The Obama Phone - Free Cell Phones for Welfare Recipients

Summary:
Protest message claims that US President Obama has established a program in which welfare recipients are eligible to receive a free cell phone and a free monthly phone allowance (Full commentary below).



Status:
Misleading and inaccurate - Programs to provide discounted telephone services do exist, but they have been in place for many years and were not initiated by the Obama administration.

Example:(Submitted, November 2009)


Commentary:
This protest email claims that US President Obama has initiated a scheme in which low-income earners can receive a free cell phone along with a monthly phone allowance of around 70 minutes. According to the message the "Obama Phone" scheme is being funded by US taxpayers.

©iStockphoto.com/Jakub Semeniuk While programs to provide free or discounted telephone services do exist, they have been in place for many years and were not initiated by President Obama.

However, the information in the message is misleading and inaccurate. While there is a scheme that provides free or discounted phone services for certain eligible low income earners, it has been in place for many years and has nothing whatsoever to do with President Obama. Nor is the scheme directly funded by taxpayers as claimed in the message.

The subsidy scheme consists of two programs, Lifeline Assistance and Link-Up America that come under the control of the Federal Communications Commission (FCC). The current form of the scheme began more than a decade ago via an act of Congress, the Telecommunications Act of 1996. A May 1997 news release about the act states:

The 1996 Act requires the Commission and the states to ensure that affordable, quality, telecommunications services are available to all Americans. Consistent with Congress's mandate, the Commission sets in motion universal service policies that will ensure all Americans, including low-income consumers and those who live in rural, insular, high cost areas, shall have affordable service and will help to connect eligible schools, libraries, and rural health care providers to the global telecommunications network. The new plan fully funds Congress's universal service goals, while ensuring adequate incentives for continued investment in the local telecommunications network. The Order also ensures that rural, small, and high cost telephone companies continue to receive the necessary universal service support.

Information about the programs on the FCC website notes:

Telephone service is considered a necessity for daily modern life. Yet the cost of starting and maintaining such service may be too high for some consumers. Under Congressional mandate, the federal Universal Service Fund (USF) supports the Lifeline Assistance and Link-Up America programs. These programs provide discounts on basic monthly service and initial installation or activation fees for telephone service at the primary residence to income-eligible consumers. The Federal Communications Commission (FCC), with the help of the Universal Service Administrative Company (USAC), administers the USF.

Moreover, even before the 1996 act was initiated, other informal programs to provide universal telecommunications service were in place including a version of the Lifeline program.

And, while the programs are overseen by Federal Government entity, the FCC, they are not directly funded by taxpayers as claimed in the message. The May 1997 FCC article explains:

All telecommunications service providers and certain other providers of telecommunications must contribute to the federal USF based on a percentage of their interstate and international end-user telecommunications revenues. These companies include wireline phone companies, wireless phone companies, paging service companies, and certain Voice over Internet Protocol (VoIP) providers.

Some consumers may notice a “Universal Service” line item on their telephone bills. This line item appears when a company chooses to recover its USF contributions directly from its customers by billing them this charge. The FCC does not require this charge to be passed on to customers. Each company makes a business decision about whether and how to assess charges to recover its Universal Service costs. These charges usually appear as a percentage of the consumer’s phone bill. Companies that choose to collect Universal Service fees from their customers cannot collect an amount that exceeds their contribution to the USF. They also cannot collect any fees from a Lifeline program participant.

The Universal Service Fund is administrated by the Universal Service Administrative Company (USAC), "an independent, not-for-profit corporation designated as the administrator of the federal Universal Service Fund by the Federal Communications Commission (FCC)".

Safelink Wireless, the program referred to in the email, does indeed provide a free cell phone to eligible clients via the Lifeline program, along with around 68 free minutes each month. The Safelink Wireless program is operated by TracFone Wireless, an América Móvil subsidiary based in Florida. Information on the Safelink Wireless website notes:

Over twenty years ago, the Federal Communications Commission (FCC) created the Lifeline Program to help guarantee Universal Service in the US. The Lifeline Program provides discounted telephone service to low-income families and individuals that otherwise would find it difficult to pay for telephone service. To qualify for Lifeline Support, Families or individuals have to be either enrolled in a State social service program or qualify under the U.S. Federal Poverty Guidelines. Eligibility varies by state.

In April 2008, the FCC approved TracFone as an Eligible Telecommunications Carrier (ETC) to provide Lifeline Service in 11 states. Subsequently, TracFone has been approved in an additional 9 states and is currently providing service in 19 states. Today, there are over 1,700 ETC’s providing Lifeline service throughout the United States.

Thus, the claim that it was the Obama administration that created the scheme is clearly untrue. Even Safelink Wireless, the specific program referred to in the message, was initiated before Obama came to power, during the administration of President George Bush. Calling the free cell phones provided by Safelink Wireless "Obama Phones" is therefore misleading to say the least. As Justin Bank of FactCheck.org pithily puts it:

The president has no direct impact on the program, and one could hardly call these devices "Obama Phones," as the e-mail author does. This specific program, SafeLink, started under President George Bush, with grants from an independent company created under President Bill Clinton, which was a legacy of an act passed under President Franklin Roosevelt, which was influenced by an agreement reached between telecommunications companies and the administration of President Woodrow Wilson.

Wilson Phones, anyone?

Of course, it is accurate to state that many US telecommunications consumers do indirectly fund the phone service programs via Universal Service Fees collected by their phone service providers. However, it is not true that taxpayer money is being redistributed to fund the programs as suggested in the email.



comments powered by Disqus

References:
FCC - COMMISSION IMPLEMENTS TELECOM ACT'S UNIVERSAL SERVICE PROVISIONS
FCC - Lifeline and Link-Up
Universal Service Administrative Company (USAC)
The Obama Phone?

Last updated: 18th November 2009
First published: 18th November 2009

Write-up by Brett M. Christensen

Similar Articles:
Obama Muslim Stamp - USPS Muslim Holiday Stamp Release Protest Message
Presidential Determination Rumour - Palestinian Resettlement in US
Safelink Wireless
Safelink - About the FCC Lifeline Program