Your tax dollars at work (sorta): free cell phones
Paying customers on hook for questionable freebie
When Katie Sharp called last week looking for help in tracking down her "free cell phone from the government," it took every liberal bone in my body to keep from responding: "just as soon as I get MY free cell phone from the government."
Still, I promised to look into it. Surely, I thought, the government isn't giving out free cell phones. Somebody must be trying to take advantage of poor Katie Sharp.
Well, I've looked into it, and I can report that everyone assures me the government is NOT giving out free cell phones.
What the government is doing is paying a subsidy to companies that are giving out free cell phones and providing free cell phone service to low-income households.
But don't get the wrong idea. These aren't your tax dollars at work. These are just "fees" assessed against telephone companies, most of whom just happen to pass along the fees to customers on their monthly bills, kind of like a tax.
In other words, it's true. We are now paying to provide free cell phones to poor people.
At least two companies are currently marketing this service heavily in the Chicago area. They each cite government estimates that there are more than 1 million households in Illinois -- 450,000 in Cook County alone -- that are eligible for free cell phone service.
Katie Sharp told me all her family and friends have obtained free phones in recent weeks.
For each of these customers, the companies receive a government subsidy in the range of $6.25 to $10 per month.
The money is paid from something called the Universal Service Fund, which is administered by something called the Universal Service Administrative Company, a nonprofit affiliate of the Federal Communications Commission.
The Universal Service Fund for many years has paid such subsidies through its Lifeline and Link Up subsidy programs, though primarily for landline users.
In the last year, however, the subsidy program has drawn the interest of pre-paid mobile service providers who can take the same subsidy and offer the service for free, which changes the landscape considerably.
TracFone Wireless, which is the biggest player in the market with its SafeLink service, launched in Illinois in September, offering customers a free phone (normal retail cost $10) and 60 free minutes of wireless service per month for qualifying individuals. A company spokesman said "the response has been overwhelming."
Nexus Communication, which is the company to which Katie Sharp applied through its ReachOut Wireless service, is offering a free phone and 50 free minutes of service per month.
Both companies say they require no contracts and allow unused minutes to roll over. Obviously, 50 to 60 minutes doesn't get you far, and customers must pay extra if they want additional minutes. But a TracFone spokesman said most don't.
As far as I can tell, and I've checked with the consumer groups, it truly is a free service as long as you don't buy extra minutes. Of course, "free" just means somebody else is paying for it. The wireless companies claim they are providing part of the subsidy, but that's obviously nonsense.
To be eligible, an applicant must receive either federal public housing assistance, food stamps, Supplemental Security Income, Low-Income Housing Energy Assistance, National School Lunch, Temporary Assistance for Needy Families or Medicaid.
Katie Sharp, who draws SSI, said ReachOut Wireless insists a phone was mailed to her home, but she says she never received it. When she called the phone number the company says it issued to her, a man answered and told her to stop wasting his minutes. A company rep assured me he will have somebody look into the matter. It's not hard to imagine scenarios under which free phones traveling through the mail might be misdirected.
Being a good liberal, I'm trying to be philosophical about all this. After all, the money comes from a decades-old program to provide subsidized landline phone service to the poor. If we recognize phone service as a vital human need, there's no sense getting hung up about the type of technology that delivers it.
Just the same, I'm questioning the need here. To discuss her problem with obtaining the free phone, Katie Sharp called me from her regular cell phone -- on which she says she has unlimited minutes. She says she wants the free phone more as a backup for emergencies.
When I mentioned that the phone program was for poor people, Katie corrected me, noting that "it doesn't really say you have to be poor," only that "you get some kind of government assistance."
Even she sees a difference.