Government Programs

These states depend on ‘Obama phone’ the most

The Federal Communications Commission (FCC) wants to expand Lifeline, a government program that subsidizes telephone service for the poor. Yet very little is understood about the people who depend on the assistance.

California, New York and Florida are among the states that depend on the subsidy the most. The Golden State tops the list with about 1.5 million subscribers, according to data from the Universal Service Administrative Company (USAC), while the Empire State has just under 1 million. Wyoming and South Dakota have the fewest subscribers.

States and tribal territories that offer both of the top Lifeline providers—Assurance Wireless, a subsidiary of Virgin Mobile, and SafeLink Wireless, a subsidy of TracFone—tend to have the largest subscriber figures, according to Philip Colvin of USAC, which serves as the program's administrator.

He added that those mobile providers are the most aggressive at promoting Lifeline plans, which is probably why they have the most subscribers.

A lifeline for 'very poor' citizens

Lifeline subsidizes wireline and mobile service for the poor, and served at least 12 million low-income Americans last year. The program is often referred to—often derisively as the "Obama phone" because although the program technically began in 1985, disbursements grew to $2.2 billion during President Barack Obama's first term. The program is funded by a universal service fee on consumers' phone bills, and last week the FCC expanded to include Internet use.

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To qualify for Lifeline assistance applicants be enrolled in some type of public assistance program, or be at or below 135 percent of the federal poverty line.

The law only permits one subsidy per household. Users may use the subsidy, $9.25 a month, for either wireline or mobile service, but not both. Those in U.S. tribal areas are given an additional subsidy of $25 a month, according to Colvin of USAC.

Despite its moniker, it was actually created under President Ronald Reagan in 1985 to subsidize phone service. Under the administration of George W. Bush, it was expanded to cover wireless service. The program has no shortage of critics among government waste watchdogs, who see Lifeline as a symbol of an overweening federal government. Still, others insist the program is vital for needy communities who wouldn't have phone access otherwise.

Low income residents apply for free phone service from Assurance Wireless at Kelly Cullen Community Center in San Francisco.
Assurance Wireless

Lifeline recipients "by definition are very poor" and they don't have access to other telecommunication services, said Ken McEldowney, executive director of the Consumer Action advocacy group. The majority speak English, but there's a large number of them who are Spanish speaking, according to McEldowney.

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The program aids a "complete cross section of low-income consumers, McEldowney says. However, there are also a large number of Asian Americans and senior citizens who receive Lifeline assistance, he added, noting that the demographics change depending on the state.

Advocates of the Lifeline's expansion to Web service say it will help to narrow the digital divide between the the rich and the poor. Critics, on the other hand, have highlighted its flaws—mainly the growth in fraud and abuse—by saying the FCC should focus on improving the program before expanding it.

However, social advocates say the widening digital divide warrants the government's intervention. Nearly 30 percent of Americans don't have broadband at home and low-income consumers disproportionately lack access, according to the Pew Research Center.

"Those without home broadband are disproportionately poor, Latino, African American, Native American, rural, and/or seniors," said Jessica Gonzalez, executive vice president the National Hispanic Media Coalition, in a statement.

"Cost is the main barrier to adoption for people under sixty-five years of age," Gonzalez said. "At the same time, broadband is critical to nearly every facet of modern American life, including education, employment, healthcare, civic participation and more."

She applauded the FCC's outline for modernizing Lifeline for the digital age.