline.

"It's just turned into another part of the nanny state, I would call it, where everybody seems to want everything for free," argues self-described government watchdog Ronald Hughes.

He believes Lifeline has moved beyond its intended purpose, and reported abuse across the country only fuels his fire.

There is a one-per-household limit for Lifeline. People can either get a discount on a landline or a free cell phone. However, in some states people have gotten multiple free phones.

Some companies have been aggressive in getting more customers, even those who do not qualify, because they get reimbursed for each customer through the federal and state Universal Service Fees regular customers pay.

In South Carolina the kickback breaks down to $9.25 from the federal USF and $3.50 from the state USF. So the companies in South Carolina get $12.75 per customer each year, which adds up to $1.7 million for the companies operating in South Carolina.

"It was well-intentioned when it started," Hughes commented. "The problem is what it's morphed into."

Nonetheless, Dawn Hipp with South Carolina's Office of Regulatory Staff defends how well Lifeline operates in South Carolina. She is the director of the agency's Telecommunications, Transportation and Water/Wastewater division.

"We have not seen that type of [abusive] behavior here in South Carolina," Hipp said. "We have seen it in other states."

Hipp said South Carolina has been more restrictive than the Federal Communications Commission's national guidelines, and her office keeps a close eye on the lifeline providers.

"It becomes a numbers game at a certain point, so we're looking to make sure that they're getting the exact reimbursement that they should - trying to close the loop, which is something that the FCC hasn't been able to do," adds Hipp.

Hipp admits FCC guidelines were loose, which left states to fill the gap and prevent fraud. Some states have not done as well as South Carolina she said.

Also, there is still the possibility that small-scale abuse of Lifeline is happening in South Carolina, even if the Office of Regulatory Staff has not heard about it.

That is why just this year, the FCC introduced an overhaul of Lifeline that is supposed to cut down on spending and catch fraud in every state. The goal for 2012 is to reduce the cost by $200 million nationwide. New databases will show who is eligible and who already has a free phone.

Hipp thinks the overhaul will make big improvements to a program she believes is needed.

"Every dollar that we save a consumer here through the Lifeline program is a dollar they can spend in another location - they can spend for medication, they can spend for groceries, towards independence or whatever their end-goal is," Hipp said.

"What I can offer is a balance, that you're not paying any more in taxes or USF fees than you should have to, the bare minimum to support what's going on in South Carolina for those individuals that need it," she claims.

However, some say the overhaul cannot do enough to get Lifeline on track. They believe the program is simply too big and that most of it is unnecessary.

"Something else for free, and I just feel there needs to be some limits to it," Hughes expresses.

Even Rockwell admitted some apparent waste is nearly impossible to prevent. She pointed to some people who qualify for Lifeline, yet still buy their own personal cell phones.

"[I see] people are on their smart phone and then they have their little Safelink phone too," Rockwell said. "I'm like, 'there's someone who could really use that'."

Now a bill is under consideration in Washington, D.C., that would take the program back to its original format - land line discounts only and no free cell phones. Arkansas Congressman Tim Griffin proposed the bill.

Even as some people such as Congressman Griffin stand up to cut Lifeline, the FCC is working to put some Universal Service Fee money toward providing broadband internet service for low-income Americans.

So with the bill under consideration to make drastic cuts, now is the time to call for lawmakers to consider if the cell phone service is important and worth saving or if it needs to go away completely.

Copyright 2012 WMBF News. All rights reserved.