Posted: 3:52 p.m. Friday, Aug. 17, 2012

1 million Ohioans using free phone program

Fees on phone bills pay for $1.5 billion national Lifeline program

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Subsidized cell phones photo
Aliesa Azbill of Dayton uses a government-subsidized cell phone.

By Josh Sweigart

Staff Writer

A program that provides subsidized phone service to low-income individuals has nearly doubled in size in Ohio in the past year — now covering more than a million people. At the same time, federal officials say they’re reining in waste, fraud and abuse in the program.

The Federal Communications Commission announced recently that reforms have saved $43 million since January and are expected to save $200 million by year’s end. In Ohio, savings are expected to be $2.9 million a year.

The savings were realized in part because the government gave out fewer cellphones to ineligible people and took steps to avoid issuing duplicate phones.

But the size of the program in the state — and profits to the increasing number of cellphone companies involved — has exploded in recent months, according to a Dayton Daily News analysis of program data.

The program in Ohio cost $26.9 million in the first quarter of 2012, the most recent data available, versus $15.6 million in the same timeframe in 2011. Compared to the first quarter of 2011, the number of people in the program nearly doubled to more than a million.

Growth could cost everyone who owns a phone. The program is funded through the “Universal Service Fund” charge on phone bills — usually a dollar or two per bill — and the amount of the fee is determined by the cost of this and other programs.

A growth of $100 million in this program could result in an increased fee of a few cents on the average bill, according to officials from the agency that administers the program. The total cost of the program nationwide was $1.5 billion in 2011, up from $1.1 billion in 2010.

Growth in the program is fed by the 2008 decision to extend it to prepaid cellphone companies, which get up to $10 every month that someone is subscribed. The number of cellphone companies offering the service in Ohio grew from four in 2011 to nine currently, with seven more awaiting approval from the Public Utilities Commission of Ohio.

Advocates for the poor say this growth is to be expected; eligibility is dependent on having a low income or being in a program such as food stamps or heating assistance, and that population is ballooning, they say.

“I am unable to have a cellphone and I need one for emergencies,” said Aliesa Azbill of Dayton, who is in a work training program at Community Action Partnership. She said the 250 free minutes she gets per month through SafeLink isn’t enough to use it for much more than emergencies.

She said it has come in helpful when her home phone has lost service or her 12-year-old daughter goes to the library and she wants her to be able to reach someone in an emergency since public phones have become rare.

Azbill heard about the phone program about six months ago from a friend, and has since told more people about it. Community Action Partnership outreach coordinator Deborah Ferguson said her anti-poverty agency tells people about the program because it helps them reach people when services or jobs become available.

Reforms to the program this year included a one-time crackdown that de-enrolled tens of thousands of people in Ohio found to have more than one phone. The program allows only one line per household; requires future applicants to prove they are eligible, instead of simply attesting to it on a form; and makes people re-enroll each year instead of doing so automatically.

Next year, phone companies will have to check new applicants against a list of current enrollees to screen out duplicates.

“We put in a number of protections to ensure that eligible consumers are signing up and households aren’t getting more than one benefit,” said the FCC’s Kimberly Scardino, who oversees the Lifeline program.

FCC officials point out that many of the reforms became effective in June. So the growth of the program could slow or halt, though they won’t make any predictions.

Studies estimate duplicate service makes up only about 7 percent of the program, and the enrollment has grown nationally from 11.5 million participants in the first quarter of 2011 to 16.5 million in the same period this year. The number of eligible people is estimated at between 20 and 30 million, according to the Universal Service Administrative Company, which administers the program.

“It’s certainly growing, and it’s growing because there are more companies entering the program and offering more services to people,” said USAC Spokesman Eric Iversen.

This growth worries people like Tom Schatz, president of the watchdog group Citizens Against Government Waste.

“There are still questions about whether or not cellphones should be provided at all,” he said. “The entire premise of the program should continue to be examined by Congress.”

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